SHANGHAI, China – Yum China Holdings, Inc. reported unaudited results for the first quarter ended March 31, 2023. Total revenues increased 9% year over year to $2.92 billion from $2.67 billion (an 18% increase excluding foreign currency translation (“F/X”)).
Total system sales increased 17% year over year, with increases of 17% at both KFC and Pizza Hut, excluding F/X. Growth was mainly attributable to same-store sales growth, new unit contribution and lapping of temporary store closures in the prior year.
Same-store sales increased 8% year over year, with increases of 8% at KFC and 7% at Pizza Hut, excluding F/X.
Other 1Q highlights:
- Opened 233 net new stores during the quarter; total store count reached 13,180 as of March 31, 2023.
- Operating Profit increased 118% year over year to $416 million from $191 million (a 134% increase excluding F/X), primarily driven by sales leveraging and margin expansion.
- Adjusted Operating Profit increased 117% year over year to $419 million from $193 million (a 133% increase excluding F/X).
- Restaurant margin was 20.3%, compared with 13.8% in the prior year period.
- Effective tax rate was 28.5%.
- Net Income increased 189% to $289 million from $100 million in the prior year period, primarily due to the increase in Operating Profit.
- Adjusted Net Income increased 186% to $292 million from $102 million in the prior year period (a 131% increase excluding the net losses of $14 million and $30 million in the first quarter of 2023 and 2022, respectively, from our mark-to-market equity investments; a 148% increase if further excluding F/X).
- Diluted EPS increased 196% to $0.68 from $0.23 in the prior year period.
- Adjusted Diluted EPS increased 188% to $0.69 from $0.24 in the prior year period (a 132% increase excluding the net losses from our mark-to-market equity investments in the first quarter of 2023 and 2022; a 148% increase if further excluding F/X).
Yum China: 2023 Outlook
The Company’s fiscal year 2023 targets remain unchanged:
- To open approximately 1,100 to 1,300 net new stores.
- To make capital expenditures in the range of approximately $700 million to $900 million.
- The Company recently published its 2022 Sustainability Report, which outlines the Company’s commitment to environmental and social responsibility and the Company’s progress against its sustainability goals.