INTERNATIONAL | Staff Reporter, Singapore

Yum China revenues reach $2.1 billion for Q2

The company’s total revenues increased 12% year over year in the second quarter of 2018.

Yum China Holdings, Inc., which reported its unaudited results for the second quarter ended June 30, 2018, posted a 12% increase in its total revenues year over year, from $1.8 billion in the comparative period last year to to $2.1 billion.

Total system sales, meanwhile, grew 3% year over year, with the 5% growth at KFC being partially offset by 1% decline at Pizza Hut. Same-store sales slipped 1% year over year, on the back of flat same-store sales at KFC and a 4% decrease at Pizza Hut. Restaurant margin was 15.1%, as compared with 16.6% in the prior year period.

Operating Profit for the company jumped 13% year over year to $193 million from $171 million, and net Income rose 14% to $143 million from $125 million in the prior year period.

"KFC achieved 5% system sales growth in the second quarter as a result of solid business fundamentals and accelerated new store development. We are on track to add 600-650 new stores, led by KFC, by the end of the year. This growth strategy will set us up for long-term growth in both profitability and market share. We are confident in the sustainability of KFC's leader position in the QSR market in China,” Joey Wat, CEO of Yum China said.

“While Pizza Hut continued to face challenges in China's competitive casual dining space, we added new talent to our team and made progress repositioning the brand with our target customers. We remain dedicated to revitalizing the brand and strongly believe that our initiatives including delivering more innovative products and introducing new store formats will restore the brand to the level of consistent growth that our shareholders expect."

"Yum China reported total revenues and operating profit growth of 12% and 13% respectively in the second quarter. We will continue to invest in strengthening our core competencies as well as building delivery, digital and data capabilities to capture online and offline opportunities and drive future growth," added Wat.

"In an increasingly competitive environment, we stepped up food investment and promotional activities, which inevitably had some pressure on our margins. This reflects our strategic decision to invest in our brands for long-term market share gain. Our business continues to generate substantial free cash flow, and during the second quarter, we returned over $110 million of cash to our shareholders through share buyback and dividends. We remain committed to creating enduring value for our stockholders," Jacky Lo, CFO of Yum China said.

As of June 30, 2018, the KFC loyalty program had more than 135 million members and the Pizza Hut loyalty program had over 45 million members, an increase of 50 million and 20 million, respectively, year over year.

Mobile payments accounted for approximately 63% of Company sales in the quarter, an increase of 21 percentage points year over year.

Delivery contributed to 16% of Company sales in the second quarter of 2018, an increase of 3 percentage points year over year. Delivery services now available in over 1,000 cities, up from 800 cities in the prior year period.

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