Yum China Announces Q4 Results and 50% Dividend Increase
Yum China Holdings, Inc. (“Yum China”) reported a strong performance for the fourth quarter and full year of 2024, achieving record highs in key financial metrics and expanding its market presence. The company’s focus on operational efficiency, digitalization, and innovation contributed to consistent growth despite challenging economic conditions.
Fourth Quarter Performance Overview
Yum China continued its strong growth trajectory in Q4 2024, leveraging digital innovation, strategic expansion, and operational efficiencies to drive revenue and profit growth. The key highlights of the quarter include:
- Total system sales grew by 4% year-over-year (“YoY”), driven by a 5% net new unit contribution.
- Same-store sales recovered to 99% of the prior year’s level, improving from 97% in the third quarter.
- Same-store transactions increased by 4% YoY, marking the eighth consecutive quarter of growth.
- Total revenues reached a record-high of $2.6 billion, up 4% YoY.
- New store openings remained robust, with 534 net new stores, bringing the total store count to 16,395 by year-end.
- Operating profit surged 36% YoY to $151 million, with core operating profit up 35%.
- Operating profit (OP) margin improved to 5.8%, a 140-basis point increase YoY.
- Restaurant margin expanded to 12.3%, improving by 160 basis points YoY due to operational efficiencies.
- Diluted earnings per share (EPS) rose 30% YoY to $0.30, or 27% excluding foreign exchange (F/X) impact.
Full-Year 2024 Performance Summary
Yum China delivered a record-breaking performance in 2024, driven by its strategic initiatives and operational excellence. Key full-year highlights include:
- Total system sales grew by 5% YoY, with a 7% net new unit contribution.
- Total revenues reached a record-high $11.3 billion, increasing 3% YoY (5% excluding F/X impact).
- Store expansion continued at a rapid pace, with 1,751 net new stores added—a 12% increase.
- Delivery sales grew 14% YoY, comprising 39% of KFC and Pizza Hut’s total company sales.
- Operating profit increased 5% YoY to $1.2 billion, with core operating profit rising 12%.
- Operating profit margin reached 10.3%, reflecting a 20-basis point improvement YoY.
- Restaurant margin remained steady at 15.7%, with efficiency gains offsetting rising costs.
- Diluted EPS increased 18% YoY to $2.33, or 22% excluding F/X impact.
- Shareholder returns totaled $1.5 billion through dividends and share repurchases, reducing outstanding shares by 8%.
- Digital sales accounted for 90% of total company sales, reaching $9.6 billion.
- Loyalty program membership surpassed 525 million, up 11% from the prior year, contributing to 65% of KFC and Pizza Hut’s system sales.
CEO Joey Wat’s Commentary
Yum China’s CEO, Joey Wat, emphasized the company’s ability to adapt to evolving market dynamics while maintaining steady growth. Key areas of focus included:
- Sales & Profitability: Yum China achieved sequential improvements in same-store sales and maintained industry-leading growth rates. Operating profit and restaurant margins expanded, demonstrating resilience.
- Operational Efficiency & Innovation: Strategic initiatives, such as Project Fresh Eye and Project Red Eye, enhanced agility, efficiency, and competitiveness.
- Expansion & Franchising: The company remains on track to reach 20,000 stores by 2026, with franchising playing a key role in penetrating lower-tier markets.
- Capital Returns & Future Growth: Yum China is increasing its cash dividend by 50% and plans to return $4.5 billion to shareholders between 2024 and 2026.
Capital Returns to Shareholders
- Share Repurchases: 31.3 million shares repurchased in 2024, reducing outstanding shares by 8%.
- Dividend Increase: The Board approved a 50% increase in the quarterly dividend to $0.24 per share, payable on March 27, 2025.
- Future Capital Returns: The company plans to distribute an additional $3 billion between 2025 and 2026.
- Stock Buyback Plans: $360 million worth of repurchases scheduled for H1 2025, split between the U.S. and Hong Kong markets.
Performance of Key Brands
KFC
Fourth Quarter Performance
- System sales grew 5% YoY, with same-store sales reaching 99% of the prior year’s level.
- Delivery sales increased 16%, contributing 42% of KFC’s company sales.
- Operating profit rose 15%, with core operating profit up 18%.
- OP margin improved to 9.9%, up 100 basis points YoY.
- Restaurant margin increased 160 basis points due to operational efficiency and favorable commodity prices.
Full-Year Performance
- System sales grew 6% YoY, with same-store sales reaching 98% of the prior year’s level.
- Delivery sales grew 16%, comprising 40% of total company sales.
- A record 1,352 net new stores opened, bringing the total to 11,648.
- Franchisees accounted for 30% of new store openings.
- Operating profit reached $1.2 billion, with core operating profit up 6%.
- OP margin stood at 14%, while restaurant margin was 16.9%.
Pizza Hut
Fourth Quarter Performance
- System sales grew 3% YoY, with same-store sales at 98% of the prior year’s level.
- Same-store transactions rose 9%, the highest quarterly growth in 2024.
- Delivery sales grew 6%, accounting for 42% of total sales.
- Operating profit surged 156%, with core operating profit up 226% YoY.
- OP margin reached 2.6%, an increase of 160 basis points YoY.
- Restaurant margin improved 220 basis points due to operational efficiency and favorable commodity prices.
Full-Year Performance
- System sales grew 2%, with same-store sales at 95% of the prior year’s level.
- Delivery sales increased 7%, comprising 39% of company sales.
- A record 412 net new stores opened, reaching a total of 3,724.
- Franchisees accounted for 10% of new store openings.
- Operating profit rose 7% to $153 million, with core operating profit up 19%.
- OP margin was 6.8%, while restaurant margin expanded 60 basis points YoY.
