YUM! BRANDS Steve Schmitt
Vice President, Investor Relations & Corporate Strategy
Core operating profit growth and core operating margin growth figures exclude foreign currency translation and Special Items.
FIRST-QUARTER HIGHLIGHTS
Worldwide system sales increased 5%.
Worldwide same-store sales increased 2%.
Worldwide core operating profit increased 21%.
EPS excluding Special Items increased 19% to $0.95. Reported EPS increased 14% to $0.93.
Foreign currency translation negatively impacted operating profit by $28 million.
Opened 295 new restaurants worldwide; 72% of international development occurred in emerging markets.
On track with China separation to be complete by year end.
China Division | % Change | ||||
System Sales | Same-Store Sales | Units | Core Operating Profit | Core Operating Margin (ppts) | |
+11 | +6 | +5 | +42 | +4.6 | |
KFC Division | +5 | +1 | +2 | +4 | +0.3 |
Pizza Hut Division | +4 | +3 | +1 | +9 | +2.6 |
Taco Bell Division | +3 | +1 | +3 | +4 | +1.5 |
Worldwide | +5 | +2 | +2 | +21 | +2.9 |
First Quarter
2016 | 2015 | % Change | |
EPS Excluding Special Items | $0.95 | $0.80 | 19% |
Special Items Gain/(Loss)1 | $(0.02) | $0.01 | NM |
EPS | $0.93 | $0.81 | 14% |
1 See Reconciliation of Non-GAAP Measurements to GAAP Results for further detail of Special Items. Special Items in 2016 primarily relate to charges associated with the agreement reached in 2015 with KFC U.S. franchisees and costs associated with the planned separation of our China business.
Effective January 2016, the Company's India business integrated its three restaurant brands into our global KFC, Pizza Hut and Taco Bell Divisions. Prior year figures have been restated to present comparable results.
Note: All comparisons are versus the same period a year ago and exclude Special Items unless noted. System sales figures on this page exclude foreign currency translation.
Yum! Brands, Inc. • 1900 Colonel Sanders Lane • Louisville, KY 40213 Tel 502 874-8300 • Website www.yum.com/investors
Greg Creed, CEO, said "I'm very pleased with our results in the first quarter, including better-than-expected core operating profit growth of 21%, driven by 42% growth in our China business. KFC China had an outstanding Chinese New Year bucket promotion leading to 12% same-store sales growth for the quarter, underscoring the power of delivering insight-driven marketing that resonates with our customers. Companywide, all four of our Divisions posted positive same-store sales and core operating profit growth. I'm especially encouraged by the continued turnaround of our Pizza Hut U.S. business, which delivered 5% same-store sales growth.
While it's early in the year and there may be bumps in the road, we're confident in raising core operating profit growth guidance to 12%, from 10% previously. This is a transformational year for our company as we remain on track to finalize the separation of our China business by year end. We look forward to establishing two powerful, independent, focused growth companies dedicated to building on our brand strengths and rewarding our shareholders."
2016 | First Quarter %/ppts Change 2015 Reported Ex F/X | |||
System Sales Growth | +6 | +11 | ||
Same-Store Sales Growth (%) | +6 | (12) | NM | NM |
Franchise & License Fees ($MM) | 25 | 21 | +19 | +25 |
Restaurant Margin (%) | 22.4 | 18.9 | 3.5 | 3.4 |
Operating Profit ($MM) | 256 | 190 | +35 | +42 |
Operating Margin (%) | 19.7 | 15.1 | 4.6 | 4.6 |
-
China Division system sales increased 11%, excluding foreign currency translation.
Same-store sales increased 6%, with an increase of 12% at KFC, partially offset by a decline of 12% at Pizza Hut Casual Dining.
China Division opened 68 new units during the quarter.
China Units | Q1 2016 | % Change2 |
Restaurants1 KFC Pizza Hut Casual Dining Home Service | 7,205 | +5 |
5,019 | +3 | |
1,596 | +17 | |
330 | +22 |
1 Total includes East Dawning and Little Sheep units.
2 Represents year-over-year change.
Restaurant margin was 22.4%, an increase of 3.5 percentage points driven by sales leverage at KFC, productivity initiatives and commodity deflation, partially offset by labor inflation.
Foreign currency translation negatively impacted operating profit by $13 million.
Consistent with prior years, China Division's first quarter includes January and February results only. The first quarter includes Chinese New Year, which is peak season for the China Division.
Leap year added an extra day in the quarter, resulting in an additional $6 million of operating profit.
First Quarter
%/ppts Change 2016 2015 Reported Ex F/X
Restaurants
14,941 14,584
+2
NA
System Sales Growth
(2)
+5
Same-Store Sales Growth (%)
+1 +4
NM
NM
Franchise & License Fees ($MM)
195 198
(1)
+6
Restaurant Margin (%)
14.9 14.5
0.4
0.3
Operating Profit ($MM)
160 166
(4)
+4
Operating Margin (%)
25.5 25.0
0.5
0.3
-
KFC Division system sales increased 5%, excluding foreign currency translation.
First Quarter (% Change)
Int'l Emerging Markets Int'l Developed Markets U.S.
System Sales Growth (Ex F/X) Same-Store Sales Growth
+8
+1
+5
+1
Even
+1
KFC Division opened 79 new international restaurants in 32 countries, including 56 units in emerging markets. 77% of these new units were opened by franchisees.
Operating margin increased 0.5 percentage points driven by new-unit development.
Core operating profit grew 7% in the quarter excluding the incremental advertising expense associated with the 2015 agreement reached with KFC U.S. franchisees.
Foreign currency translation negatively impacted operating profit by $13 million, as approximately 90% of division profits are generated outside the U.S.
KFC MARKETS1 | Percent of KFC System Sales 2 | SYSTEM Sales Growth Ex F/X |
First Quarter (%) | ||
Emerging Markets | 7% | +9 |
Asia (e.g. Malaysia, Indonesia, Philippines) | ||
Africa | 6% | +7 |
Latin America (e.g. Mexico, Peru) | 6% | +6 |
Middle East / North Africa | 6% | +3 |
Russia | 5% | +27 |
Thailand | 3% | +5 |
Continental Europe (e.g. Poland) | 3% | +17 |
India | 1% | (1) |
Developed Markets | ||
U.S. | 24% | Even |
Australia | 10% | +5 |
Asia (e.g. Japan, Korea, Taiwan) | 9% | +6 |
U.K. | 9% | Even |
Continental Europe (e.g. France, Germany) | 7% | +9 |
Canada | 3% | +5 |
Latin America (e.g. Puerto Rico) | 1% | (3) |
1 See website www.yum.com/investors for a list of the countries within each of the markets.
2 Reflects Full Year 2015.
YUM! Brands Inc. issued this content on 20 April 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 20 April 2016 22:49:27 UTC
Original Document: http://www.yum.com/app/uploads/Earnings_Release_Q1_2016_FINAL.pdf
