Yum Brands Inc. reports full year 2009 EPS growth of 13% or $2.17 per share, excluding special items; led by China full year operating profit growth of 25%.
-- Chain Leader, 2/3/2010 3:52:40 PM
LOUISVILLE, Ky.--(BUSINESS WIRE)--Yum! Brands Inc. (NYSE: YUM) today reported results for the fourth quarter and year ended December 26, 2009.
FULL YEAR HIGHLIGHTS
●
Worldwide system sales grew 1% prior to foreign currency
translation.
●
Worldwide revenue declined 4% due to the negative
impact from foreign currency translation and refranchising. Excluding these
items, revenue increased 5%.
●
International development continued at a strong pace with
1,467 new restaurants including a record 509 new units in mainland China and 898
new units in Yum! Restaurants International (YRI).
●
Worldwide operating profit grew 9% prior to foreign
currency translation, including growth of 23% in China, 5% in YRI and 1% in the
U.S. After negative foreign currency translation, worldwide operating profit
grew 6%.
●
Worldwide restaurant margin improved by 1.7 percentage
points driven by China and the U.S.
●
EPS growth was negatively impacted by approximately $0.07
per share due to foreign currency translation that was fully offset by lower
interest expense and a lower tax rate.
●
An industry leader with return on invested capital (ROIC)
of 20%.
FOURTH-QUARTER HIGHLIGHTS
●
System sales growth of +8% in mainland China and
+2% in YRI was offset by a 7% decline in the U.S. resulting in a 2% decline
worldwide prior to foreign currency translation, and a 1% decline after a
benefit from foreign currency translation.
●
Worldwide restaurant margin improved by 0.8 percentage
points.
●
Worldwide operating profit was flat prior to foreign
currency translation with growth of 24% in China and 9% in YRI, offset by a 23%
decline in the United States. After a benefit from foreign currency translation,
worldwide operating profit grew 2%.
Fourth Quarter
Full Year
2009
2008
% Change
2009
2008
% Change
EPS Excluding Special Items
$
0.50
$
0.46
7%
$
2.17
$
1.91
13%
Special Items Gain/(Loss)1
($
0.05)
($
0.03
)
NM
$
0.05
$
0.05
NM
EPS
$
0.45
$
0.43
5%
$
2.22
$
1.96
13%
1 See Reconciliation of Non-GAAP
Measurements to GAAP Results for further detail of the Special Items.
Note: All comparisons are versus the same
period a year ago and exclude Special Items unless noted.
David C. Novak, Chairman and CEO, said, "Given the tough macro environment, I am especially pleased to announce 2009 was another strong year of performance as we continue our quest to make Yum! Brands "The Defining Global Company That Feeds the World." We reported 13% EPS growth, marking the 8th straight year that we exceeded our annual target of at least 10% growth and achieved at least 13%. Our growth in 2009 was driven primarily by a record 509 new units in mainland China and 898 new units in Yum! Restaurants International. At the same time, we invested heavily in our future growth drivers including infrastructure in emerging markets and developing incremental sales layers that will make our unit economics even stronger over time. "We are in the enviable position of having powerful brands and unmatched unit economics in China as evidenced by KFC's $1.4 million average unit volumes and restaurant margins of over 20%. There is no question we are in the early innings of profitable expansion in this massive and rapidly growing economy. We are also making progress creating major new growth vehicles by investing in India, Russia and France and beginning to develop Taco Bell into a truly global brand. At the same time, we are aggressively developing incremental sales layers including breakfast, new beverages and expanded protein options. Our goal is to provide more meaningful menu variety to our customers and leverage our assets throughout the day. We are putting these same building blocks in place to drive long-term growth at Taco Bell in the U.S. where we are also making steady progress transforming and restructuring our Pizza Hut and KFC businesses. "In 2010, we once again expect to achieve our annual target of at least 10% EPS growth. Our profitable international new unit development will be a key driver of our growth as we execute against our obvious short-term challenge of driving same-store-sales growth. I am confident that our teams around the world will continue to build on our track record of consistent double-digit EPS growth." CHINA DIVISION
Fourth Quarter
Full Year
% Change
% Change
2009
2008
Reported
Ex F/X
2009
2008
Reported
Ex F/X
System Sales Growth
+7
+7
+10
+9
Restaurant Margin (%)
17.6
15.9
1.7
1.7
20.2
18.4
1.8
1.7
Operating Profit ($MM)
149
120
+24
+24
602
480
+25
+23
●
China Division system sales growth of 9% for the full year
and 7% for the fourth quarter, prior to foreign currency translation, was driven
by strong new unit development in mainland China.
○
We opened a record of 509 new restaurants in
mainland China for the full year including 205 in the fourth quarter.
○
Mainland China same-store sales declined 1% for the full
year and 3% in the fourth quarter.
Mainland China Units
Q4 2009
% Change
Traditional Restaurants
3,453
+15
KFC
2,872
+15
Pizza Hut Casual Dining
457
+10
Pizza Hut Home Service
101
+28
●
Restaurant margin increased 1.8 points for the full year
and 1.7 points for the fourth quarter, driven primarily by commodity cost
deflation of $61 million for the full year and $39 million for the fourth
quarter.
●
Foreign currency conversion benefited full year operating
profit by $10 million with minimal impact in the fourth quarter.
●
Full year operating profit growth of 25% lapped strong
growth of 28% in 2008.
YUM! RESTAURANTS INTERNATIONAL (YRI)
DIVISION
Fourth Quarter
Full Year
% Change
% Change
2009
2008
Reported
Ex F/X
2009
2008
Reported
Ex F/X
Traditional Restaurants
13,206
12,746
+4
NA
13,206
12,746
+4
NA
System Sales Growth
+5
+2
(3)
+5
Franchise & License Fees
218
202
+8
+5
660
669
(1)
+7
Operating Profit ($MM)
149
129
+15
+9
491
522
(6)
+5
Operating Margin (%)
16.8
15.0
+1.8
+1.1
18.1
17.1
+1.0
+0.2
●
YRI generated system sales growth of 5% for the full year
and 2% for the fourth quarter, prior to foreign currency translation, driven
primarily by new unit development. The table below provides further insight into
key YRI markets.
●
Same-store sales grew 1% for the full year and declined 2%
for the fourth quarter.
●
For 2009, YRI opened 898 new restaurants in more than 75
countries with 92% opened by our franchise partners. Continental Europe
experienced a net unit decline due to a 99 unit franchisee in Spain exiting the
Pizza Hut system.
●
Full year operating profit growth of 5% prior to foreign
currency translation was driven by strong growth in the U.K. and key franchise
markets partially offset by weakness in Mexico and Pizza Hut South Korea. Pizza
Hut South Korea's results included a fourth quarter, non-cash, goodwill
impairment charge of $12 million, equivalent to 2 percentage points of full year
profit growth for YRI.
●
Foreign currency translation negatively impacted operating
profit by $56 million for the full year. This included a benefit of $7 million
in the fourth quarter.
Key YRI Markets
System-Sales Growth Ex F/X (%)
Net Unit
Fourth Quarter
Full Year
Growth (%)
Franchise Only Markets
Asia (ex China Division)
+4
+6
+5
Continental Europe
-10
-1
-6
Middle East
+6
+7
+9
Latin America
+4
+6
+5
Company/Franchise Markets
Australia
+2
+5
+2
UK
+8
+9
+1
New Growth Markets
+15
+17
+12
Note: The markets listed above generate
approximately 85% of YRI's operating profit excluding corporate G&A expense.
New Growth Markets include France, Russia, and India.
U.S. DIVISION
Fourth Quarter
Full Year
2009
2008
% Change
2009
2008
% Change
Same-Store-Sales Growth (%)
(8)
+2
NM
(5)
+2
NM
Restaurant Margin (%)
13.5
14.0
(0.5)
13.9
12.5
+1.4
Operating Profit ($MM)
150
194
(23)
647
641
+1
Operating Margin (%)
11.8
13.0
(1.2)
14.5
12.5
+2.0
●
Same-store sales declined 5% for the full year and 8% in
the fourth quarter including a decline of 5% at Taco Bell, 8% at KFC and 12% at
Pizza Hut.
●
Restaurant margin improved by 1.4 points for the full year
due largely to commodity cost deflation of $28 million, refranchising and
productivity initiatives.
●
Fourth quarter operating profit declined by 23% due to
weaker same-store sales, an increase in franchise related expenses and higher
expenses related to restaurant closures.
●
Full year operating profit growth of 1% was driven by a
$65 million reduction in our U.S. G&A cost structure offset by a
same-store-sales decline. Importantly, Taco Bell generated solid profit growth
in 2009 offset by weak performance in the balance of our U.S. business.
U.S. BUSINESS TRANSFORMATION
UPDATE
●
In the fourth quarter, 255 company-owned U.S. restaurants
were sold to franchisees. For the full year, we refranchised 541 units,
exceeding our goal of 500, including 427 Pizza Huts, 60 KFCs and 54 Taco Bells.
U.S. company ownership is now 16%, a 3 percentage point reduction from 2008,
with Pizza Hut 11%, KFC 17% and Taco Bell 25%. Refranchising proceeds in 2009
were $163 million. Net gains of $11 million for the fourth quarter and $34
million for the full year were reported in Special Items.
●
In the fourth quarter, we made a decision to limit
multibranding as a U.S. growth strategy going forward, particularly as it
relates to the use of Long John Silver's and A&W as multibranding partners.
As a result, we recorded a $26 million non-cash charge for impairment of
goodwill related to these brands as a Special Item.
DIVISION REPORTING REALIGNMENT Beginning in the first quarter of 2010, two of our China Division businesses, Thailand and KFC Taiwan, will begin being reported as part of YRI. The China Division will then include solely the results of our mainland China business. While our consolidated results will not be impacted, we will restate our historical segment information during 2010 for consistent presentation. CONFERENCE CALL Yum! Brands Inc. will host a conference call to review the company's financial performance and strategies at 9:15 a.m. ET Thursday, February 4, 2010. The number is 877/815-2029 for U.S. callers and 706/645-9271 for international callers. The call will be available for playback beginning at noon Eastern Time Thursday, February 4, through midnight Thursday, February 18, 2010. To access the playback, dial 800/642-1687 in the United States and 706/645-9291 internationally. The playback pass code is 52224616. The webcast and the playback can be accessed via the internet by visiting Yum! Brands' Web site, www.yum.com/investors and selecting "Q4 2009 Earnings Conference Call" under "Investors: News and Presentations". A podcast will be available within 24 hours. ADDITIONAL INFORMATION ONLINE Fourth quarter end dates for each division, restaurant-count details, and definitions of terms including Key Markets are available online at www.yum.com under "Investors". This announcement, any related announcements and the related webcast may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Our forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ materially from those projected. Factors that can cause our actual results to differ materially include, but are not limited to: economic and political conditions in the countries where we operate; currency exchange and interest rates; commodity, labor and other operating costs; competition, consumer preferences or perceptions; the impact of any widespread illness or food borne illness; the effectiveness of our operating initiatives and marketing; new-product and concept development by us and our competitors; the success of our strategies for refranchising and international development; the continued viability of our franchise and license operators; our ability to secure and maintain distribution and adequate supply to our restaurants; publicity that may impact our business and/or industry; pending or future legal claims; our effective tax rates; our actuarially determined casualty loss estimates; government regulations; and accounting policies and practices. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions "Risk Factors" and "Forward-Looking Statements" in our Annual Report on Form 10-K) for additional detail about factors that could affect our financial and other results. Forward-looking statements are based on current expectations and assumptions and currently available data and are neither predictions nor guarantees of future events or performance. You should not place undue reliance on forward-looking statements, which speak only as of the date hereof. We are not undertaking to update any of these statements. Yum! Brands, Inc., based in Louisville, Kentucky, is the world's largest restaurant company in terms of system restaurants, with more than 37,000 restaurants in over 110 countries and territories. The company is ranked #239 on the Fortune 500 List, with revenues of nearly $11 billion in 2009. Four of the company's restaurant brands - KFC, Pizza Hut, Taco Bell and Long John Silver's - are the global leaders of the chicken, pizza, Mexican-style food and quick-service seafood categories, respectively. Outside the United States, the Yum! Brands system opened more than four new restaurants each day of the year, making it a leader in international retail development.
Master-Bilt's line of refrigerated cabinets includes ice cream dipping cabinets, open air merchandisers and reach-in cases utilized in the foodservice, convenience store and restaurant industries. We also produce walk-in coolers and freezers...
more
Electrolux Professional, Inc. is the only truly global provider of integrated foodservice equipment solutions, known for its thoughtful, innovative range of products with a focus on safety, hygiene, food quality and leading edge design. With North...
more
Moving Targets has been in business since 1992 helping advertisers reach new residents via direct mail marketing. Headquartered in Perkasie, PA, Moving Targets creates warmhearted personal letters with valuable gift certificates, and sends them out...
more
Motorola is a global leader in providing integrated communications solutions and embedded electronic solutions. These include: Software-enhanced wireless telephone, two-way radio and messaging products and systems, as well as networking and...
more
The iFranchise Group is comprised of the nation's top franchise professionals. Our expertise in foodservice is unparalleled in franchising. Whether you are an experienced franchisor or looking to expand through franchising for the first time, we...
more
