Yum China Holdings Reports Strong Q3 Earnings

SHANGHAI – Yum China Holdings, Inc. (NYSE:YUMC) experienced a more than 6% increase in stock price during after-hours trading on Friday following the release of its third-quarter earnings, which exceeded expectations. The growth in earnings and revenue was fueled by strong sales performance and improved margins.

The operator of KFC and Pizza Hut in China reported adjusted earnings per share of $0.77, surpassing analysts' expectations of $0.66. Revenue rose 5% year-over-year to $3.07 billion, exceeding the forecast of $3.04 billion.

Total system sales increased 4% YoY without accounting for currency effects, largely driven by a 7% net new unit contribution. Same-store sales reached 97% of last year’s figures, improving from 96% in Q2, marking the company's seventh consecutive quarter of growth in same-store transactions.

Operating profit increased 15% YoY to $371 million, with core operating profit up 18%. The operating profit margin expanded by 100 basis points to 12.1%, supported by strong restaurant margins and savings in general and administrative expenses.

"We delivered strong results again in the third quarter," said Joey Wat, CEO of Yum China. "Our RGM 2.0 strategy is executing effectively, with a dual focus on operational efficiency and innovation."

In Q3, the company opened 438 net new stores, bringing its store total to 15,861. It plans to launch between 1,500-1,700 net new stores in fiscal 2024.

Yum China also announced an increase in capital returns to shareholders from $3 billion to $4.5 billion for the years between 2024 and 2026, a 50% boost. For 2024, it aims to return a record $1.5 billion to shareholders through dividends and share repurchases.

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