British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — Deutsche Bank Conference, June 2014
25 slides from British American Tobacco P.l.c's conference presentation, June 2014
Slide 1: British American Tobacco
British American Tobacco Ben Stevens – Finance Director Deutsche Bank Conference, June 2014
Slide 2: Winning strategy with proven track record
Winning strategy with proven track record • Consistently executed strategy • Challenging trading conditions in recent years • High single figure constant earnings growth delivered • Sustainable business model • Well positioned for continued success
Slide 3: A winning formula
A winning formula Developing markets driving growth Strong brands driven by innovation Continuous margin improvement Commitment to shareholder returns
Slide 4: A winning formula
A winning formula Developing markets driving growth Strong brands driven by innovation Continuous margin improvement Commitment to shareholder returns
Slide 5: A strong geographic footprint
A strong geographic footprint Volume NTO/Mille NTO CAGR split % (relative) (08-13) Developing 71% 1.0x +7.5% Developed 29% 1.8x +3.2% Developed markets – source of current profits Developing markets – driver of future profits Source: Company internal data, NTO at current rates
Slide 6: Developing markets - long term growth opportunity
Developing markets - long term growth opportunity Adult Population Adult Middle Class % of World Consumption Spend 3400 1600 50 3200 1400 40 3000 1200 1000 30 millions millions 2800 800 2600 20 600 2400 400 10 2200 200 2000 0 0 2013 2023 2013 2023 2013 2023 By 2023 +350m adults Adult Middle Class Co
Slide 7: … and BAT is well positioned for the future
… and BAT is well positioned for the future Strong, growing positions in key Investing in new opportunities developing markets BAT Market Share in Top 10 Developing Markets Philippines China by volume China 0.1% Russia 21.4% Indonesia 6.5% Indonesia India (ITC) 80.0% Philippines 0.6% Turkey 20.5% Vi
Slide 8: A winning formula
A winning formula Developing markets driving growth Strong brands driven by innovation Continuous margin improvement Commitment to shareholder returns
Slide 9: A strong, growing international brand portfolio…
A strong, growing international brand portfolio… Global Drive Brands International Brands GDB+IBs (including Rothmans) +7.8% p.a. +1.8% p.a. +5.4% p.a. CAGR 2002-2013 130 GDB and Cigarette Volume – 2009-2013 GDB volume 120 110 100 Cigarette volume 90 2009 2010 2011 2012 2013
Slide 10: … driven by Innovations…
… driven by Innovations… Innovations rollout since 2009 100 GDB share growth (including Rothmans) Jan 12 – Dec 13 Exit Shares 80 AsPac +110bps Number of markets 60 Americas +460bps W Europe + 80bps 40 EEMEA +170bps Group +150bps 20 Source: AC Nielsen Retail Audit 0 09 10 11 12 13 09 10 11 12 13 11 1
Slide 11: … which deliver results…
… which deliver results… 2.3 5,000 4,000 2.1 3,000 1.9 T40 share 2,000 2,500 1,000 1.7 2,000 Tubes volume (mn) 0 1,500 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 1,000 Strong global share growth driven by Reloc Tubes launched in 14 markets 500 Russia volume (mn) 800 0 1,400 700 Q1 12 Q2 12 Q3 12 Q4 12
Slide 12: … and strong share growth
… and strong share growth +40bps 300 Premium Share +80bps 200 +10bps Corporate +60bps Share +20bps +20bps +10bps +40bps 100 0 2010 2011 2012 2013 2014 Q1 Source: AC Nielsen Retail Audit
Slide 13: Product innovation is sustainable
Product innovation is sustainable • Quality products (44% superior, 97% parity or better) • Better products taste better, consumers will pay more • Differentiated taste and flavour will become increasingly important • Visibly differentiated innovations with consumer USP • Vertically integrated busin
Slide 14: And further growth opportunities exist in NGPs
And further growth opportunities exist in NGPs • Volume remains <1% of WE consumption • Industry growth rates have slowed • Consumer behaviour evolving rapidly • Products in development – eCigs, medicinal and HnB Category is a growth opportunity
Slide 15: A winning formula
A winning formula Developing markets driving growth Strong brands driven by innovation Continuous margin improvement Commitment to shareholder returns
Slide 16: Excellent margin progression…
Excellent margin progression… 38.1% 37.1% 35.5% £400m profit delivery 33.2% 31.3% 2009 2010 2011 2012 2013 Source: Company’s financial results, all years restated for IAS19
Slide 17: … with continuing opportunities for growth
… with continuing opportunities for growth • Factory Footprint – 67 factories closed since 2000 • Complexity reduction – packaging rationalisation and standardisation, reduced pack formats • Pricing – price mix in the range of 5-8%, premium share growth (+150 bps since 2010) • OneSAP / TaO Confident
Slide 18: Driven by a single global operating model
Driven by a single global operating model OneSAP driving margin • Single instance of SAP drives standardisation of operating model • Shared Services and Centres of Expertise: • Increased value added activities • Enable End Markets to focus on Brands, Trade, Regulation and Talent OneSAP rollout progr
Slide 19: A winning formula
A winning formula Developing markets driving growth Strong brands driven by innovation Continuous margin improvement Commitment to shareholder returns
Slide 20: Committed to growing earnings and dividends…
Committed to growing earnings and dividends… 216.6 207.5 CAGR in dividends 13% p.a. 194.6 CAGR in EPS 11% p.a. 175.7 153.0 142.4 134.9 Adj EPS Div per share 128.8 126.5 Payout ratio 114.2 108.5 98.1 99.5 89.3 83.7 75.8 66.5 69.2 66.2 61.8 57.9 55.9 47.0 38.8 41.9 32.0 35.2 29.0 2000 2001 2002 2003 2
Slide 21: … and returning cash to shareholders
… and returning cash to shareholders £bn, Current FX 2009 2010 2011 2012 2013 Total Free Cash Flow 2.6 3.2 3.3 3.3 3.4 15.8 Dividends Paid 1.8 2.1 2.4 2.5 2.6 11.4 Share Buy-Back 0.0 0.0 0.8 1.3 1.5 3.6 Total Shareholder Returns 1.8 2.1 3.2 3.8 4.1 15.0 Total Shareholder Returns as % of FCF 69% 66%
Slide 22: Driving a strong TSR performance
Driving a strong TSR performance Growth in the value of a hypothetical £100 holding over 5 years 300 263.9 250 237.0 226.7 Valur of Hypothetical £100 holding 199.9 197.7 200 188.4 161.4 156.2 150 131.1 148.3 143.3 119.8 100 50 0 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Jun 14 British American Tobac
Slide 23: Q1 Trading
Q1 Trading • Volume improving • Pricing on track • Continued good share growth • Premium share again grew faster than corporate share • GDBs continued to perform well • Innovations double digit volume growth • Adverse FX – translational and transactional • Remain confident of high single figure earn
Slide 24: A winning strategy
A winning strategy • A powerful brand portfolio • World leading innovations • Geographic diversity • Fully integrated supply chain • Margin growth opportunities • Committed to shareholder returns Proven strategy continues to deliver
Slide 25: British American Tobacco
British American Tobacco Ben Stevens – Finance Director Deutsche Bank Conference, June 2014
British American Tobacco — Deutsche Bank Conference, June 2014 on 6ix