British American Tobacco Malaysia Bhd. · MYX:BAT
British American Tobacco Malaysia Bhd — Q3 2013 Earnings Presentation
29 slides from British American Tobacco Malaysia Bhd's earnings presentation, Oct 17, 2013
Slide 1: Analyst Briefing Quarter 3, 2013
ANALYST BRIEFING QUARTER 3, 2013 17th Oct 2013
Slide 2: Agenda
AGENDA Industry Review, Market Share and Volumes BATM Review Quarter 3, 2013 Results Other Highlights Future Prospects
Slide 3: Q3 2013 Headlines
Q3 2013 Headlines • YTD PAT/EPS increased by 5.5% v’s SPLY • +1.50/pk consumer price increase (September 2013) • Growth in domestic market share • Good growth of new variants • Upgraded Peter Stuyvesant July 2013 • Dunhill Kretek Launch • Significant y.o.y. growth in contract manufacturing volume
Slide 4: Industry Review, Market Share, Volumes and BATM Review
INDUSTRY REVIEW, MARKET SHARE, VOLUMES AND BATM REVIEW
Slide 5: Business update
Business update Cigarette Excise Tax Increase • The Government has gazetted a cigarette excise tax increase of 14% after two years of no excise tax increase. • Subsequently, British American Tobacco Malaysia increased the prices of our cigarettes across the board by RM1.50 per pack except for Pall M
Slide 6: Industry Volume: Recovering in Q2'13
Industry Volume: Recovering in Q2’13 Source: Industry Exchange, IMS Volumes (Kretek + Whites) Industry Volumes (bns) 2012 2013 Big3 + Sub VFM + Kretek 3.69 3.65 3.56 3.47 3.33 5.9% 2.6% 2.39 2.22 6.8% Q1 Q2 Jul-Aug Q4 Volume Variance % Variance Volume Variance % Variance Jul-Aug 13 vs. Jul-Aug 13 vs
Slide 7: Premium segment further grew to 74.1% SOM
Premium segment further grew to 74.1% SOM Source: YTD Aug’13 Malaysia Retail Audit (Base: Total Legal Market – White + Kretek) 72.5 74.1 YTD 2012 YTD 2013 SOM % 23.4 23.7 4.0 2.2 Premium Aspirational Premium VFM SPLY 2012 YTD 2013 Share of Premium YTD Aug 2012 Share of Premium YTD Aug 2013 BAT 72.3
Slide 8: Illicit Whites a Significant Concern
Illicit Whites a Significant Concern. Source: Illicit Cigarette Study, 2010 - 2013 *Survey methodology does not capture sub-VFM brands selling at below minimum price. 36.3 36.1 40 34.9 -0.2ppt 34.5 34.7 33.8 -1.6ppt +0.2ppt 33.6 -1.1ppt -0.2ppt 35 30 25 21.9 22.7 24.5 % Illicit 23.6 22.5 23.5 23.0 2
Slide 9: BAT witnessed mild fluctuations in the latest two months
BAT witnessed mild fluctuations in the latest two months J&J - Oil 3 Source: YTD Aug’13 Malaysia Retail Audit (Base: TotalPeriod Ended –AUG13 Legal Market White +| Hide NA's | Colour % Chg | Share of Sum(PROD) Kretek) +1.5ppt BAT brands Pall Mall & P. Stuyvesant are showing month-on-month improvemen
Slide 10: Dunhill: Vigorously grows in 2013 despite Dunhill Red impacted by Ramadan
Dunhill: Vigorously grows in 2013 despite Dunhill Red BAT impacted by Ramadan Source: YTD Aug’13 Malaysia Retail Audit (Base: Total Legal Market – White + Kretek) +1.2ppt +2.5ppt Mar 2013 Sept 2013 Q4 2012 Dunhill Ice – High Menthol Capsule Dunhill Switch Reinforcement campaign Dunhill Kretek - Long
Slide 11: Dunhill Kretek: Initial feedback is good
DUNHILL Kretek: Initial feedback is good Aug 2013 - Petronas Share price rise 1.7% due to the launch Sep 2013 - National MARKET COMMENTS: • Consumer are attracted to its classy and premium packaging and reloc function which helps to keep their product fresh • Dunhill Kretek is being indicated as a l
Slide 12: Dunhill Lights resilient at 3.3% SOM in Aug'13
BAT Dunhill Lights leads in Premium Lights Source: YTD Aug’13 Malaysia Retail Audit (Base: Total Legal Market – White + Kretek) Dunhill Lights resilient at 3.3% SOM in Aug’13 Source: Malaysia Retail Audit (Base: Total Whites, YTD AUG13) Produk ini mengandungi lebih 4,000 bahan kimia termasuk tar, ni
Slide 13: DH Ice adding to the growth with an SOM of 0.5%
DH Ice adding to the growth with an SOM of 0.5% Source: YTD Aug’13 Malaysia Retail Audit (Base: Total Legal Market – White + Kretek) DH Ice National SOM (%) 3.99 3.80 3.80 3.85 3.58 3.74 National 0.52 0.49 0.51 3.54 3.67 launch 0.48 0.48 3.56 3.53 3.61 3.49 3.43 3.47 0.32 3.31 3.34 DH Ice National l
Slide 14: Peter Stuyvesant gains post upgrade
BAT Aspirational Premium gradually rising in recent months Source: YTD Aug’13 Malaysia Retail Audit (Base: Total Legal Market – White + Kretek) BAT -1.7ppt -0.9ppt Source: Malaysia Retail Audit (Base: Total Whites, YTD AUG13) Peter Stuyvesant gains post upgrade
Slide 15: Pack Upgrade of Peter Stuyvesant in July'13
BAT Pack Upgrade of Peter Stuyvesant in July’13 Source: YTD Aug’13 Malaysia Retail Audit (Base: Total Legal Market – White + Kretek) -0.1ppt +0.1ppt Source: Malaysia Retail Audit (Base: Total Whites, YTD AUG13) Mini Merchandising Blister Pack Unit Produk ini mengandungi lebih 4,000 bahan kimia terma
Slide 16: Pall Mall upwards trend
Pall Mall upwards trend BAT since Jun’13 Source: YTD Aug’13 Malaysia Retail Audit (Base: Total Legal Market – White + Kretek) -0.5ppt Jun 2013: -0.1ppt Pall Mall Menthol Range Re-launch Jul 2012: Sep 2012: Feb 2012: Pall Mall Core Range Re-launch Pall Mall OT Pack Upgrade Source: Malaysia Retail Aud
Slide 17: Financial Highlights
FINANCIAL HIGHLIGHTS OBACCO
Slide 18: Q3: Volume and Revenue Mix
Q3: Volume and Revenue Mix Domestic & DF Volumes (mn stick)) Contract Manufacturing Volumes (mn stick) Cigarette Semi Finished 2,933 - 14.0% 2,377 - 1.9% 2,298 2,255 1,834 1,724 Q3 2012 Q3 2013 Q3 2012 Q3 2013 Revenue - Domestic & DF (RM'mn) Revenue - Contract Manufacturing (RM'mn) Cigarette Semi Fi
Slide 19: Revenue and Net Turnover
Revenue (RM'mn) Net Turnover (RM'mn) 1,160 1,171 +2.4% + 1.0% 625 640 Q3 2012 Q3 2013 Q3 2012 Q3 2013
Slide 20: Key Metrics: Total Quarter 3, 2013 vs. SPLY
Key Metrics: Total Quarter 3, 2013 vs. SPLY Gross Profit (RM'mn) Operating Expenses (RM'mn) 403 391 135.4 +3.1% -23.9% 103.1 Q3 2012 Q3 2013 Q3 2012 Q3 2013 Profit from Operation (RM'mn) Earning per Share (Sen/share) 301 76.8 +18.1% +17.1% 257 65.0 Q3 2012 Q3 2013 Q3 2012 Q3 2013
Slide 21: YTD Q3: Volume and Revenue Mix
YTD Q3: Volume and Revenue Mix Contract Manufacturing Volumes (mn stick) Domestic & DF Volumes (mn stick)) Cigarette Semi Finished 6,742 4,981 6,827 - 2.9% 6,630 + 21.0% 5,468 5,891 YTD Q3 2012 YTD Q3 2013 YTD Q3 2012 YTD Q3 2013 Revenue - Domestic & DF (RM'mn) Revenue - Contract Manufacturing (RM'm
Slide 22: Key Metrics: Total YTD Quarter 3, 2013 vs. SPLY
Key Metrics: Total YTD Quarter 3, 2013 vs. SPLY Revenue (RM'mn) Net Turnover (RM'mn) + 4.7% +11.1% 1,867 3,424 1,680 3,271 YTD Q3 2012 YTD Q3 2013 YTD Q3 2012 YTD Q3 2013
Slide 23: Key Metrics: Total YTD Quarter 3, 2013 vs. SPLY
Key Metrics: Total YTD Quarter 3, 2013 vs. SPLY Gross Profit (RM'mn) Operating Expenses (RM'mn) 1,127 1,134 +0.6% 310 - 13.2% 269 YTD Q3 2012 YTD Q3 2013 YTD Q3 2012 YTD Q3 2013 Profit from Operation (RM'mn) Earning per Share (Sen/share) 866 +4.5% 222.2 829 210.5 +5.5% YTD Q3 2012 YTD Q3 2013 YTD Q3
Slide 24: Dividends for Q3 2013 at 68 cents per share
2012: RM2.72 - 97.4% Payout YTD 2013: 91.8% Payout 0.77 0.68 0.68 0.68 0.65 0.65 0.65 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Dividends for Q3 2013 at 68 cents per share
Slide 25: Future Prospects
Future Prospects Concern about soft economic conditions and Government actions to address budget deficit impacting disposable incomes; Recent excise increase was against industry advice, and only likely to fuel illicit trade unless significant actions taken by the Government; In light of excis
Slide 26: Other Highlights
OTHER HIGHLIGHTS OBACCO
Slide 27: Recent External Recognition
Recent External Recognition The Edge Billion Ringgit Club Awards 2013 • Most Profitable Company in Consumer Products Sector (4th consecutive year) • Most Profitable Company in Big Cap Companies category (more than RM10 billion market capitalisation) (3rd consecutive year) BAT Malaysia rated 6th in w
Slide 28: Your thoughts & input welcomed
Current Option 1 Option 2 Quarterly Biannual Triannual (Feb, Apr, Jul, Oct) HY (Jul) HY (Jul) FY (Feb) Q3 (Oct) FY (Feb) Your thoughts & input welcomed
Slide 29: Thank You
THANK YOU BRITISH AMERICAN TOBACCO MALAYSIA
British American Tobacco Malaysia — Q3 2013 Earnings Presentation on 6ix