YUM 05/29/08

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Transcript of YUM 05/29/08

  • 1. Global Growth Company & Cash MachineSanford 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 F2007 30% U.S.24% China 40% ChinaChina46%U.S. U.S. 30%30% YRIYRI Note: Excludes corporate allocation 4. Consistent Double-Digit EPS Growth +15%+15% +14% +13%+13% +13% +11%Target Targetat leastat least10%10% 0203 040506 07 08 FNote: Prior to special items. 2005 growth rate is also prior to the impact of expensing stock options. 5. Significant Share Buybacks Share BuybacksAverage Diluted Shares ($ million)(million)12% 6111,410 597 reduction 1,056 983564 569 541 04 05 0607 04 050607Avg$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 shareDoubled $0.15$0.1030%Increase 15% Increase Initiated $0.05$0.00 4 5566 7 78 '0 '0'0'0'0 '0 '0'0 3 1 3 13131QQQQ Q Q Q Q Note: split-adjusted (May 2007 2-for-1 stock split) quarterly dividend 7. 4 Key Strategies to Drive GrowthDriveDriveBuild Leading BrandsBuild Leading Brands Aggressive International Aggressive Internationalin China in Every in China in Every Expansion and Build Expansion and Build Significant Category Significant CategoryStrong BrandsStrong Brands Everywhere Everywhere Drive DriveDramatically Improve Dramatically Improve Industry-Leading, Long-TermIndustry-Leading, Long-TermU.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 BreakfastExpansion Delivery Drive-thru New Cities Tea TimeEast Dawning New Menu 9. . . . with World-Class Infrastructure and Long-Term Competitive AdvantageSysco-like UnparalleledSysco-like Unparalleled Talent &DistributionDistribution Talent & Business ExperienceBusinessExperienceUnmatchedUnmatchedTargeted Targeted National Development National DevelopmentManufacturing Manufacturing Capability CapabilityNational Scale 500 Cities 10. Drive Aggressive YRI ExpansionYum! Restaurants International New BrandsIndiaRussiaEmerging/New MarketsWestern EuropeAfricaNon-FriedEnhanced Beverages Dine-In Leverage Existing BrandsNew Proteins DedicatedDelivery Breakfast 11. Huge YRI Growth Opportunity 5+5+ billion billion18,0001.3 1.3Restaurantsbillion billion 12,000 Restaurants300300 million million 2,600 RestaurantsU.S. Mainland China YRI Restaurants Per 602 3 Million People Note: Traditional units only (2007) 12. Dramatically Improve U.S. Brands Permanent Sales LayersPermanent Sales Layers+ Refranchising and RestructuringRefranchising and Restructuring + Investments in Brand Repositioning Investments in Brand RepositioningBusiness TransformationBusiness Transformation 13. Asset Leverage Opportunity2007 Average Unit Volume ($ million)2.02.0 1.9 1.51.1 1.0 0.8 Top 10% System Top 10% System Top 10% SystemSystemCompanyCompany Company 14. Vision for Sales Layers More Balanced Options New Dayparts Everyday Value Contemporary Beverages & Destination Desserts New Proteins Contemporary AssetsLeveraging 35,000 Restaurant Assets 15. Transforming Our U.S. BusinessFROM TOHMRPizza Pizza Pasta Chicken Mexican-Inspired Mexican Food Powerhouse Fried, Grilled,Fried Chicken Portable and More 16. 4th Key Strategy: Drive ValueDriveDriveBuild Leading BrandsBuild Leading Brands Aggressive International Aggressive Internationalin China in Every in China in Every Expansion and Build Expansion and Build Significant Category Significant CategoryStrong BrandsStrong Brands Everywhere Everywhere Drive DriveDramatically Improve Dramatically Improve Industry-Leading, Long-TermIndustry-Leading, Long-TermU.S. Brand Positions, U.S. Brand Positions,Shareholder and Franchisee Shareholder and Franchisee Consistency and Returns Consistency and Returns ValueValue 17. Drive High ROIC Focus investments on high-return opportunitiesMainland China brandsFranchise development at YRI Maintain strong discipline with earn the right to ownown principleReduce company ownership in U.S. 18. A Global Leader in Returns2007 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 Payout3-Year Annual Average 2005 20078.8% 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 CompanyChina U.S.YRIChina U.S.YRIGrowthGrowthValueFirst Inning Greatest Potential Asset LeverageOpportunity to Invest in Overseas and Emerging Markets 21. Commitment to ShareholdersAT LEAST 10% EPS GROWTH AT LEAST 10% EPS GROWTHLeader in International DevelopmentBuild Significant, Sustainable Sales LayersLeader in Free Cash Flow and ReturnsLeader in Shareholder Payouts 22. Yum!: A Defining Global Company People Focused Culture: Where everyone makes a differenceBreakthrough Results with Breakthrough InnovationGiving to Others: World Food Program22