On August 6th, YUM! Brands (YUM) reported on Q2 FY 2024 ending June 30th. Revenue for the quarter was 2.2 percent below Zach’s estimate of $1,800 million but 1.5 percent above consensus for EPS. For the period, the Company posted net income of $367 million on revenue of $1,763 million, including company sales, franchise fees and advertising, generating a diluted EPS of $1.28. Comparative values for Q2 FY 2023 were net earnings of $418 million on revenue of $1,687 million with a diluted EPS of $1.46.
Revenue was up by 4.5 percent from Q2 FY 2023. Operating margin increased from 34.0 percent to 34.4 percent for the most recent quarter.
Digital sales attained “nearly” $8,000 in Q2 FY 2024 exceeding 50 percent of sales.
During Q4 2023 the holding Company purchased 218 KFC restaurants in England and Ireland that have been fully integrated into the Company.
The KFC division comprising 30,689 restaurants posted a three percent decline in same-store sales. This division generated $8,226 million in system-wide sales, an operating profit of $334 million representing an operating margin of 46.6 percent. Of total KFC sales expressed as a percentage, China amounted to 27; U.S.15; Europe, 11 and the remainder from Asia, Africa and the Middle East. KFC opened 438 restaurants in Q2.
The Pizza Hut division comprising 19,864 restaurants posted a three percent decline in same-store sales. This division generated $3,140 million in system-wide sales, an operating profit of $94 million with an operating margin of 39.3 percent. Of total Pizza Hut sales expressed as a percentage, U.S. amounted to 41; China.,18; Europe and Asia, 13 each. Pizza Hut recorded a net loss of 78 restaurants during Q1.
The Taco Bell division comprising 8,565 restaurants posted a five percent increase in same-store sales with $4,017 million in system-wide sales, operating profit of $250 million attaining an operating margin of 37.5 percent. During Q2, a net 10 restaurants were added.
In commenting on results David Gibbs, CEO stated “I’m incredibly pleased with how well our teams have managed through a challenging operating environment to deliver a 10 percent increase in Core Operating Profit. Our twin growth engines of Taco Bell U.S. and KFC International combined delivered 5 percent system sales growth led by 8 percent unit growth. Second-quarter results most clearly showcased the power of the Taco Bell brand thanks to unmatched, crave-worthy innovation and a successful menu expansion to a new platform offering, Cantina Chicken. Based on our first half results, we continue to expect to deliver at 
least 8 percent Core Operating Profit growth this year”. He concluded, “As we progress into the next phase of our technology and digital journey, we are laying the groundwork for another promising year in 2025 as evidenced by the expansion of drive-thru Voice AI technology at Taco Bell.”
On March 31st 2023 Yum Brands posted total assets of $6,395 million including goodwill and intangibles of $1,135 million against long-term debt of $11,140 million and an accumulated shareholders’ deficit of $7,630 million. Yum Brands! posted a market capitalization of $37,550 million on August 6th. The share has traded over 52 weeks in a range of $115.53 to $143.20 with a 50-day moving average of $132.99. On a trailing 12-month basis, operating margin was 34.5 percent, profit margin 22.9 percent with a return on assets of 25.2 percent. YUM! is held primarily by institutions that collectively hold 86.0 percent of equity.