YUM! BRANDS Steve Schmitt
Vice President, Investor Relations & Corporate Strategy
FOURTH-QUARTER HIGHLIGHTS
Worldwide system sales grew 6%. Worldwide restaurant margin increased 3.4 percentage points to 13.6%. Worldwide operating profit increased 17%.
New global restaurants totaled 1,160, including 384 in China, 374 at KFC, 270 at Pizza Hut, 109 at Taco Bell and 23 in India; 83% of international development occurred in emerging markets.
China Division system sales increased 7%, driven by 7% unit growth and 2% same-store sales growth. Restaurant margin increased 4.3 percentage points to 11.4%. Operating profit increased 207%.
KFC Division system sales increased 6%, driven by 3% unit growth and 3% same-store sales growth. Operating margin increased 0.4 percentage points to 22.4%. Operating profit increased 7%.
Pizza Hut Division system sales increased 2%, driven by 1% unit growth and 1% same-store sales growth. Operating margin increased 1.0 percentage point to 23.4%. Operating profit increased 6%.
Taco Bell Division system sales increased 7%, driven by 3% unit growth and 4% same-store sales growth. Operating margin decreased 2.7 percentage points to 25.0%. Operating profit decreased 7%.
India Division system sales decreased 9%, driven by a 13% same-store sales decline.
Worldwide effective tax rate decreased to 29.4% from 30.0%.
Foreign currency translation negatively impacted operating profit by $37 million.
FULL-YEAR HIGHLIGHTS
Worldwide system sales grew 5%. Worldwide restaurant margin increased 1.5 percentage points to 16.0%. Worldwide operating profit increased 7%.
New global restaurants totaled 2,365, including 743 in China, 715 at KFC, 577 at Pizza Hut, 276 at Taco Bell and 54 in India; 80% of international development occurred in emerging markets.
China Division system sales increased 2%, driven by 7% unit growth and partially offset by a 4% same-store sales decline. Restaurant margin increased 1.1 percentage points to 15.9%. Operating profit increased 8%.
KFC Division system sales increased 7%, driven by 3% unit growth and 3% same-store sales growth. Operating margin increased 0.8 percentage points to 23.0%. Operating profit increased 8%.
Pizza Hut Division system sales increased 2%, driven by 1% unit growth and 1% same-store sales growth. Operating margin decreased 0.4 percentage points to 25.2%. Operating profit increased 1%.
Taco Bell Division system sales increased 8%, driven by 3% unit growth and 5% same-store sales growth. Operating margin increased 1.3 percentage points to 27.1%. Operating profit increased 12%.
India Division system sales decreased 5%, driven by a 13% same-store sales decline.
Worldwide effective tax rate increased to 25.6% from 25.5%.
Foreign currency translation negatively impacted operating profit by $107 million.
Note: All comparisons are versus the same period a year ago and exclude Special Items unless noted. System sales and operating profit figures on this page exclude foreign currency translation; restaurant margin and operating margin figures are as reported.
Yum! Brands, Inc. • 1900 Colonel Sanders Lane • Louisville, KY 40213 Tel 502 874-8300 • Website www.yum.com/investors
Fourth Quarter Full Year
2015
2014
% Change
2015
2014
% Change
EPS Excluding Special Items
$0.68
$0.61
11%
$3.18
$3.09
3%
Special Items Gain/(Loss)1
$(0.05)
$(0.81)
NM
$(0.26)
$(0.77)
NM
EPS
$0.63
$(0.20)
NM
$2.92
$2.32
26%
1 See Reconciliation of Non-GAAP Measurements to GAAP Results for further detail of Special Items. Special Items for 2015 are primarily related to charges for the refranchising of certain international markets, U.S. refranchising gains and charges associated with the agreement reached with KFC U.S. franchisees. Special Items for 2014 are primarily related to the impairment of Little Sheep and U.S. refranchising gains.
GREG CREED COMMENTS
Greg Creed, CEO, said "I'm pleased with the positive sales momentum we generated across the majority of Yum! in the fourth quarter. KFC China, for example, grew same-store sales 6% in the last quarter of 2015. Outside of China, each of our brand divisions grew same-store sales on a one-year and a two-year basis. Our U.S. results were particularly strong on a two-year basis, with growth of 2% at Pizza Hut, 8% at KFC and 10% at Taco Bell.
Fourth-quarter EPS grew 11%, with full-year EPS growth of 3% despite a 7% decline in the first half and six percentage points of foreign currency headwinds. For the full year, our brand divisions collectively grew operating profit 8% in constant currency, led by 12% operating profit growth at Taco Bell. Operating profit grew 8% in constant currency in China with impressive cost management partially offsetting weaker than originally anticipated sales results.
New-unit development continues to be a bright spot for our company. We added more than 2,300 new units globally in 2015. This year we expect to open nearly 2,400 new restaurants, which means we're opening over six new restaurants a day, laying the groundwork for future growth. With all of this in mind, we are reiterating the guidance we initially gave in December. Given the results we have seen year-to-date and the plans we have laid out for each of the brands, we're confident in our ability to deliver 10% operating profit growth in constant currency in 2016.
2016 will be a transformational year for Yum! as we are on track to complete the spin-off of our China Division, ultimately creating two powerful, independent, focused growth companies. The fundamental goal of Yum!, however, is unchanged. We are 100% dedicated to building and strengthening KFC, Pizza Hut and Taco Bell all around the world, as strong brands are critical to delivering sustained growth and creating shareholder value over the long term."
2015
Fourth Quarter
% Change 2014 Reported Ex F/X
2015
Full Year
% Change 2014 Reported Ex F/X
System Sales Growth
+3
+7
Even
+2
Same-Store Sales Growth (%)
+2
(16)
NM
NM
(4)
(5)
NM
NM
Franchise & License Fees ($MM)
37
33
+12
+16
120
113
+7
+9
Restaurant Margin (%)
11.4
7.1
4.3
4.3
15.9
14.8
1.1
1.0
Operating Profit ($MM)
96
32
+195
+207
757
713
+6
+8
-
China Division system sales increased 7% for the quarter and 2% for the year, excluding foreign currency translation.
KFC same-store sales increased 6% for the quarter and declined 4% for the year.
Pizza Hut Casual Dining same-store sales declined 8% for the quarter and 5% for the year.
China Division opened 384 new restaurants in the quarter. For the year, China Division opened 743 new restaurants, including 351 at KFC, 280 at Pizza Hut Casual Dining and 75 at Pizza Hut Home Service.
China Units | Q4 2015 | % Change2 |
Restaurants1 KFC Pizza Hut Casual Dining Home Service | 7,176 | +7 |
5,003 | +4 | |
1,572 | +20 | |
331 | +28 |
1 Total includes East Dawning and Little Sheep units.
2 Represents year-over-year change.
Restaurant margin increased 4.3 percentage points to 11.4% for the quarter driven by productivity initiatives and KFC sales leverage. Restaurant margin increased 1.1 percentage points to 15.9% for the year driven by productivity initiatives, partially offset by sales deleverage.
Foreign currency translation negatively impacted operating profit by $4 million for the quarter and $15 million for the year.
2015
Fourth Quarter
% Change 2014 Reported Ex F/X
2015
Full Year
% Change 2014 Reported Ex F/X
Restaurants
14,577 14,197
+3
NA
14,577
14,197
+3
NA
System Sales Growth
(5)
+6
(4)
+7
Same-Store Sales Growth (%)
+3
+4
NM
NM
+3
+3
NM
NM
Franchise & License Fees ($MM)
263
277
(5)
+7
842
873
(4)
+7
Restaurant Margin (%)
14.7
13.8
0.9
0.8
14.8
13.3
1.5
1.4
Operating Profit ($MM)
206
221
(7)
+7
677
708
(4)
+8
Operating Margin (%)
22.4
22.0
0.4
0.3
23.0
22.2
0.8
0.4
-
KFC Division system sales increased 6% for the quarter and 7% for the year, excluding foreign currency translation.
% Change
Int'l Emerging Markets Int'l Developed Markets U.S.
Fourth Fourth Fourth
Quarter Full Year Quarter Full Year Quarter Full Year
System Sales Growth (Ex F/X) Same-Store Sales Growth
+10 +11
+2 +3
+6 +6
+3 +3
+1 +2
+3 +4
KFC Division opened 370 new international restaurants during the quarter.
For the year, KFC Division opened 705 new international restaurants in 85 countries, including 524 units in emerging markets. 85% of these new units were opened by franchisees.
Operating margin increased 0.4 percentage points for the quarter and 0.8 percentage points for the year driven by same-store sales growth and new-unit development.
Foreign currency translation negatively impacted operating profit by $31 million for the quarter and $85 million for the year, 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 | |
Fourth Quarter (%) | Full Year (%) | ||
Emerging Markets | 8% | +8 | +6 |
Asia (e.g. Malaysia, Indonesia, Philippines) | |||
Africa | 6% | +4 | +9 |
Latin America (e.g. Mexico, Peru) | 6% | +7 | +8 |
Middle East / North Africa | 6% | +3 | +3 |
Russia | 5% | +35 | +42 |
Thailand | 3% | +6 | +6 |
Continental Europe (e.g. Poland) | 3% | +12 | +13 |
Developed Markets | |||
U.S. | 24% | +1 | +2 |
Australia | 10% | +7 | +9 |
Asia (e.g. Japan, Korea, Taiwan) | 9% | +7 | +5 |
U.K. | 9% | +2 | +3 |
Continental Europe (e.g. France, Germany) | 7% | +11 | +9 |
Canada | 3% | +4 | +2 |
Latin America (e.g. Puerto Rico) | 1% | +3 | +3 |
1 See website www.yum.com under tab "Investors" for a list of the countries within each of the markets.
2 Reflects Full Year 2015.
YUM! Brands Inc. issued this content on 03 February 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 04 February 2016 00:19:28 UTC
Original Document: http://www.yum.com/investors/media/Q4_2015_Earnings_Release_Final.pdf
