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YUMC's Revenue Down 11% YoY in 2Q2020, of Which KFC Falls 10%
COVID-19 and China
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YUMC's revenue reached USD 1.9 billion in 2Q2020, basically in line with Bloomberg's estimate of USD 1.962 billion. The adjusted net profit recorded USD 136 million, a YoY decrease of 23%. Among the brands in the YUMC family, KFC and Pizza Hut's revenues were down 10% and 17% YoY, respectively.

Gross profit remained stable, despite the impact of the epidemic. The company achieved a gross profit of USD 260 million, with a gross profit margin of 13.7%, which was one percentage point higher than 14.7% in the same period last year. Among them, KFC and Pizza Hut saw gross profit margins of 14.6% and 11.2%, respectively. Operating profit fell 38% YoY to USD 128 million, compared to USD 204 million in the same period last year.

YUMC opened 169 stores in 2Q2020, including 142 KFC, 8 Pizza Hut and 19 other brand stores. As of June 30, 2020, the loyalty programs of KFC and Pizza Hut have enabled it to have more than 265 million members worldwide. KFC members contributed 65% to the sales, while Pizza Hut contributed 53%.

Looking forward to the 2020 target, YUMC stated that the company would continue to maintain its goal of 800-850 stores throughout the year, and the annual capital expenditure will remain in the range of USD 500 million to USD 550 million.

Editor: Luke Sheehan
ANALYST
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