British American Tobacco Malaysia Bhd. · MYX:BAT
British American Tobacco Malaysia Bhd — Q2 2020 Earnings Presentation
18 slides from British American Tobacco Malaysia Bhd's earnings presentation, Jul 23, 2020
Slide 1: Quarter 2, 2020 Performance
QUARTER 2, 2020 PERFORMANCE 23rd July 2020
Slide 2: Agenda
Agenda 1 Q2 Business Review and Financial Performance 2 Other Business Updates
Slide 3: Q2 Business Review and Financial Performance
Q2 Business Review and Financial Performance
Slide 4: Q2 Performance summary
Q2 Performance summary +10% +15% +1.9ppt vs Q1’20 69% vs Q1’20 vs Q1’20 Q4 2019 Legal domestic industry volume BAT domestic volume BAT share of market in Convenience Stores (CVS) Illegal FMC & vaping remains high Total BAT volume including Duty Free +12% Source: CMTM Big 3 Industry exchange, Ipsos C
Slide 5: BAT volume resilient, coming out strong post MCO
BAT volume resilient, coming out strong post MCO Industry Domestic Shipment Volume BAT Domestic Shipment Volume Monthly average (mns) Monthly average (mns) 529 +10% +15% 481 258 224 Q1-20 Q2-20 Q1-20 Q2-20 • Underlying stability in the legal market • Consumer shift from general trade to convenience
Slide 6: BAT share gain driven by Dunhill and Rothmans
BAT share gain driven by Dunhill and Rothmans Convenience stores (CVS) - Share of market (%) 46.6 46.3 46.3 45.5 45.6 44.7 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20
Slide 7: Strong Q2 performance
Strong Q2 performance +15%vs Q1’20 +14% +16% +6% vs Q1’20 vs Q1’20 vs Q1’20 BAT domestic volume Revenue Profit from operations Earnings per share Total BAT volume including Duty Free +12% Q2 growth delivered despite COVID-19 headwinds
Slide 8: Impact of COVID-19
Impact of COVID-19 Movement Control Order (MCO) Conditional MCO (CMCO) 18 March – 3 May 4 May – 9 Jun • Airports and land borders closed Allowed business sectors to resume operations • All hotel, restaurants, cafes and coffee shops closed • JB Factory closed. • Back to business and strict adherence
Slide 9: Q2 results showed an improvement despite COVID-19 headwinds
Q2 results showed an improvement despite COVID-19 headwinds Q1’20 Q2’20 vs Q1’19 vs Q2’19 Volumes -21% Volumes -16% Revenue -23% Revenue -15% Profit from operations -41% Profit from operations -22%
Slide 10: Underlying YTD financials pressured by black market and downtrading
Underlying YTD financials pressured by black market and downtrading Total Volume Revenue Profit from operations mns RM’mil RM’mil -18% -19% -32% vs SPLY vs SPLY vs SPLY
Slide 11: Continue to optimise cost base delivering efficiencies
Continue to optimise cost base delivering efficiencies Operating expenses (RM’mil) Restructuring expenses (RM’mil) -RM33mil -23% 80% Completion to date 142 109 RM15 mil RM11 mil Q4’19 YTD Q2’20 YTD Q2'19 YTD Q2'20 RM20mil - Cost base optimisation & resource allocation RM13mil - Overhead savings due
Slide 12: Dividend payout for Q2 2020
Dividend payout for Q2 2020 Earnings per share 19.1 sen Dividend per share 18.0 sen Payout ratio 94% Payment schedule for 19th Aug 2020
Slide 13: Other business updates
Pa a 1 ee 2") 4) 2 Py ye * x wT VWVw Other business updates MALAYSIA
Slide 14: H2 focus areas
H2 focus areas Stop the Black Market Multi-faceted regulatory framework Our portfolio
Slide 15: BATM taking action – STOP THE BLACK MARKET
BATM taking action – STOP THE BLACK MARKET • Public awareness campaign drawing attention to the seriousness of the tobacco black market • Driving national discussion on how the black market can be stopped • Overwhelmingly supportive response • Malaysians want: • “Increased law enforcement action” •
Slide 16: To STOP THE BLACK MARKET, a combined approach is needed
To STOP THE BLACK MARKET, a combined approach is needed Multi Agency Task Force re-established for stricter and rigorous enforcement Policy change → transhipment laws / single point of entry Excise moratorium Exploration of other excise measures to reduce the price gap between the legal and black ma
Slide 17: KYO launch in the VFM segment
KYO launch in the VFM segment VFM segment continues to grow driven by downtrading Launched 1 Jul 2020 60% 56% 65% 16% 19% 21% 28% 21% 14% 2018 2019 H1 2020 VFM AP Premium Share of segment (%)
Slide 18: BAT Malaysia Summary
BAT Malaysia Summary Fast and agile in adjusting to sales and distribution activities Q2 performance resilient despite COVID-19 headwinds. However, YTD results remained challenged by black market. Multi-faceted regulatory framework required to STOP THE BLACK MARKET
British American Tobacco (Malaysia) Berhad — Q2 2020 Earnings Presentation on 6ix