Yum China Holdings Inc (0M30.L) Q1 2025 Earnings Report

Yum China reported QQ1 2025 revenue of USD 2.981 billion, up 0.8% year over year and up 14.9% versus the prior quarter, signaling a modest top-line growth trajectory supported by brand breadth and improving mix. Gross profit of USD 572 million yielded a gross margin of 19.19%, while operating income reached USD 399 million for an operating margin of 13.38%. Net income of USD 292 million contributed to earnings per diluted share of USD 0.77 (basic USD 0.78), with YoY EPS growth of 8.3% and QoQ growth of 160%. EBITDA stood at USD 514 million (EBITDA margin ~17.2%), underscoring the efficiency of Yum China’s operating framework and scale in a competitive Chinese QSR market.

Free cash flow generation remained robust in QQ1 2025, with USD 452 million of operating cash flow and USD 315 million of free cash flow. Capital expenditure was USD 137 million, supporting ongoing store expansion and higher-return initiatives, while capital allocation reflected shareholder-friendly activity: USD 173 million in share repurchases and USD 90 million in cash dividends. The balance sheet remains solid with USD 1.992 billion in cash and short-term investments against USD 2.370 billion of gross debt (net debt USD 1.545 billion), and a current ratio of 1.26x. These cash generation characteristics provide a cushion for deleveraging and potential value-creation actions in a China‑driven growth backdrop.

Management commentary (based on the earnings release cadence) emphasized brand breadth, ongoing digital and omnichannel initiatives, and disciplined cost management as levers for margin stability in a competitive market. While the reported QQ1 2025 numbers reflect a resilient business, the company faces macro and industry risks tied to consumer sentiment, input costs, and competitive dynamics in China. Investors should monitor same-store sales progression, traffic trends, and the trajectory of commodity and labor costs, alongside potential capital allocation decisions (growth vs. returns) as the China quick-service restaurant landscape evolves.