Yum China Reports Second Quarter 2025 Results

Operating Profit Increased 14% YoY; OP Margin Expanded 100 Basis Points to 10.9%, a Second-Quarter Record HighSame-Store Sales Growth Turned Positive, Driven by 10th Consecutive Quarter of Same-Store Transaction GrowthDiluted EPS Up 5%, or 15% Excluding Mark-to-Market and F/X Impact , /PRNewswire/ -- Yum China Holdings, Inc. (the "Company" or "Yum China") (NYSE: YUMC and HKEX: 9987) today reported unaudited results for the second quarter ended June 30, 2025. Second Quarter Highlights Total system sales grew 4% year over year ("YoY"), excluding foreign currency translation ("F/X"). The growth sequentially improved from the first quarter and was primarily attributable to 4% of net new unit contribution and 1% same-store sales growth. Same-store sales growth turned positive at 1%. Same-store transactions grew 2% YoY, the tenth consecutive quarter of growth. Total revenues increased 4% YoY to $2.8 billion, also a 4% increase excluding F/X. The Company opened 336 net new stores in the quarter, with 89 net new stores opened by franchisees, accounting for 26%. Total store count reached 16,978 as of June 30, 2025, including 12,238 KFC stores and 3,864 Pizza Hut stores. Operating profit grew 14% YoY to $304 million, a second-quarter record high. Core operating profit grew 14% YoY. OP margin was 10.9%, an increase of 100 basis points YoY and also record high for the second quarter, supported by restaurant margin expansion and G&A savings. Restaurant margin was 16.1%, an increase of 60 basis points YoY, driven primarily by savings in Food and Paper cost and Occupancy and Other Operating expenses. Diluted EPS increased 5% YoY to $0.58, another second-quarter record-high, also a 5% increase excluding F/X. Excluding the negative impact of $0.04 from the mark-to-market equity investments in the 2025 and 2024 second quarters and F/X, Diluted EPS increased 15% YoY. Returned $274 million to shareholders in the second quarter through $184 million in share repurchases and $90 million in cash dividends. Delivery sales grew 22% YoY. Delivery contributed approximately 45% of total Company sales. Digital sales reached $2.4 billion, with digital ordering accounting for approximately 94% of total Company sales. Total membership of KFC and Pizza Hut was approximately 560 million, up 13% versus the prior year. Member sales accounted for approximately 64% of KFC and Pizza Hut's system sales in aggregate. CEO Comments Joey Wat, CEO of Yum China, commented, "I am pleased to announce that we achieved solid results in the second quarter. We turned same-store sales growth positive while expanding our store portfolio to nearly 17,000 locations. We delivered double-digit growth in operating profit and substantially expanded our margins. KFC stayed resilient and Pizza Hut sustained its momentum. Our dual focus on innovation and operational efficiency enabled us to deliver compelling value and experiences to our customers. We sparked cravings with innovative and great-tasting food, including the Crazy Spicy Zinger at KFC and the upgraded hand-crafted thin-crust pizza at Pizza Hut. In addition to great value for money, our meal sets with IP-themed toys brought emotional value to our customers and helped us set a new 2025 daily sales record on Children's Day." Wat continued, "We are always exploring ways to broaden our addressable market. KFC has expanded KCOFFEE cafes to over 1,300 locations, leveraging KFC's store space, various in-store resources and membership. Pizza Hut's new menu has widened our price ranges, reaching previously underserved customer segments and contributing to double-digit same-store transactions growth for the quarter. At the same time, we are reinforcing our strategic moat via our membership programs and Super Apps, and enhancing the in-store experience, while capturing additional traffic on delivery platforms. We are also fortifying our end-to-end digitalization to streamline operations and elevate our customer experience. With the strength of our brands and our strategies, we are confident in delivering sustainable, long-term value for our shareholders." Key Financial Results Second Quarter Year to Date Ended 6/30 %/ppts Change %/ppts Change 2025 2024 Reported Ex F/X 2025 2024 Reported Ex F/X System Sales Growth (1) (%) 4 4 NM NM 3 5 NM NM Same-Store Sales Growth (1) (%) 1 (4) NM NM Even (3) NM NM Operating Profit ($mn) 304 266 +14 +14 703 640 +10 +11 Adjusted Operating Profit (2) ($mn) 304 266 +14 +14 703 640 +10 +11 Core Operating Profit (2) (3) ($mn) 303 266 NM +14 708 640 NM +11 OP Margin (4) (%) 10.9 9.9 +1.0 +1.0 12.2 11.4 +0.8 +0.8 Core OP Margin (2) (5) (%) 10.9 9.9 NM +1.0 12.2 11.4 NM +0.8 Net Income ($mn) 215 212 +1 +1 507 499 +1 +2 Adjusted Net Income (2) ($mn) 215 212 +1 +1 507 499 +1 +2 Diluted Earnings Per Common Share ($) 0.58 0.55 +5 +5 1.35 1.26 +7 +8 Adjusted Diluted Earnings Per Common Share (2) ($) 0.58 0.55 +5 +5 1.35 1.26 +7 +8 (1) System sales and same-store sales percentages exclude the impact of F/X. Effective January 1, 2018, temporary store closures arenormalized in the same-store sales calculation by excluding the period during which stores are temporarily closed. (2) See "Reconciliation of Reported GAAP Results to Non-GAAP Measures" included in the accompanying tables of this release for further details. (3) Core operating profit is defined as operating profit adjusted for special items, further excluding items affecting comparability and theimpact of F/X. The Company uses core operating profit for the purposes of evaluating the performance of its core operations. Currentperiod amounts are derived by translating results at average exchange rates of the prior year period. (4) OP margin refers to operating profit as a percentage of total revenues. (5) Core OP margin refers to core operating profit as a percentage of total revenues excluding F/X. Note: All comparisons are versus the same period a year ago. Percentages may not recompute due to rounding. NM refers to not meaningful. Capital Returns to Shareholders The Company is on track to return a total of $3 billion to shareholders in 2025 through 2026, in addition to the $1.5 billion delivered to shareholders in 2024. The average annual amount of capital return over the three years is around 9% of our market capitalization as of August 4, 2025. In the first half of 2025, the Company returned $536 million in capital to shareholders through $356 million in share repurchases and $180 million in cash dividends. Including the previously announced $510 million share repurchase agreements for the second half of 2025 and assuming a quarterly dividend of $0.24 per share, the Company expects the total return of capital for 2025 to be at least $1.2 billion. As of June 30, 2025, approximately $936 million remained available for future share repurchases under the current authorization program. The Board declared a cash dividend of $0.24 per share on Yum China's common stock, payable on September 23, 2025 to shareholders of record as of the close of business on September 2, 2025. KFC Second Quarter Year to Date Ended 6/30 %/ppts Change %/ppts Change 2025 2024 Reported Ex F/X 2025 2024 Reported Ex F/X Restaurants 12,238 10,931 +12 NM 12,238 10,931 +12 NM System Sales Growth (%) 5 5 NM NM 4 6 NM NM Same-Store Sales Growth (%) 1 (3) NM NM Even (3) NM NM Total Revenues ($mn) 2,096 2,014 +4 +4 4,342 4,244 +2 +3 Operating Profit ($mn) 292 264 +11 +10 678 636 +6 +7 Core Operating Profit ($mn) 291 264 NM +10 682 636 NM +7 OP Margin (%) 14.0 13.1 +0.9 +0.9 15.6 15.0 +0.6 +0.6 Restaurant Margin (%) 16.9 16.2 +0.7 +0.7 18.4 17.8 +0.6 +0.6 System sales for KFC grew 5% YoY. Same-store sales increased 1% YoY, with flat same-store transactions. Ticket average was 1% higher YoY, driven mainly by increased delivery mix. Delivery sales grew 25% YoY, contributing approximately 45% of KFC's Company sales. KFC opened 295 net new stores during the quarter, with 119 net new stores opened by franchisees, accounting for 40%. Total store count reached 12,238 as of June 30, 2025. Operating profit grew 11% YoY to $292 million, a record level for the second quarter. Core operating profit increased 10% YoY. OP margin was 14.0%, an increase of 90 basis points YoY. Restaurant margin was 16.9%, expanding 70 basis points YoY, primarily due to favorable commodity prices and streamlined operations, partially offset by the impact of higher rider cost due to the increased delivery mix, increased value-for-money offerings and wage inflation. Pizza Hut Second Quarter Year to Date Ended 6/30 %/ppts Change %/ppts Change 2025 2024 Reported Ex F/X 2025 2024 Reported Ex F/X Restaurants 3,864 3,504 +10 NM 3,864 3,504 +10 NM System Sales Growth (%) 3 1 NM NM 3 3 NM NM Same-Store Sales Growth (%) 2 (8) NM NM 1 (7) NM NM Total Revenues ($mn) 554 540 +3 +3 1,149 1,135 +1 +2 Operating Profit ($mn) 46 40 +16 +15 106 87 +22 +23 Core Operating Profit ($mn) 46 40 NM +15 107 87 NM +23 OP Margin (%) 8.3 7.4 +0.9 +0.9 9.2 7.7 +1.5 +1.5 Restaurant Margin (%) 13.3 13.2 +0.1 +0.1 13.9 12.8 +1.1 +1.1 System sales for Pizza Hut grew 3% YoY. Same-store sales increased 2% YoY. Same-store transactions grew 17% YoY, the tenth consecutive quarter of growth. Ticket average was 13% lower YoY, consistent with our strategy and driven mainly by better value-for-money. Pizza Hut opened 95 net new stores during the quarter, with 21 net new stores opened by franchisees, accounting for 22%. Total store count reached 3,864 as of June 30, 2025. Delivery sales grew 15% YoY, contributing approximately 43% of Pizza Hut's Company sales. Operating profit grew 16% to $46 million, a record level for the second quarter. Core operating profit increased 15% YoY. OP margin was 8.3%, an increase of 90 basis points YoY and a record level for the second quarter. Restaurant margin was 13.3%, expanding 10 basis points YoY, primarily due to favorable commodity prices, streamlined operations and automation, partially offset by the impact of increased value-for-money offerings, increased cost associated with higher delivery sales mix and wage inflation. Outlook The Company targets: Approximately 1,600 to 1,800 net new stores in 2025. The franchise mix of net new stores to reach 40-50% for KFC and 20-30% for Pizza Hut in 2025, ahead of schedule and to moderately increase the mix within the guided range over the next few years. Capital expenditures in the range of approximately $600 million to $700 million for the 2025 fiscal year, revised down from the initial target of $700 million to $800 million, mainly due to lower capital expenditures per store. The Company plans to return $3 billion to shareholders in 2025 through 2026, adding to the $1.5 billion it delivered to shareholders in 2024. Note on Non-GAAP Measures Reported GAAP results include items that are excluded from non-GAAP measures. See "Reconciliation of Reported GAAP Results to Non-GAAP Measures" and "Segment Results" within this release for non-GAAP reconciliation details. Conference Call Yum China's management will hold an earnings conference call at 7:00 a.m. U.S. Eastern Time on Tuesday, August 5, 2025 (7:00 p.m. Beijing/Hong Kong Time on Tuesday, August 5, 2025). A live webcast of the call may be accessed at https://edge.media-server.com/mmc/p/kij3u6kb. To join by phone, please register in advance of the conference through the link provided below. Upon registering, you will be provided with participant dial-in numbers and a unique access PIN. Pre-registration Link: https://register-conf.media-server.com/register/BIb7706c47c6cf42db8f213a8ac7f0329c A replay of the webcast will be available two hours after the event and will remain accessible until August 4, 2026. Additionally, earnings release accompanying slides will be available at the Company's Investor Relations website http://ir.yumchina.com. For important news and information regarding Yum China, including our filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange, visit Yum China's Investor Relations website at http://ir.yumchina.com. Yum China uses this website as a primary channel for disclosing key information to its investors, some of which may contain material and previously non-public information. Forward-Looking Statements This press release contains "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, including statements relating to our projected capital return for 2025 and those set forth under the section titled "Outlook." 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 generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as "expect," "expectation," "believe," "anticipate," "may," "could," "intend," "belief," "plan," "estimate," "target," "predict," "project," "likely," "will," "continue," "should," "forecast," "outlook," "commit" or similar terminology. These statements are based on current estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable under the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Forward-looking statements include, without limitation, statements regarding the future strategies, growth, business plans, investments, store openings, franchise mix of net new stores, capital expenditures, dividend and share repurchase plans, CAGR for system sales, operating profit and EPS, earnings, performance and returns of Yum China, anticipated effects of population and macroeconomic trends, pace of recovery of Yum China's business, the anticipated effects of our innovation, digital and delivery capabilities and investments on growth and beliefs regarding the long-term drivers of Yum China's business. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks and uncertainties that are difficult to predict and could cause our actual results or events to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or assumptions will be achieved. The forward-looking statements included in this press release are only made as of the date of this press release, and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law. Numerous factors could cause our actual results or events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: whether we are able to achieve development goals at the times and in the amounts currently anticipated, if at all, the success of our marketing campaigns and product innovation, our ability to maintain food safety and quality control systems, changes in public health conditions, our ability to control costs and expenses, including tax costs, changes in political, economic and regulatory conditions in China, as well as changes in political, business, economic and trade relations between the U.S. and China, and those set forth under the caption "Risk Factors" in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. Our plan of capital returns to shareholders is based on current expectations, which may change based on market conditions, capital needs or otherwise. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q) for additional detail about factors that could affect our financial and other results. About Yum China Holdings, Inc. Yum China is the largest restaurant company in China with a mission to make every life taste beautiful. The Company operates over 16,000 restaurants under six brands across over 2,400 cities in China. KFC and Pizza Hut are the leading brands in the quick-service and casual dining restaurant spaces in China, respectively. In addition, Yum China has partnered with Lavazza to develop the Lavazza coffee concept in China. Little Sheep and Huang Ji Huang specialize in Chinese cuisine. Taco Bell offers innovative Mexican-inspired food. Yum China has a world-class, digitalized supply chain, which includes an extensive network of logistics centers nationwide and an in-house supply chain management system. Its strong digital capabilities and loyalty program enable the Company to reach customers faster and serve them better. Yum China is a Fortune 500 company with the vision to be the world's most innovative pioneer in the restaurant industry. For more information, please visit http://ir.yumchina.com. Contacts Investor Relations Contact: Tel: +86 21 2407 7556 [email protected] Media Contact: Tel: +86 21 2407 8288 / +852 2267 5807 [email protected] Yum China Holdings, Inc. Condensed Consolidated Statements of Income (in US$ million, except per share data) (unaudited) Quarter Ended % Change Year to Date Ended % Change 6/30/2025 6/30/2024 B/(W) 6/30/2025 6/30/2024 B/(W) Revenues Company sales $ 2,613 $ 2,528 3 $ 5,414 $ 5,322 2 Franchise fees and income 24 22 11 51 47 9 Revenues from transactions with franchisees 115 96 20 236 203 16 Other revenues 35 33 6 67 65 3 Total revenues 2,787 2,679 4 5,768 5,637 2 Costs and Expenses, Net Company restaurants Food and paper 810 797 (2) 1,684 1,693 — Payroll and employee benefits 712 666 (7) 1,431 1,374 (4) Occupancy and other operating expenses 669 674 1 1,357 1,371 1 Company restaurant expenses 2,191 2,137 (3) 4,472 4,438 (1) General and administrative expenses 131 133 2 269 273 2 Franchise expenses 10 9 (8) 21 19 (10) Expenses for transactions with franchisees 110 92 (20) 227 196 (16) Other operating costs and expenses 30 29 (3) 59 58 (1) Closures and impairment expenses, net 12 13 11 18 14 (25) Other income, net (1) — NM (1) (1) 19 Total costs and expenses, net 2,483 2,413 (3) 5,065 4,997 (1) Operating Profit 304 266 14 703 640 10 Interest income, net 25 31 (21) 51 69 (26) Investment (loss) gain (18) 8 NM (15) 16 NM Income Before Income Taxes and Equity in Net Earnings (Losses) from Equity Method Investments 311 305 2 739 725 2 Income tax provision (80) (77) (4) (199) (190) (5) Equity in net earnings (losses) from equity method investments 2 — NM 6 — NM Net income – including noncontrolling interests 233 228 2 546 535 2 Net income – noncontrolling interests 18 16 (9) 39 36 (6) Net Income – Yum China Holdings, Inc. $ 215 $ 212 1 $ 507 $ 499 1 Effective tax rate 25.8 % 25.2 % (0.6) ppts. 26.9 % 26.2 % (0.7) ppts. Basic Earnings Per Common Share $ 0.58 $ 0.55 $ 1.36 $ 1.27 Weighted-average shares outstanding (in millions) 373 389 374 395 Diluted Earnings Per Common Share $ 0.58 $ 0.55 $ 1.35 $ 1.26 Weighted-average shares outstanding (in millions) 374 391 376 397 OP margin 10.9 % 9.9 % 1.0 ppts. 12.2 % 11.4 % 0.8 ppts. Company sales 100.0 % 100.0 % 100.0 % 100.0 % Food and paper 31.0 31.5 0.5 ppts. 31.1 31.8 0.7 ppts. Payroll and employee benefits 27.2 26.3 (0.9) ppts. 26.4 25.8 (0.6) ppts. Occupancy and other operating expenses 25.7 26.7 1.0 ppts. 25.1 25.8 0.7 ppts. Restaurant margin 16.1 % 15.5 % 0.6 ppts. 17.4 % 16.6 % 0.8 ppts. Percentages may not recompute due to rounding. NM refers to not meaningful. Yum China Holdings, Inc. KFC Operating Results (in US$ million) (unaudited) Quarter Ended % Change Year to Date Ended % Change 6/30/2025 6/30/2024 B/(W) 6/30/2025 6/30/2024 B/(W) Revenues Company sales $ 2,059 $ 1,983 4 $ 4,267 $ 4,176 2 Franchise fees and income 19 16 16 40 34 14 Revenues from transactions with franchisees 17 12 32 33 26 26 Other revenues 1 3 (68) 2 8 (74) Total revenues 2,096 2,014 4 4,342 4,244 2 Costs and Expenses, Net Company restaurants Food and paper 631 626 (1) 1,316 1,320 — Payroll and employee benefits 556 513 (8) 1,110 1,055 (5) Occupancy and other operating expenses 523 524 — 1,055 1,059 — Company restaurant expenses 1,710 1,663 (3) 3,481 3,434 (1) General and administrative expenses 61 60 (2) 120 121 1 Franchise expenses 9 8 (9) 19 17 (9) Expenses for transactions with franchisees 15 11 (37) 29 23 (29) Other operating costs and expenses 1 2 68 2 6 72 Closures and impairment expenses, net 8 6 (15) 13 7 (65) Total costs and expenses, net 1,804 1,750 (3) 3,664 3,608 (2) Operating Profit $ 292 $ 264 11 $ 678 $ 636 6 OP margin 14.0 % 13.1 % 0.9 ppts. 15.6 % 15.0 % 0.6 ppts. Company sales 100.0 % 100.0 % 100.0 % 100.0 % Food and paper 30.7 31.6 0.9 ppts. 30.9 31.6 0.7 ppts. Payroll and employee benefits 27.0 25.9 (1.1) ppts. 26.0 25.3 (0.7) ppts. Occupancy and other operating expenses 25.4 26.3 0.9 ppts. 24.7 25.3 0.6 ppts. Restaurant margin 16.9 % 16.2 % 0.7 ppts. 18.4 % 17.8 % 0.6 ppts. Percentages may not recompute due to rounding. Yum China Holdings, Inc. Pizza Hut Operating Results (in US$ million) (unaudited) Quarter Ended % Change Year to Date Ended % Change 6/30/2025 6/30/2024 B/(W) 6/30/2025 6/30/2024 B/(W) Revenues Company sales $ 545 $ 530 3 $ 1,129 $ 1,117 1 Franchise fees and income 2 2 20 4 4 21 Revenues from transactions with franchisees 1 1 44 3 2 56 Other revenues 6 7 — 13 12 9 Total revenues 554 540 3 1,149 1,135 1 Costs and Expenses, Net Company restaurants Food and paper 177 167 (6) 363 365 1 Payroll and employee benefits 154 150 (3) 317 312 (2) Occupancy and other operating expenses 141 143 1 292 297 1 Company restaurant expenses 472 460 (3) 972 974 — General and administrative expenses 26 27 5 52 54 4 Franchise expenses 1 1 (14) 2 2 (15) Expenses for transactions with franchisees 1 1 (32) 3 2 (41) Other operating costs and expenses 5 6 7 11 11 (3) Closures and impairment expenses, net 3 5 37 3 5 38 Total costs and expenses, net 508 500 (2) 1,043 1,048 — Operating Profit $ 46 $ 40 16 $ 106 $ 87 22 OP margin 8.3 % 7.4 % 0.9 ppts. 9.2 % 7.7 % 1.5 ppts. Company sales 100.0 % 100.0 % 100.0 % 100.0 % Food and paper 32.5 31.6 (0.9) ppts. 32.1 32.7 0.6 ppts. Payroll and employee benefits 28.3 28.3 — ppts. 28.1 27.9 (0.2) ppts. Occupancy and other operating expenses 25.9 26.9 1.0 ppts. 25.9 26.6 0.7 ppts. Restaurant margin 13.3 % 13.2 % 0.1 ppts. 13.9 % 12.8 % 1.1 ppts. Percentages may not recompute due to rounding. Yum China Holdings, Inc. Condensed Consolidated Balance Sheets (in US$ million) 6/30/2025 12/31/2024 (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 592 $ 723 Short-term investments 1,563 1,121 Accounts receivable, net 94 79 Inventories, net 360 405 Prepaid expenses and other current assets 383 366 Total Current Assets 2,992 2,694 Property, plant and equipment, net 2,415 2,407 Operating lease right-of-use assets 2,103 2,146 Goodwill 1,915 1,880 Intangible assets, net 145 144 Long-term bank deposits and notes 626 1,088 Equity investments 382 368 Deferred income tax assets 142 138 Other assets 263 256 Total Assets 10,983 11,121 LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY Current Liabilities Accounts payable and other current liabilities 2,056 2,080 Short-term borrowings — 127 Income taxes payable 101 76 Total Current Liabilities 2,157 2,283 Non-current operating lease liabilities 1,760 1,816 Non-current finance lease liabilities 48 49 Deferred income tax liabilities 395 389 Other liabilities 154 157 Total Liabilities 4,514 4,694 Redeemable Noncontrolling Interest 13 13 Equity Common stock, $0.01 par value; 1,000 million shares authorized; 371 million shares and 379 million shares issued at June 30, 2025 and December 31, 2024, respectively; 371 million shares and 378 million shares outstanding at June 30, 2025 and December 31, 2024, respectively. 4 4 Treasury stock (12) (52) Additional paid-in capital 3,952 4,028 Retained earnings 2,110 2,089 Accumulated other comprehensive loss (265) (341) Total Yum China Holdings, Inc. Stockholders' Equity 5,789 5,728 Noncontrolling interests 667 686 Total Equity 6,456 6,414 Total Liabilities, Redeemable Noncontrolling Interest and Equity $ 10,983 $ 11,121 Yum China Holdings, Inc. Condensed Consolidated Statements of Cash Flows (in US$ million) (unaudited) Year to Date Ended 6/30/2025 6/30/2024 Cash Flows – Operating Activities Net income – including noncontrolling interests $ 546 $ 535 Depreciation and amortization 219 235 Non-cash operating lease cost 199 203 Closures and impairment expenses 18 14 Investment loss (gain) 15 (16) Equity in net (earnings) losses from equity method investments (6) — Distributions of income received from equity method investments 9 7 Deferred income taxes (3) (2) Share-based compensation expense 22 23 Changes in accounts receivable (13) (5) Changes in inventories 52 52 Changes in prepaid expenses, other current assets and value-added tax assets (8) (28) Changes in accounts payable and other current liabilities (53) 27 Changes in income taxes payable 24 25 Changes in non-current operating lease liabilities (200) (206) Other, net 43 (21) Net Cash Provided by Operating Activities 864 843 Cash Flows – Investing Activities Capital spending (259) (358) Purchases of short-term investments, long-term bank deposits and notes (3,924) (1,479) Maturities of short-term investments, long-term bank deposits and notes 3,905 1,702 Acquisition of equity investment (14) — Other, net 2 3 Net Cash Used in Investing Activities (290) (132) Cash Flows – Financing Activities Proceeds from short-term borrowings — 307 Repayment of short-term borrowings (129) (52) Repurchase of shares of common stock (368) (869) Cash dividends paid on common stock (180) (126) Dividends paid to noncontrolling interests (25) (28) Other, net (7) (17) Net Cash Used in Financing Activities (709) (785) Effect of Exchange Rates on Cash, Cash Equivalents and Restricted Cash 4 (11) Net Decrease in Cash, Cash Equivalents and Restricted Cash (131) (85) Cash, Cash Equivalents, and Restricted Cash - Beginning of Period 723 1,128 Cash, Cash Equivalents, and Restricted Cash - End of Period $ 592 $ 1,043 In this press release: Certain performance metrics and non-GAAP measures are presented excluding the impact of foreign currency translation ("F/X"). These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the F/X impact provides better year-to-year comparability without the distortion of foreign currency fluctuations. System sales growth reflects the results of all restaurants regardless of ownership, including Company-owned and franchise restaurants that operate our restaurant concepts, except for non-Company-owned restaurants for which we do not receive a sales-based royalty. Sales of franchise restaurants typically generate ongoing franchise fees for the Company at an average rate of approximately 6% of system sales. Franchise restaurant sales are not included in Company sales in the Condensed Consolidated Statements of Income; however, the franchise fees are included in the Company's revenues. We believe system sales growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates all of our revenue drivers, Company and franchise same-store sales as well as net unit growth. Effective January 1, 2018, the Company revised its definition of same-store sales growth to represent the estimated percentage change in sales of food of all restaurants in the Company system that have been open prior to the first day of our prior fiscal year, excluding the period during which stores are temporarily closed. We refer to these as our "base" stores. Previously, same-store sales growth represented the estimated percentage change in sales of all restaurants in the Company system that have been open for one year or more, including stores temporarily closed, and the base stores changed on a rolling basis from month to month. This revision was made to align with how management measures performance internally and focuses on trends of a more stable base of stores. Unit Count by Brand KFC 12/31/2024 New Builds Closures Refranchised 6/30/2025 Company-owned 10,187 526 (175) (2) 10,536 Franchisees 1,461 255 (16) 2 1,702 Total 11,648 781 (191) — 12,238 Pizza Hut 12/31/2024 New Builds Closures Refranchised 6/30/2025 Company-owned 3,525 230 (125) (1) 3,629 Franchisees 199 41 (6) 1 235 Total 3,724 271 (131) — 3,864 Others 12/31/2024 New Builds Closures 6/30/2025 Company-owned 175 9 (30) 154 Franchisees 848 26 (152) 722 Total 1,023 35 (182) 876 Reconciliation of Reported GAAP Results to Non-GAAP Measures(in millions, except per share data)(unaudited) In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") in this press release, the Company provides the following non-GAAP measures: Measures adjusted for Special Items, which include Adjusted Operating Profit, Adjusted Net Income, Adjusted Earnings Per Common Share ("EPS"), Adjusted Effective Tax Rate and Adjusted EBITDA; Company Restaurant Profit ("Restaurant profit") and Restaurant margin; Core Operating Profit and Core OP margin, which exclude Special Items, and further adjusted for Items Affecting Comparability and the impact of F/X; These non-GAAP measures are not intended to replace the presentation of our financial results in accordance with GAAP. Rather, the Company believes that the presentation of these non-GAAP measures provides additional information to investors to facilitate the comparison of past and present results, excluding those items that the Company does not believe are indicative of our core operations. With respect to non-GAAP measures adjusted for Special Items, the Company excludes impact from Special Items for the purpose of evaluating performance internally and uses them as factors in determining compensation for certain employees. Special Items are not included in any of our segment results. Adjusted EBITDA is defined as net income including noncontrolling interests adjusted for equity in net earnings (losses) from equity method investments, income tax, interest income, net, investment gain or loss, depreciation and amortization, store impairment charges, and Special Items. Store impairment charges included as an adjustment item in Adjusted EBITDA primarily resulted from our semi-annual impairment evaluation of long-lived assets of individual restaurants, and additional impairment evaluation whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. If these restaurant-level assets were not impaired, depreciation of the assets would have been recorded and included in EBITDA. Therefore, store impairment charges were a non-cash item similar to depreciation and amortization of our long-lived assets of restaurants. The Company believes that investors and analysts may find it useful in measuring operating performance without regard to such non-cash items. Restaurant Profit is defined as Company sales less expenses incurred directly by our Company-owned restaurants in generating Company sales, including cost of food and paper, restaurant-level payroll and employee benefits, rent, depreciation and amortization of restaurant-level assets, advertising expenses, and other operating expenses. Company restaurant margin percentage is defined as Restaurant profit divided by Company sales. We also use Restaurant profit and Restaurant margin for the purposes of internally evaluating the performance of our Company-owned restaurants and we believe they provide useful information to investors as to the profitability of our Company-owned restaurants. Core Operating Profit is defined as Operating Profit adjusted for Special Items, and further excluding Items Affecting Comparability and the impact of F/X. We consider quantitative and qualitative factors in assessing whether to adjust for the impact of items that may be significant or that could affect an understanding of our ongoing financial and business performance or trends. Items such as charges, gains and accounting changes which are viewed by management as significantly impacting the current period or the comparable period, due to changes in policy or other external factors, or non-cash items pertaining to underlying activities that are different from or unrelated to our core operations, are generally considered "Items Affecting Comparability." Examples of Items Affecting Comparability include, but are not limited to: temporary relief from landlords and government agencies; VAT deductions due to tax policy changes; and amortization of reacquired franchise rights recognized upon acquisitions. We believe presenting Core Operating Profit provides additional information to further enhance comparability of our operating results and we use this measure for purposes of evaluating the performance of our core operations. Core OP margin is defined as Core Operating Profit divided by Total revenues, excluding the impact of F/X. The following tables set forth the reconciliation of the most directly comparable GAAP financial measures to the non-GAAP financial measures. The reconciliation of GAAP Operating Profit to Restaurant Profit and Core Operating Profit by segment is presented in Segment Results within this release. Quarter Ended Year to Date Ended 6/30/2025 6/30/2024 6/30/2025 6/30/2024 Reconciliation of Operating Profit to Adjusted Operating Profit Operating Profit $ 304 $ 266 $ 703 $ 640 Special Items, Operating Profit — — — — Adjusted Operating Profit $ 304 $ 266 $ 703 $ 640 Reconciliation of Net Income to Adjusted Net Income Net Income – Yum China Holdings, Inc. $ 215 $ 212 $ 507 $ 499 Special Items, Net Income –Yum China Holdings, Inc. — — — — Adjusted Net Income – Yum China Holdings, Inc. $ 215 $ 212 $ 507 $ 499 Reconciliation of EPS to Adjusted EPS Basic Earnings Per Common Share $ 0.58 $ 0.55 $ 1.36 $ 1.27 Special Items, Basic Earnings Per Common Share — — — — Adjusted Basic Earnings Per Common Share $ 0.58 $ 0.55 $ 1.36 $ 1.27 Diluted Earnings Per Common Share $ 0.58 $ 0.55 $ 1.35 $ 1.26 Special Items, Diluted Earnings Per Common Share — — — — Adjusted Diluted Earnings Per Common Share $ 0.58 $ 0.55 $ 1.35 $ 1.26 Reconciliation of Effective Tax Rate to Adjusted Effective Tax Rate Effective tax rate 25.8 % 25.2 % 26.9 % 26.2 % Impact on effective tax rate as a result of Special Items — — — — Adjusted effective tax rate 25.8 % 25.2 % 26.9 % 26.2 % Net income, along with the reconciliation to Adjusted EBITDA, is presented below: Quarter Ended Year to Date Ended 6/30/2025 6/30/2024 6/30/2025 6/30/2024 Net Income – Yum China Holdings, Inc. $ 215 $ 212 $ 507 $ 499 Net income – noncontrolling interests 18 16 39 36 Equity in net (earnings) losses from equity method investments (2) — (6) — Income tax provision 80 77 199 190 Interest income, net (25) (31) (51) (69) Investment loss (gain) 18 (8) 15 (16) Operating Profit 304 266 703 640 Special Items, Operating Profit — — — — Adjusted Operating Profit 304 266 703 640 Depreciation and amortization 110 118 219 235 Store impairment charges 13 15 19 19 Adjusted EBITDA $ 427 $ 399 $ 941 $ 894 Operating Profit, along with the reconciliation to Core Operating Profit, is presented below: Quarter ended % Change Year to Date Ended % Change 6/30/2025 6/30/2024 B/(W) 6/30/2025 6/30/2024 B/(W) Operating Profit $ 304 $ 266 14 $ 703 $ 640 10 Special Items, Operating Profit — — — — Adjusted Operating Profit $ 304 $ 266 14 $ 703 $ 640 10 Items Affecting Comparability — — — — F/X impact (1) — 5 — Core Operating Profit $ 303 $ 266 14 $ 708 $ 640 11 Total revenues 2,787 2,679 4 5,768 5,637 2 F/X impact (7) — 31 — Total revenues, excluding the impact of F/X $ 2,780 $ 2,679 4 $ 5,799 $ 5,637 3 Core OP margin 10.9 % 9.9 % 1.0 ppts. 12.2 % 11.4 % 0.8 ppts. Yum China Holdings, Inc. Segment Results (in US$ million) (unaudited) Quarter Ended 6/30/2025 KFC Pizza Hut All OtherSegments CorporateandUnallocated(1) Elimination Total Company sales $ 2,059 $ 545 $ 9 $ — $ — $ 2,613 Franchise fees and income 19 2 3 — — 24 Revenues from transactions with franchisees(2) 17 1 17 80 — 115 Other revenues 1 6 172 17 (161) 35 Total revenues $ 2,096 $ 554 $ 201 $ 97 $ (161) $ 2,787 Company restaurant expenses 1,710 472 9 — — 2,191 General and administrative expenses 61 26 8 36 — 131 Franchise expenses 9 1 — — — 10 Expenses for transactions with franchisees(2) 15 1 16 78 — 110 Other operating costs and expenses 1 5 168 17 (161) 30 Closures and impairment expenses, net 8 3 1 — — 12 Other income, net — — — (1) — (1) Total costs and expenses, net 1,804 508 202 130 (161) 2,483 Operating Profit (Loss) $ 292 $ 46 $ (1) $ (33) $ — $ 304 Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows: Quarter Ended 6/30/2025 KFC Pizza Hut All OtherSegments CorporateandUnallocated(1) Elimination Total GAAP Operating Profit (Loss) $ 292 $ 46 $ (1) $ (33) $ — $ 304 Less: Franchise fees and income 19 2 3 — — 24 Revenues from transactions with franchisees(2) 17 1 17 80 — 115 Other revenues 1 6 172 17 (161) 35 Add: General and administrative expenses 61 26 8 36 — 131 Franchise expenses 9 1 — — — 10 Expenses for transactions with franchisees(2) 15 1 16 78 — 110 Other operating costs and expenses 1 5 168 17 (161) 30 Closures and impairment expenses, net 8 3 1 — — 12 Other income, net — — — (1) — (1) Restaurant profit $ 349 $ 73 $ — $ — $ — $ 422 Company sales 2,059 545 9 — — 2,613 Restaurant margin 16.9 % 13.3 % (11.5) % N/A N/A 16.1 % Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows: Quarter Ended 6/30/2025 KFC Pizza Hut All OtherSegments CorporateandUnallocated(1) Elimination Total GAAP Operating Profit (Loss) $ 292 $ 46 $ (1) $ (33) $ — $ 304 Special Items, Operating Profit — — — — — — Adjusted Operating Profit (Loss) $ 292 $ 46 $ (1) $ (33) $ — $ 304 Items Affecting Comparability — — — — — — F/X impact (1) — — — — (1) Core Operating Profit (Loss) $ 291 $ 46 $ (1) $ (33) $ — $ 303 Quarter Ended 6/30/2024 KFC Pizza Hut All OtherSegments CorporateandUnallocated(1) Elimination Total Company sales $ 1,983 $ 530 $ 15 $ — $ — $ 2,528 Franchise fees and income 16 2 4 — — 22 Revenues from transactions with franchisees(2) 12 1 16 67 — 96 Other revenues 3 7 144 16 (137) 33 Total revenues $ 2,014 $ 540 $ 179 $ 83 $ (137) $ 2,679 Company restaurant expenses 1,663 460 14 — — 2,137 General and administrative expenses 60 27 10 36 — 133 Franchise expenses 8 1 — — — 9 Expenses for transactions with franchisees(2) 11 1 14 66 — 92 Other operating costs and expenses 2 6 142 16 (137) 29 Closures and impairment expenses, net 6 5 2 — — 13 Total costs and expenses, net 1,750 500 182 118 (137) 2,413 Operating Profit (Loss) $ 264 $ 40 $ (3) $ (35) $ — $ 266 Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows: Quarter Ended 6/30/2024 KFC Pizza Hut All OtherSegments CorporateandUnallocated(1) Elimination Total GAAP Operating Profit (Loss) $ 264 $ 40 $ (3) $ (35) $ — $ 266 Less: Franchise fees and income 16 2 4 — — 22 Revenues from transactions with franchisees(2) 12 1 16 67 — 96 Other revenues 3 7 144 16 (137) 33 Add: General and administrative expenses 60 27 10 36 — 133 Franchise expenses 8 1 — — — 9 Expenses for transactions with franchisees(2) 11 1 14 66 — 92 Other operating costs and expenses 2 6 142 16 (137) 29 Closures and impairment expenses, net 6 5 2 — — 13 Restaurant profit $ 320 $ 70 $ 1 $ — $ — $ 391 Company sales 1,983 530 15 — — 2,528 Restaurant margin 16.2 % 13.2 % 5.9 % N/A N/A 15.5 % Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows: Quarter Ended 6/30/2024 KFC Pizza Hut All OtherSegments CorporateandUnallocated(1) Elimination Total GAAP Operating Profit (Loss) $ 264 $ 40 $ (3) $ (35) $ — $ 266 Special Items, Operating Profit — — — — — — Adjusted Operating Profit (Loss) $ 264 $ 40 $ (3) $ (35) $ — $ 266 Items Affecting Comparability — — — — — — F/X impact — — — — — — Core Operating Profit (Loss) $ 264 $ 40 $ (3) $ (35) $ — $ 266 Year to Date Ended 6/30/2025 KFC Pizza Hut All OtherSegments CorporateandUnallocated(1) Elimination Total Company sales $ 4,267 $ 1,129 $ 18 $ — $ — $ 5,414 Franchise fees and income 40 4 7 — — 51 Revenues from transactions with franchisees(2) 33 3 36 164 — 236 Other revenues 2 13 342 34 (324) 67 Total revenues $ 4,342 $ 1,149 $ 403 $ 198 $ (324) $ 5,768 Company restaurant expenses 3,481 972 20 — (1) 4,472 General and administrative expenses 120 52 16 81 — 269 Franchise expenses 19 2 — — — 21 Expenses for transactions with franchisees(2) 29 3 33 162 — 227 Other operating costs and expenses 2 11 335 34 (323) 59 Closures and impairment expenses, net 13 3 2 — — 18 Other income, net — — — (1) — (1) Total costs and expenses, net 3,664 1,043 406 276 (324) 5,065 Operating Profit (Loss) $ 678 $ 106 $ (3) $ (78) $ — $ 703 Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows: Year to Date Ended 6/30/2025 KFC Pizza Hut All OtherSegments CorporateandUnallocated(1) Elimination Total GAAP Operating Profit (Loss) $ 678 $ 106 $ (3) $ (78) $ — $ 703 Less: Franchise fees and income 40 4 7 — — 51 Revenues from transactions with franchisees(2) 33 3 36 164 — 236 Other revenues 2 13 342 34 (324) 67 Add: General and administrative expenses 120 52 16 81 — 269 Franchise expenses 19 2 — — — 21 Expenses for transactions with franchisees(2) 29 3 33 162 — 227 Other operating costs and expenses 2 11 335 34 (323) 59 Closures and impairment expenses, net 13 3 2 — — 18 Other income, net — — — (1) — (1) Restaurant profit (loss) $ 786 $ 157 $ (2) $ — $ 1 $ 942 Company sales 4,267 1,129 18 — — 5,414 Restaurant margin 18.4 % 13.9 % (16.0) % N/A N/A 17.4 % Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows: Year to Date Ended 6/30/2025 KFC Pizza Hut All OtherSegments CorporateandUnallocated(1) Elimination Total GAAP Operating Profit (Loss) $ 678 $ 106 $ (3) $ (78) $ — $ 703 Special Items, Operating Profit — — — — — — Adjusted Operating Profit (Loss) $ 678 $ 106 $ (3) $ (78) $ — $ 703 Items Affecting Comparability — — — — — — F/X impact 4 1 — — — 5 Core Operating Profit (Loss) $ 682 $ 107 $ (3) $ (78) $ — $ 708 Year to Date Ended 6/30/2024 KFC Pizza Hut All Other Segments CorporateandUnallocated(1) Elimination Total Company sales $ 4,176 $ 1,117 $ 29 $ — $ — $ 5,322 Franchise fees and income 34 4 9 — — 47 Revenues from transactions with franchisees(2) 26 2 36 139 — 203 Other revenues 8 12 308 31 (294) 65 Total revenues $ 4,244 $ 1,135 $ 382 $ 170 $ (294) $ 5,637 Company restaurant expenses 3,434 974 31 — (1) 4,438 General and administrative expenses 121 54 20 78 — 273 Franchise expenses 17 2 — — — 19 Expenses for transactions with franchisees(2) 23 2 33 138 — 196 Other operating costs and expenses 6 11 304 30 (293) 58 Closures and impairment expenses, net 7 5 2 — — 14 Other income, net — — — (1) — (1) Total costs and expenses, net 3,608 1,048 390 245 (294) 4,997 Operating Profit (Loss) $ 636 $ 87 $ (8) $ (75) $ — $ 640 Reconciliation of GAAP Operating Profit to Restaurant Profit is as follows: Year to Date Ended 6/30/2024 KFC Pizza Hut All OtherSegments CorporateandUnallocated(1) Elimination Total GAAP Operating Profit (Loss) $ 636 $ 87 $ (8) $ (75) $ — $ 640 Less: Franchise fees and income 34 4 9 — — 47 Revenues from transactions with franchisees(2) 26 2 36 139 — 203 Other revenues 8 12 308 31 (294) 65 Add: General and administrative expenses 121 54 20 78 — 273 Franchise expenses 17 2 — — — 19 Expenses for transactions with franchisees(2) 23 2 33 138 — 196 Other operating costs and expenses 6 11 304 30 (293) 58 Closures and impairment expenses, net 7 5 2 — — 14 Other income, net — — — (1) — (1) Restaurant profit (loss) $ 742 $ 143 $ (2) $ — $ 1 $ 884 Company sales 4,176 1,117 29 — — 5,322 Restaurant margin 17.8 % 12.8 % (11.1) % N/A N/A 16.6 % Reconciliation of GAAP Operating Profit to Core Operating Profit is as follows: Year to Date Ended 6/30/2024 KFC Pizza Hut All OtherSegments CorporateandUnallocated(1) Elimination Total GAAP Operating Profit (Loss) $ 636 $ 87 $ (8) $ (75) $ — $ 640 Special Items, Operating Profit — — — — — — Adjusted Operating Profit (Loss) $ 636 $ 87 $ (8) $ (75) $ — $ 640 Items Affecting Comparability — — — — — — F/X impact — — — — — — Core Operating Profit (Loss) $ 636 $ 87 $ (8) $ (75) $ — $ 640 The above tables reconcile segment information, which is based on management responsibility, with our Condensed Consolidated Statements of Income. (1) Amounts have not been allocated to any segment for purpose of making operating decision or assessing financial performance as the transactions are deemed corporate revenuesand expenses in nature. (2) Primarily includes revenues and associated expenses of transactions with franchisees derived from the Company's central procurement model whereby the Company centrally purchasessubstantially all food and paper products from suppliers and then sells and delivers to KFC and Pizza Hut restaurants, including franchisees. SOURCE Yum China Holdings, Inc. WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM? 440k+ Newsrooms & Influencers 9k+ Digital Media Outlets 270k+ Journalists Opted In

Yum China Reports Second Quarter 2025 Results

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