Yum China stock jumps 6% on earnings beat, strong sales growth

SHANGHAI - Yum China Holdings, Inc. (NYSE:YUMC ) saw its stock surge over 6% in after-hours trading on Friday after the fast food giant reported better-than-expected third quarter earnings and revenue, driven by robust sales growth and margin expansion.

The operator of KFC and Pizza Hut in China posted adjusted earnings per share of $0.77, surpassing analyst estimates of $0.66. Revenue climbed 5% year-over-year to $3.07 billion, also topping expectations of $3.04 billion.

Total system sales grew 4% YoY excluding currency effects, primarily due to 7% net new unit contribution. Same-store sales reached 97% of the prior year's level, improving from 96% in Q2. The company achieved its seventh consecutive quarter of same-store transaction growth.

Operating profit jumped 15% YoY to $371 million, while core operating profit increased 18%. Operating profit margin expanded 100 basis points to 12.1%, supported by resilient restaurant margins and G&A savings.

"We delivered strong results again in the third quarter," said Joey Wat, CEO of Yum China. "Our RGM 2.0 strategy is executing effectively, with a dual focus on operational efficiency and innovation."

The company opened 438 net new stores in Q3, bringing its total store count to 15,861. It plans to open 1,500-1,700 net new stores in fiscal 2024.

Yum China also announced it will increase capital returns to shareholders from $3 billion to $4.5 billion between 2024 and 2026, a 50% boost. For 2024, it aims to return a record $1.5 billion to shareholders through dividends and share repurchases.

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Source: Investing.com