Imperial Brands Plc · LSE:IMB
Imperial Brands — CAGNY 2023
40 slides from Imperial Brands's conference presentation, Feb 22, 2023
Slide 1: CAGNY February 2023
CAGNY FEBRUARY 2023 1|
Slide 2: Disclaimer
Disclaimer Certain statements in this presentation conditions. These and other factors could Company for current or future financial constitute or may constitute forward-looking adversely affect the outcome and financial years will necessarily match or exceed the statements. Any statement in this ef
Slide 3: CAGNY 2021: Outlined a New Five-Year Strategy
CAGNY 2021: Outlined a New Five-Year Strategy TWO YEARS ON… WE ARE BUILDING A STRONGER, MORE CONSUMER-FOCUSED BUSINESS Building stronger capabilities Delivering a stronger tobacco performance Creating a stronger NGP business A stronger financial performance and capital returns Opportunity to invest
Slide 4: Imperial Brands is a Global Consumer Business
Imperial Brands is a Global Consumer Business GLOBAL FOOTPRINT; FOCUSED ON FIVE PRIORITY MARKETS 4th Americas Europe largest global tobacco player 36% 45% 26,000 employees £7.8bn net revenue Africa Asia Australasia £3.7bn 19% adjusted op profit 4 | CAGNY | 22 February 2023 FY22 results
Slide 5: A Range of Tobacco and Nicotine Offerings
A Range of Tobacco and Nicotine Offerings MEETING A WIDE RANGE OF CONSUMER NEEDS AND OCCASIONS Cigarettes Fine cut Vapour Heated Tobacco Snus Cigars Papers Modern Oral 5 | CAGNY | 22 February 2023
Slide 6: 6|
6|
Slide 7: Our New Strategy, Purpose and Vision
Our New Strategy, Purpose and Vision CREATING A COMMON HIGH-PERFORMANCE CULTURE FOR IMPERIAL BRANDS OUR PURPOSE “Forging a path to a healthier future for moments of relaxation and pleasure” OUR VISION “To build a strong challenger business powered by responsibility, focus and choice” 7 | CAGNY | 22
Slide 8: Building a Strong Challenger Business
Building a Strong Challenger Business DIFFERENTIATED APPROACH EMBRACES A CHALLENGER MINDSET Creating a System of Capabilities with a Challenger Mindset Greater focus Providing A strong Faster, on key consumer choice competitive more agile battlegrounds and through retail partner with decision-making
Slide 9: On Track with Our Five-Year Transformation
On Track with Our Five-Year Transformation WE HAVE ACHIEVED A LOT TWO YEARS IN, BUT THERE IS MORE TO GO PHASE 1 - STRENGTHENING PHASE 2 – FURTHER OPPORTUNITIES Jan 2021 Sept 2021 Jan 2023 FY23-25 Top 5 markets NGP trials Exited aggregate • Leveraging investments in share growth brand portfolio Strat
Slide 10: |
10 |
Slide 11: Strengthened Leadership Team
Strengthened Leadership Team COMPLETELY REFRESHED TEAM WITH SIGNIFICANT FMCG EXPERIENCE • Broadest FMCG experience of any global executive tobacco team • Eight out of ten new to Imperial • Combined with deep tobacco experience • With strong capabilities in key areas • And experience of driving corpo
Slide 12: Putting the Consumer at the Centre
Putting the Consumer at the Centre BUILDING OUR CONSUMER FACING CAPABILITIES Leveraging the Strengths and Capabilities of a Newly Established Global Consumer Office Brand and Revenue growth Consumer insight portfolio Innovation NGP management management More consistent use Bringing greater Unlocking
Slide 13: Building a Performance-Based Culture
Building a Performance-Based Culture MAJOR CHANGE PROGRAMME EMBEDDING PURPOSE, VISION & BEHAVIOURS Nov 2021 2021/2022 End 2022 End 2023 Embedding 90 senior leaders 350 senior leaders 1,100 leaders All employees within incentives Global survey exceeds Global Engagement Score “I understand what our ex
Slide 14: Simplified and Efficient Operations
Simplified and Efficient Operations NEW WAYS OF WORKING DELIVERING SELF-HELP OPPORTUNITIES Achieved to date Next phase: Leveraging new ways of working Strengthened Delivering new operating models in corporate functions – the consumer-facing enhancing focus on consumer and growth organisation Enhanci
Slide 15: Building our ESG Capabilities
Building our ESG Capabilities SIGNIFICANT PROGRESS MADE IN 2022; CLEAR PRIORITIES FOR 2023 ✓ Appointed new Head of ESG ✓ Enhanced ESG team supported by rigorous governance process ✓ Consumer health and climate change main priorities To view our ESG investor webinar click here POSITIVE HEALTHIER SAFE
Slide 16: |
16 |
Slide 17: Focus on Priority Markets
Focus on Priority Markets PRIORITY MARKETS REPRESENT C. 70% OF WIDER MARKETS REPRESENT C. 30% OF COMBUSTIBLE OPERATING PROFIT COMBUSTIBLE OPERATING PROFIT • Every market plays a clear role c. 33% 70% • Exited low margin/loss-making markets 30% c. 18% • Developing potential platforms for future growt
Slide 18: Operational Levers in our Priority Markets
Operational Levers in our Priority Markets SIX OPERATIONAL LEVERS IN OUR FIVE PRIORITY MARKETS 1 Increase participation in premium Brand equity building & 2 Drive and rejuvenate local jewel brands portfolio management 3 Optimise our approach to the value segment 4 Maximise the potential of fine-cut
Slide 19: Priority Markets: Premium Brand Investment
Priority Markets: Premium Brand Investment 1 Increase participation in premium • Targeted investment in quality & taste perception • Refreshed pack design rolled-out nationally following local trial • Contemporary advertisement campaign • Leveraging retailer partnerships Innovative retail partnershi
Slide 20: Priority Markets: Jewel Brand Investment
Priority Markets: Jewel Brand Investment 2 Drive and rejuvenate local jewel brands • Leveraging our strong • Revitalising a strong local heritage brands UK brand • Pack re-design • Driven share gains incorporating Spanish through innovation street artists resonate with new filter and with urban cult
Slide 21: Priority Markets: Value Segment and Fine-Cut Investment
Priority Markets: Brand Investment 3 Optimise our approach to the value segment 4 Maximise the potential of fine-cut tobacco category Activation to drive awareness of Riverstone fine cut • Fifth price tier now 40% of industry volumes in Australia • Launched Lambert & Butler in the fifth price tier i
Slide 22: Priority Markets: Sales Force Investment
Priority Markets: Sales Force Investment ENHANCING SALES COVERAGE DRIVE PERFORMANCE IN AND EFFECTIVENESS UNDER-PENETRATED AREAS Increasing sales force Increased coverage across numbers under-represented retail channels c. 2,100 Perfect store and partnerships with key Extend focus to under- accounts
Slide 23: Stabilising our Priority Market Share
Stabilising our Priority Market Share TARGETED INVESTMENT STRENGTHENING OUR SHARE OF MARKET AVERAGE PRIORITY MARKET PRIORITY MARKET SHARES SHARE PERFORMANCE (12 month share Δ FY22) +35bps +90 bps Objective is to stabilise share performance -85 bps +85 bps -6bps -10bps -9bps +5 bps -28bps -29bps +20
Slide 24: |
24 |
Slide 25: Our Purpose: Forging a Path to a Healthier Future
Our Purpose: Forging a Path to a Healthier Future for Moments of Relaxation and Pleasure NGP provides potentially reduced risk alternatives to cigarettes Heated The relative risk scale indicates their relative harm Tobacco Oral Nicotine Combustible Vape Nicotine Replacement Cigarettes Snus Pouches T
Slide 26: Consumer Adoption Varies by Market
Consumer Adoption Varies by Market EUROPE IS THE LARGEST NGP REGION IN OUR FOOTPRINT NGP penetration of Penetration by nicotine product in priority markets by RSV nicotine pool (by RSV £bn) 1% 1% 8.2% 8.1% 3% 1% 5% 6% 200 5% 1% 150 98% 100% 100 92% 94% 92% 93% 50 92% 0 Europe US USA Germany UK Spain
Slide 27: Differentiated Approach Plays to Our Strengths
Differentiated Approach Plays to Our Strengths OUR CONSUMER-LED APPROACH WILL IMPROVE CONSUMER ACCEPTANCE Targeted Innovation Focused and Tight market Product consumer through efficient focus differentiation investment partnership investment Focused on Differentiated Investment in More agile and Foc
Slide 28: NGP: Differentiated, Challenger Approach
NGP: Differentiated, Challenger Approach VALIDATION OF OUR CONSUMER-FOCUSED APPROACH Targeted investment and recognised consumer acceptance are driving revenue growth 2020 Now and the future… • Portfolio overly focused on • Rebooted strategy embracing a multicategory vapour approach • Ageing vapour
Slide 29: NGP: EVP Innovation Delivers Upgraded Pod Device
NGP: EVP Innovation Delivers Upgraded Pod Device LAUNCH OF BLU 2.0 IN FRANCE, UK AND SPAIN blu 2.0 • Upgraded 2.0 device • Improved battery life • Better pod performance • Flavour expansion to meet consumer demand • Refreshed end-to-end consumer experience 29 | CAGNY | 22 February 2023
Slide 30: NGP: Innovation Delivers All-New Vapour Device
NGP: Innovation Delivers All-New Vapour Device LAUNCH OF BLU BAR IN FRANCE, UK AND SPAIN blu bar • Broadening the consumer appeal of the blu brand • Targeting adult smokers/vapers • New convenient format • Diverse flavour range • Targeted market roll-out, with a responsible launch framework 30 | CAG
Slide 31: NGP: Innovation Delivers Upgraded 2.0 Device
NGP: Innovation Delivers Upgraded 2.0 Device LAUNCH OF PULZE 2.0 UNDERWAY IN FOUR EUROPEAN MARKETS Pulze 2.0 • Innovation focused on: nicotine satisfaction, quality, simplicity and sensory experience • Redesigned device: one of the smallest all-in-one devices • 25+ sessions from single charge • New
Slide 32: NGP: Modern Oral Nicotine Innovation
NGP: Modern Oral Nicotine Innovation PORTFOLIO INNOVATION THROUGH FLAVOURS Zone X • Investing in the Nordics and selected European markets • Innovation driving consumer interest and growth • Innovative flavours launched 32 | CAGNY | 22 February 2023
Slide 33: Accelerating Our Pace of Innovation
Accelerating Our Pace of Innovation FASTER, MORE AGILE, MORE CONSUMER-LED Sept 2021 Apr 2022 Sept 2022 Feb 2023 Pulze 1.0 New iD Pulze 1.0 Pulze 2.0 trials crushball markets launched flavours expanded launched blu 2.0 trials in four French blu 2.0 national cities Two new flavour launches Launch of “
Slide 34: |
34 |
Slide 35: A Clear Five-Year Plan With Two Phases
A Clear Five-Year Plan With Two Phases GOOD PROGRESS IMPLEMENTING PHASE ONE OF OUR STRATEGY FY21 TO FY22 FY23 TO FY25 PHASE ONE – STRENGTHENING PHASE TWO – IMPROVING RETURNS Gradually improving trajectory with 5-year CAGR of 1-2% Net FY21 FY22* FY23 guidance revenue +1.4% +1.5% +1-2% Delivered ahead
Slide 36: Strategy Stabilised Financial Delivery
Strategy Stabilised Financial Delivery SUPPORTING STRONG AND SUSTAINABLE CASH GENERATION IMPROVING TOBACCO & NGP IMPROVED TOBACCO & NGP COMBINED WITH NET REVENUE GROWTH* (£m) OPERATING PROFIT MARGINS HIGH CASH CONVERSION 44.2% 2.3% 43.5% 107% 103% 102% 41.2% 1.4% 0.8% FY20 FY21 FY22 FY20 FY21 FY22 F
Slide 37: Cash Generation Supports Capital Returns
Cash Generation Supports Capital Returns CAPITAL ALLOCATION FRAMEWORK DEVELOPED ALONGSIDE STRATEGY SUSTAINABLE FREE CASH FLOW SUPPORTS ALL FOUR CAPITAL ALLOCATION PRIORITIES Investing in the Strong, efficient Progressive Surplus capital 1 strategy 2 balance sheet 3 dividend 4 returns Guiding to Main
Slide 38: Attractive Valuation
Attractive Valuation OPPORTUNITY TO INVEST IN GLOBAL CONSUMER GOODS BUSINESS WITH ATTRACTIVE VALUATION FREE CASH FLOW YIELD DIVIDEND YIELD DIVIDEND COVER 14.4% +7.2% 1.9x compared to 5.8% compared to 3.6% compared to 1.8x global FMCG average global FMCG average global FMCG average 7% DIVIDEND YIELD
Slide 39: CAGNY 2023: Further Opportunities To Build On
CAGNY 2023: Further Opportunities To Build On MORE CONFIDENT THAN EVER IN OUR FUTURE Building stronger capabilities Delivering a stronger tobacco performance Creating a stronger NGP business A stronger financial performance and capital returns Opportunity to invest in further upside at attractive va
Slide 40: CAGNY February 2023
CAGNY FEBRUARY 2023 40 |