2015 was a landmark year for Yum! Brands. Late in the year we announced our intention to spin-off our China business into an independent, publicly-traded company. Our decision to create two powerful, independent, focused growth companies is a classic example of one plus one being greater than two. Yum! China will be China’s largest independent restaurant company, with no meaningful external debt. New Yum! will be a global, diversified, franchise company with an optimized capital structure. The separation of these two distinctly different businesses will give shareholders the best of both worlds. Yum! China will be a focused China investment with strong national appeal and major growth potential and will target annual ongoing EPS growth of approximately 15%. This company will have tremendous new-unit potential in China’s growing consumer economy and inherent value from improving unit economics. Yum! China will also have a self-sufficient business model, funding all of its capital needs, while having the potential for stock buybacks in year one. New Yum! will be an even more highly franchised company with three leading global brands, leadership in emerging markets, clear average-unit volume and new-unit growth opportunities, less volatile cash and earnings streams, and high shareholder cash returns. New Yum! will target approximately 15% annual ongoing shareholder return, defined as EPS growth plus dividend yield. In addition, we intend to return approximately $6.2 billion in capital to our shareholders prior to the completion of the spin-off. This is an incremental return of capital beyond our regularly planned dividend.
Needless to say, 2016 will be a transformational year for Yum! as we complete this spin-off. The fundamental goal of Yum!, however, is unchanged. We are 100% dedicated to building and strengthening KFC, Pizza Hut and Taco Bell all around the world as strong brands are critical to delivering sustained growth and creating long-term shareholder value.
In 2015 EPS excluding Special Items grew to $3.18 per share, or 3%, despite a 7% decline in the first half of the year. With restaurants in over 130 countries and territories we have foreign exchange exposure from the impact of translating our foreign profits from local currencies into U.S. dollars. In 2015 we had six percentage points of foreign currency headwinds. Excluding these currency headwinds full-year EPS grew 9% despite lower than expected sales in our China division. While 2015 EPS was below our initial expectations, I was pleased with the sales momentum we generated across the majority of Yum! in the fourth quarter and look forward to building on this in 2016.
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For 2015 Financial Highlights, Click Here.