Yum! Brands The Global Growth Company and Cash - Corporate-ir
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Yum! Brands The Global Growth Company and Cash Machine Tim Jerzyk SVP Investor Relations & Treasurer Information herein as of February 12, 2007 This presentation will include forward-looking statements that reflect management’s expectations based on currently available data. However, actual results are subject to future events and uncertainties. The information in the presentation related to projections or other forward-looking statements may be relied on subject to the safe harbor statement posted on our Web site: www.yum.com. No Duty to Update The information in this presentation is current as of February 12, 2007. While the presentation remains on the company’s Web site, the company assumes no duty to update the information to reflect subsequent developments. Consequently, the company will not update the information contained in the presentation, and investors should not rely on the information as current or accurate after May 01, 2007. YUM Investment Proposition GLOBAL GLOBAL GROWTH GROWTH HIGH HIGH RETURNS RETURNS GLOBAL FREE” CASH GLOBAL ““FREE” CASH SUBSTANTIAL SUBSTANTIAL CASH CASH PAYOUTS PAYOUTS TO TO SHAREHOLDERS SHAREHOLDERS Long Runway for Global Growth 4+ 4+ billion billion 20,000+ Restaurants 1.3 1.3 billion billion 11,900+ Restaurants 300 300 million million U.S. Note: Includes licensed units 2,100+ Restaurants YRI Mainland China New-Unit Development Focused on Growth & Returns ’04 – ’06 Net Restaurants Added Mainland China 1,040+ International Franchise-Only Markets 540+ India, KFC France, Russia 125+ TOTAL GROWTH All other markets including U.S. WORLDWIDE Note: Traditional restaurants 1,705+ (55) 1,650+ Yum! Competitive Position Strengthening Worldwide 3,425 Net New International Restaurants 5 Years 2,256 2,147 1,231 828 248 Source: Goldman Sachs 186 117 Yum! Competitive Position Strengthening Mainland China # Restaurants QSR Casual Dining 1,855 254 775 430 548 2001 63 2006 2001 5 5 2006 Extending YUM Growth for Long Term . . . CHINA CHINA Pizza Hut Home Service East Dawning India YRI YRI Russia KFC Continental Europe Taco Bell International U.S. U.S. Taco Bell Breakfast Focus on Global Growth AND Returns YRI FRANCHISED Restaurants 0 0 5 , +4 Mainland China COMPANY-OWNED Restaurants 10,800 2,000 6,296 +1 00 9 , .. . 16 X 125 ’97 ’08 E ’97 ’08 E Focus on Global Growth AND Returns # Company-Owned Restaurants 7,794 4,700 4,700 Fewer Fewer 60% 60% Less Less 3,100 ’97 ’08 E ALL Businesses Contribute to Growing “Free Cash” EBITDA After CAPEX ($ million) 1,187 U.S. 3% 3-Yr CAGR 831 632 731 672 541 419 China 25% 3-Yr CAGR 116 32 ’01 ’02 ’03 YRI 20% 3-Yr CAGR 227 244 167 Yum! 13% 3-Yr CAGR ’04 ’05 ’06 YUM Shareholder Payout Is Substantial ($ million) Net Income Shareholders’ Payout $1,179 $762 ’05 $1,127 $824 ’06 ’05 ’06 YRI . . . Deserves Premium Valuation Franchise (85%) . . . No capital required Capex is only ∼20% of EBITDA Consistent Profit Growth . . . 11% 5-Year CAGR Consistent Unit Growth . . . 7 straight years of 700+ new openings Diversified . . . Two brands operating across 110+ markets Look at an Example Equity Markets Franchise Business Units (FBU) Australia Asia Mexico Middle East United Kingdom Southern Africa Korea Carribbean/Latin America Continental Europe + BRI (C) Yum! Asia FBU Across 13 countries, spanning Japan to Fiji, from North to South Hawaii to Indonesia, from East to West 3,700+ franchise restaurants Operated by 27 local franchise partners A Region of Immense Diversity. . . GDP GDP Per Per Capita Capita ($ ($ U.S.) U.S.) Japan $35,000 Vietnam $700 Population Population Indonesia 250 million Singapore 4 million % % Population Population Under Under 18 18 Philippines 41% Japan 17% Asia FBU — A Significant Contributor to YRI 2006 Results Operating Profit New Restaurants ∼$100 ∼$100 million million Asia 271 785 Asia YRI 514 Rest of YRI ∼$300 million Rest of YRI Double-Digit Annual Profit Growth Since Spin-Off, 1997 CAGR Japan BALANCE OF ASIA System Sales 2% 10% Operating Profit 6% 15% Pillars to Drive Performance GREAT BRANDS Leadership Position in Asia GREAT PARTNERS Large Corporate Partners with 20+ Years’ Experience in Business GREAT PEOPLE Asian Hospitality Drives Customer Mania in Restaurants and RSC Growing in Asia with 5 Brands . . . COUNTRIES UNITS 11 2,300 10 1,100 5 230 2 60 3 30 # 1 in QSR Category in 5 markets #1 in Pizza Category in 9 markets Phenomenal Growth in Indonesia 2006 System Sales Growth Early Days in Vietnam +96% Vietnam +23% Indonesia Philippines 14% Hong Kong 11% Malaysia 8% Singapore Japan 7% 2% KFC Vietnam — Next Growth Engine 1st Restaurant Opened in 1997 Doubled Average Unit Sales since 1999 Doubled System Sales in 2006 100 Units by 2009 120 100 80 60 2006: 24 units 40 20 0 1998: 1 unit 1998 2004 2006 2009 Indonesia – A Market of Immense Opportunity 3,200 3,200 Miles Miles Home to 250 million people – 4th largest in the world World’s largest Muslim nation GDP per capita $1,400 300 ethnic groups with 250 languages 17,500 islands – 11,500 inhabited Strong Growth in Indonesia Doubled sales in last 3 years 140 Doubled sales in last 4 years Doubled sales in last 5 years Opened 80 new units in 2006 280 540 140 105 Great Future Growth Potential for Asia FBU Established markets still have tremendous potential for growth Penetrating new markets for our Brands Launched in Vietnam January 2007 Introduced in the Philippines Testing to begin in Japan Launched in Taiwan December 2006 Objectives — 2007 & Beyond AT AT LEAST LEAST 10% 10% EPS EPS GROWTH GROWTH ª At Least 1,000 New International Restaurants Dominant Restaurant Brands in Mainland China Profitable International Expansion ª Growing Cash Flow from Operations with High Returns ª Substantial Shareholder Payouts
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