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Yum! Brands: Reports Fourth Quarter and FY 2018 Results

Louisville / KY. (yb) Yum! Brands Inc. reported results for the fourth-quarter and year ended December 31, 2018. Fourth-quarter GAAP EPS was USD 1.04, a decrease of (17) percent. Full-year GAAP EPS was USD 4.69, an increase of 24 percent. Fourth-quarter EPS excluding Special Items was USD 0.40, a decrease of (58) percent. Full-year EPS excluding Special Items was USD 3.17, an increase of 7 percent.

Commentary

Greg Creed, CEO, said, «I am very proud of what we have been able to accomplish in just two short years since we announced the transformation of Yum!. In 2018, our diverse portfolio of iconic brands generated over USD 49 billion in system sales and ended the year with over 48,000 restaurants. Focus on our four growth drivers, increased collaboration and a new mindset are fuelling strong results. During 2018, system sales grew 5 percent with same store sales growth of 2 percent, and net unit growth of 4 percent, excluding the impact of Telepizza. Combined across our brands and led by over 2,000 world-class franchisees, we opened a record 8 gross new restaurants per day across the globe in 2018. As we move into 2019, we will continue to pursue even more growth, leverage our unprecedented scale, and maximize value for all Yum! stakeholders.»

David Gibbs, President, COO and CFO, continued, «Fourth-quarter results were a strong finish to a solid year, and serve as a healthy foundation for our 2019 guidance. I am also pleased that we made significant progress on our transformation commitments in 2018, having achieved our goal of becoming at least 98 percent franchised. Our commitment to being more focused, more franchised and more efficient is strengthening our enviable business model. Yum! is well positioned to leverage our massive scale and expand our capabilities in order to improve franchise unit economics and accelerate growth.»

Fourth Quarter Highlights

  • Worldwide system sales excluding foreign currency translation grew 6 percent, with Taco Bell at 9 percent, KFC at 7 percent and Pizza Hut at 2 percent.
  • We opened 865 net new units and added 1,282 Telepizza units for 7 percent net unit growth.
  • We refranchised 331 restaurants, including 227 KFC and 104 Taco Bell units, for pre-tax proceeds of USD 380 million. We recorded net refranchising gains of USD 255 million in Special Items. As of quarter end, our global franchise ownership mix increased to 98 percent.
  • We repurchased 7.8 million shares totalling USD 696 million at an average price of USD 90.
  • We reflected the change in fair value of our investment in Grubhub by recording USD 171 million of pre-tax investment expense, resulting in a negative (USD 0.41) impact to EPS on the quarter.
  • Foreign currency translation unfavourably impacted divisional operating profit by USD 14 million.

Full Year Highlights

  • Worldwide system sales excluding foreign currency translation grew 5 percent, with KFC at 6 percent, Taco Bell at 6 percent and Pizza Hut at 1 percent.
  • We opened 1,757 net new units and added 1,282 Telepizza units for 7 percent net unit growth.
  • We refranchised 660 restaurants, including 364 KFC, 97 Pizza Hut and 199 Taco Bell units, for pre-tax proceeds of USD 825 million, recording net refranchising gains of USD 540 million in Special Items.
  • We repurchased 28.2 million shares totalling USD 2.4 billion at an average price of USD 85.
  • We reflected the change in fair value of our investment in Grubhub by recording USD 14 million of pre-tax investment income, resulting in a positive USD 0.03 impact to EPS on the year.
  • Foreign currency translation favourably impacted divisional operating profit by USD 1 million.

For additional information please read Yum! Brands’s PDF file below (1046 KB).

20190212-YUM-Q4-2018
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