On February 7th, YUM! Brands (YUM) reported on Q4 and FY 2023 ending December 31st. Results for the quarter were below Zach’s estimates of $2.12 billion for revenue and $1.39 for EPS. For the period, the Company posted net income of $463 million on an unexpectedly low revenue of $2,036 million, including company sales, franchise fees and advertising, generating a diluted EPS of $1.62. Comparative values for Q4 of fiscal 2022 were net earnings of $371 million on revenue of $2,019 million with a diluted EPS of $1.31. Operating margin increased from 28.6 percent to 29.9 percent for the most recent quarter. Digital sales were up 22 percent in FY 2023 approaching 45 percent of sales.
For FY 2023 the Company posted net income of $1,597 million on revenue of $7,076 million, with a diluted EPS of $5.68. Comparative values for FY 2022 were net earnings $1,325 million on revenue of $6,842 million with a diluted EPS of $4.63.
During Q4 the holding Company purchased 218 KFC restaurants in England and Ireland and opened 1,853 new units worldwide.
The KFC division comprising 29,900 restaurants posted a two percent growth in same-store sales The KFC division generated an operating profit of $329 million achieving an operating margin of 43.4 percent. Of total KFC sales expressed as a percentage, China attained 27; U.S.,15; Europe, 11 and the remainder from Asia.
The Pizza Hut division comprising 19,866 restaurants posted 2 percent decline in same-store sales. The Pizza Hut division generated an operating profit of $99 million with an operating margin of 35 percent. Of total Pizza Hut sales expressed as a percentage, U.S. attained 41; China.,18; Europe and Asia, 13 each.
The Taco Bell division comprising 8,564 restaurants posted a three percent increase in same-store sales with system with operating profit of $286 million attaining an operating margin of 34.9 percent. During Q4 201 restaurants were added.
In commenting on results David Gibbs, CEO stated, “2023 was another remarkable year for Yum! Brands as we crossed the $60 billion system sales threshold and exceeded all aspects of our long-term growth algorithm. We achieved 10 percent system sales growth with broad-based strength across the globe and another record year for development, opening over 4,700 new stores. We also made massive strides in scaling our proprietary digital and AI-driven ecosystem in partnership with our franchisees. Looking to 2024, this will be a year of major milestones as we cross 30,000 restaurants at KFC, 20,000 at Pizza Hut and well over 60,000 globally for Yum!"
Chris Turner, CFO, commented “Last year proved to be another great example of Yum!’s unique blend of growth and resilience. We delivered percent unit growth, one percent system sales growth, and 12 percent Core Operating profit growth. Simply put, there is no other retail business that is growing across 110 different countries and opening the equivalent of a new store roughly every two hours.
On December 31st 2023 Yum Brands posted total assets of $6,231 million including goodwill and intangibles of $1,019 million against long-term debt of $11,142 million and an accumulated shareholder’s deficit of $7,858 million. Yum Brands! had a market capitalization of $36,610 million on February 9th. The share has traded over 52 weeks in a range of $115.53 to $143.25 with a 50-day moving average of $125.91. On a trailing 12-month basis, operating margin was 31.9 percent, profit margin 22.6 percent with a return on assets of 24.5 percent. YUM! is held primarily by institutions that collectively hold 80.0 percent of equity.