Yum China Holdings Inc (YUMC, Financial) released its Q3 2023 earnings report on October 31, 2023, revealing a 9% increase in total revenues and an 18% increase in net income. The company's total revenues grew to $2.91 billion, up from $2.68 billion in the same period last year. This growth was primarily driven by new unit contributions, same-store sales, and the lapping of temporary closures in the prior year.
Financial Highlights
YUMC's operating profit grew by 2% to $323 million, primarily driven by sales leveraging. The adjusted operating profit increased by 3% to $327 million. The company's net income increased by 18% to $244 million, primarily due to the increase in Operating Profit and higher interest income. The diluted EPS increased by 18% to $0.58 from $0.49 in the prior year period.
YUMC's total system sales increased by 15% year over year, with increases of 15% at KFC and 13% at Pizza Hut in constant currency. The same-store sales increased by 4% year over year, with increases of 4% at KFC and 2% at Pizza Hut in constant currency.
Store Openings and Expansion
During the quarter, YUMC opened 500 net new stores, bringing the total store count to 14,102. The company is on track to meet its full-year net new store target, with record year-to-date store openings of 1,155 net new adds.
CEO and CFO Comments
Joey Wat, CEO of Yum China, commented,
“We delivered a record third quarter in total revenues, adjusted operating profit and net new store openings. System sales grew 15% and adjusted operating profit excluding temporary reliefs grew 21% in constant currency."Andy Yeung, CFO of Yum China, added,
“In the third quarter, we achieved robust results despite macroeconomic headwinds. Same-store sales growth was solid on a year-over-year basis, and maintained at approximately 90% of the 2019 level in the quarter."
Outlook for 2023
For the fiscal year 2023, YUMC plans to open approximately 1,400 to 1,600 net new stores, an increase of 300 stores from the previous target. The company also plans to make capital expenditures in the range of approximately $700 million to $900 million.
Explore the complete 8-K earnings release (here) from Yum China Holdings Inc for further details.
