Since our company was spun off from PepsiCo in 1997, I have had the privilege of leading our quest to become the Defining Global Company that Feeds the World. Over this time, our compound annual shareholder return has been 16% and we have been recognized among elite global companies for our leadership capability, recognition culture and ability to perform across the globe.
Growth opportunities outlined in this report abound at Yum! Brands. Although 2014 results fell short of our expectations, I’m confident our growth model is intact and we are well positioned to deliver at least 10% annual EPS growth on a sustainable basis.
On January 1, I stepped down as CEO and will serve as Executive Chairman and I’m pleased and proud that Greg Creed will be my successor.
Greg has everything it takes to be an outstanding CEO and take our company to the next level. First and foremost, he walks the talk of our culture and will continue to grow and develop it further. Next, he is a visionary business leader with a 20-year track record of success at Yum!. Over the past 9 years, Greg has transformed Taco Bell into an industry leader, elevating its esteem and establishing top-tier customer service levels. He is a breakthrough thinker, launching day parts like Fourth Meal and breakfast, and introducing major product lines such as Doritos® Locos Taco and Cantina Bell. Importantly, Greg has a passion for our global business, with deep international experiences at Unilever and at KFC and Pizza Hut in Australia and New Zealand. He is a well-rounded executive, having previously served as Yum! Brands Chief Operations Officer. There is no doubt in my mind that he is fully qualified and equipped with the knowledge, experience and positive energy we need to lead the company going forward.
In this Annual Report, Greg will share his perspectives on the business and his vision for the company.
I am truly honored...
...and grateful for the opportunity to lead Yum! Brands. As CEO, I am privileged to lead a phenomenal business with three iconic brands, vast global infrastructure and the franchise capability necessary to facilitate growth.
In 2014 we grew full-year EPS 4% to $3.09 per share, excluding Special Items. This was well below our 2014 full-year target of at least 20%. These results were heavily skewed by the challenges handed to our biggest division as we suffered two highly publicized supplier incidents in two years in China. However, we know our brands are resilient and continue to believe this setback is temporary. After our first supplier incident, which negatively impacted 2013, we recovered and delivered strong results in the first half of 2014. Specifically, our China Division operating profit increased 116% and Yum! EPS grew 27% through our first two quarters, prior to Special Items. We were convinced 2014 would be a year of at least 20% EPS growth. The July Shanghai Husi supplier incident changed all that. However, we are fully committed to achieving at least 10% EPS growth in 2015 and I'm confident we have the people and plans in place to deliver double-digit growth going forward.