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  • 1. Global Growth Company & Cash Machine Sanford Bernstein Strategic Decisions Conference May 29, 2008 David Novak Yum! Brands Chairman & CEO
  • 2. Power of Yum! GLOBAL PORTFOLIO GLOBAL GROWTH GLOBAL CASH GENERATION
  • 3. Not Your Ordinary Restaurant Company % of Total Operating Profit 2017 F 2007 30% U.S. 24% China 40% China China 46% U.S. U.S. 30% 30% YRI YRI Note: Excludes corporate allocation
  • 4. Consistent Double-Digit EPS Growth +15% +15% +14% +13% +13% +13% +11% Target Target at least at least 10% 10% ’02 ’03 ’04 ’05 ’06 ’07 ’08 F Note: Prior to special items. 2005 growth rate is also prior to the impact of expensing stock options.
  • 5. Significant Share Buybacks Share Buybacks Average Diluted Shares ($ million) (million) 12% 611 1,410 597 reduction 1,056 983 564 569 541 ’04 ’05 ’06 ’07 ’04 ’05 ’06 ’07 Avg $34 $20 $25 $25 Price* *Rounded and split adjusted
  • 6. Commitment to Dividends ~4x On May 6th, initial $0.25 27% increase, dividend from $0.15 to $0.20 $0.19 per share Doubled $0.15 $0.10 30% Increase 15% Increase Initiated $0.05 $0.00 4 5 5 6 6 7 7 8 '0 '0 '0 '0 '0 '0 '0 '0 3 1 3 1 3 1 3 1 Q Q Q Q Q Q Q Q Note: split-adjusted (May 2007 2-for-1 stock split) quarterly dividend
  • 7. 4 Key Strategies to Drive Growth Drive Drive Build Leading Brands Build Leading Brands Aggressive International Aggressive International in China in Every in China in Every Expansion and Build Expansion and Build Significant Category Significant Category Strong Brands Strong Brands Everywhere Everywhere Drive Drive Dramatically Improve Dramatically Improve Industry-Leading, Long-Term Industry-Leading, Long-Term U.S. Brand Positions, U.S. Brand Positions, Shareholder and Franchisee Shareholder and Franchisee Consistency and Returns Consistency and Returns Value Value
  • 8. Build Leading Brands in China Bigger Brands New Growth Brands • New Proteins • Breakfast Expansion • Delivery • Drive-thru • New Cities • Tea Time East Dawning • New Menu
  • 9. . . . with World-Class Infrastructure and Long-Term Competitive Advantage “Sysco-like” Unparalleled “Sysco-like” Unparalleled Talent & Distribution Distribution Talent & Business Experience Business Experience Unmatched Unmatched Targeted Targeted National Development National Development Manufacturing Manufacturing Capability Capability National Scale — 500 Cities
  • 10. Drive Aggressive YRI Expansion Yum! Restaurants International New Brands •India •Russia Emerging/New Markets •Western Europe •Africa •Non-Fried •Enhanced •Beverages Dine-In Leverage Existing Brands •New Proteins •Dedicated Delivery •Breakfast
  • 11. Huge YRI Growth Opportunity 5+ 5+ billion billion 18,000 1.3 1.3 Restaurants billion billion 12,000 Restaurants 300 300 million million 2,600 Restaurants U.S. Mainland China YRI Restaurants Per 60 2 3 Million People Note: Traditional units only (2007)
  • 12. Dramatically Improve U.S. Brands Permanent Sales Layers Permanent Sales Layers + Refranchising and Restructuring Refranchising and Restructuring + Investments in Brand Repositioning Investments in Brand Repositioning Business Transformation Business Transformation
  • 13. Asset Leverage Opportunity 2007 Average Unit Volume ($ million) 2.0 2.0 1.9 1.5 1.1 1.0 0.8 Top 10% System Top 10% System Top 10% System System Company Company Company
  • 14. Vision for Sales Layers • More Balanced Options • New Dayparts • Everyday Value • Contemporary Beverages & Destination Desserts • New Proteins • Contemporary Assets Leveraging 35,000 Restaurant Assets
  • 15. Transforming Our U.S. Business FROM TO HMR Pizza Pizza Pasta Chicken Mexican-Inspired Mexican Food Powerhouse Fried, Grilled, Fried Chicken Portable and More
  • 16. 4th Key Strategy: Drive Value Drive Drive Build Leading Brands Build Leading Brands Aggressive International Aggressive International in China in Every in China in Every Expansion and Build Expansion and Build Significant Category Significant Category Strong Brands Strong Brands Everywhere Everywhere Drive Drive Dramatically Improve Dramatically Improve Industry-Leading, Long-Term Industry-Leading, Long-Term U.S. Brand Positions, U.S. Brand Positions, Shareholder and Franchisee Shareholder and Franchisee Consistency and Returns Consistency and Returns Value Value
  • 17. Drive High ROIC Focus investments on high-return opportunities Mainland China brands Franchise development at YRI Maintain strong discipline with “earn the right to own” own” principle Reduce company ownership in U.S.
  • 18. A Global Leader in Returns 2007 ROIC 36% 27% 25% 22% 19% 18% 11% 11% Source: Thomson Financial Data; ROIC = EBIT (1 – Effective Tax Rate) / (Total Equity + Total Debt)
  • 19. Global Leader in Shareholder Payout 3-Year Annual Average 2005 – 2007 8.8% 7.7% 7.3% 5.9% 5.2% 5.2% 4.6% 4.3% Source: Thomson Financial Data Payout = (Dividends + Repurchase) / Average Market Capitalization
  • 20. Not Your Ordinary Restaurant Company China U.S. YRI China U.S. YRI Growth Growth Value “First Inning” “Greatest Potential” “Asset Leverage” Opportunity to Invest in Overseas and Emerging Markets
  • 21. Commitment to Shareholders AT LEAST 10% EPS GROWTH AT LEAST 10% EPS GROWTH Leader in International Development Build Significant, Sustainable Sales Layers Leader in Free Cash Flow and Returns Leader in Shareholder Payouts
  • 22. Yum!: A Defining Global Company People Focused Culture: Where everyone makes a difference Breakthrough Results with Breakthrough Innovation Giving to Others: World Food Program 22