Yum Brands' system sales grow, revenues dip in 2015
Yum! Brands, Inc. reported the results for the fourth quarter and full year ended December 26, 2015.
For the three month period, the company saw worldwide system sales growing 6%, while worldwide restaurant margin rose 3.4 percentage points to 13.6%. Worldwide operating profit increased 17% comparable to last year.
Worldwide system sales for the full year grew 5%. Worldwide restaurant margin rose 1.5 percentage points to 16.0%, while worldwide operating profit increased 7%.
However, total revenue fell to $3.95 billion in the quarter ended December 26, from nearly $4 billion a year earlier, showing a 1% drop. For the full year, the company reported total revenue at $13.11 billion, 1% lower than the $13.28 billion a year earlier.
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.
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," Creed said.
For the fourth quarter of the company's China Division, system sales increased 7%, driven by 7% unit growth and 2% same-store sales growth; restaurant margin grew 4.3 percentage points to 11.4%; while operating profit increased 207%. For the full year, 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%.
According to the report, Yum Brands' KFC Division system sales saw 6% growth for the fourth quarter, driven by 3% unit growth and 3% same-store sales growth, while operating margin rose 0.4 percentage points to 22.4%, and operating profit increased 7%. KFC Division system sales increased 7% for the year, 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%.
For the fourth quarter, the Pizza Hut Division showed system sales increasing 2%, driven by 1% unit growth and 1% same-store sales growth. Operating margin increased 1.0 percentage point to 23.4% and operating profit rose 6%. System sales for the full year 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%.
The Taco Bell Division reported fourth quarter system sales growing 7%, driven by 3% unit growth and 4% same-store sales growth. Operating margin fell 2.7 percentage points to 25.0%. Operating profit decreased 7%. System sales increased 8% for the year, 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%.
"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."
