Yum China Holdings, Inc.

Worth knowing

• Profit growing, cash flow isn't. Profit +110% since 2022 (an unusually weak year for profit), operating cash flow +3.8%.Profit +110% since 2022, operating cash flow +3.8%.

  Yum China's reported profit rose 110% since 2022, but the cash its operations generate changed +3.8%. When profit and cash diverge like this, it's worth understanding why (for example, customers paying more slowly or gains that aren't cash).Yum China's reported profit rose 110% since 2022, but the cash its operations generate changed +3.8%. When profit and cash diverge like this, it's worth understanding why.

• Returning more cash than it generates. Paid out $3.8B vs $2.3B of free cash flow over the 3 fiscal years to 2025.

  Yum China returned $3.8B to shareholders over three years, 165% of the free cash flow it produced. That gap has to be covered by cash reserves or new debt, which can't last indefinitely.

• Borrowing rising faster than profit. Since 2022 (an unusually weak year for operating profit): debt +1400%, operating profit +105%.Since 2022: debt +1400%, operating profit +105%.

  Yum China's debt grew 1400% since 2022 while operating profit changed +105%.

• Profit recovered from an unusually weak 2022. Since 2022 (an unusually weak year for operating profit): revenue +23%, operating profit +105%.Since 2022: revenue +23%, operating profit +105%.

  Since 2022, Yum China's revenue grew 23% while operating profit grew 105%: each extra dollar of sales is adding more profit.