British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — Debt Investor Presentation (July 2024)
18 slides from British American Tobacco P.l.c's debt investor presentation, July 2024
Slide 1: Building a Smokeless World
Building a Smokeless World Fixed Income Update Call - Interim Results 2024 Soraya Benchikh – Chief Financial Officer | Neil Wadey – Group Head of Treasury
Slide 2: Important Information
Important Information The information contained in this presentation in relation to British American Tobacco p.l.c. (“BAT”) and its subsidiaries has been prepared solely for use at this presentation. The presentation is not directed to, or intended for distribution to or use by, any person or entity
Slide 3: Important Information
Important Information Forward-looking Statements (continued) Additional information concerning these and other factors can be found in BAT’s filings with the U.S. Securities and Exchange Commission (“SEC”), including the Annual Report on Form 20-F and Current Reports on Form 6-K, which may be obtain
Slide 4: Returns-focused approach, enabled by empowered teams
Returns-focused approach, enabled by empowered teams Extensive global My Key Priorities Finance/Management career ▪ Various pivotal BAT roles ▪ Quality Growth focus ▪ Over two decades across three ▪ More balanced top and bottom- continents line performance ▪ Most recently: President for Europe ▪ Tar
Slide 5: Driving a sustainable transformation
Driving a sustainable transformation ▪ Our transformation continued in H1 ▪ Consumers of Smokeless* products up 1.4m to 26.4m ▪ Smokeless represents 17.9% of Group revenue, up 1.4ppts A Better Tomorrow ▪ Driving returns on more targeted NC investment ▪ £165m increase in category contribution** Build
Slide 6: Targeted investment year in 2024
Targeted investment year in 2024 H1 performance in line with Confident in H2 acceleration to expectations and guidance deliver FY guidance (Negative low-single digit revenue* and APFO**) (Low-single digit revenue* and APFO** growth) Key factors: Key drivers: ▪ Adverse U.S. wholesaler inventory moves
Slide 7: Good progress over the last 12 months… with more to do
Good progress over the last 12 months… with more to do Sharpen execution 1 2 3 4 5 Lead Drive Consistent U.S. Enhance Significantly responsible profitability in combustibles financial strengthen HP New Category New Categories value growth flexibility development Increased NC Encouraging results Pate
Slide 8: H1 performance in line with expectations
H1 performance in line with expectations Group New Category Profit from Diluted Earnings per Revenue Revenue Operations Share Reported -8.2% -0.4% -28.3% +13.8% £12,340m £1,651m £4,258m 200.3p Adjusted -0.8%* +7.4%* -0.9%** +1.3%** Organic Constant Currency 177.7p £12,944m £1,709m £5,809m On track f
Slide 9: H1 performance impacted by U.S. wholesaler inventory movements
H1 performance impacted by U.S. wholesaler inventory movements… HY24 U.S. HY24 Group Organic Organic Organic Organic adjusted for U.S. inventory^ adjusted for U.S. inventory^ -13.7% -11.4% -6.6% -6.4% Volume* Volume* Volume* Volume* -6.7% -4.8% -0.8% FLAT Revenue** Revenue** Revenue** Revenue** -5.1
Slide 10: U.S. commercial actions gaining traction
U.S. commercial actions gaining traction H1 volume share showing signs …to support sustainable value share of recovery… delivery HY23 FY23 HY24 HY23 FY23 HY24 vs. vs. vs. vs. vs. vs. HY22 FY22 HY23 HY22 FY22 HY23 Volume share* Value share* basis points basis points Total U.S. combustibles -30 -10 +1
Slide 11: New Category revenue growth driven by Velo
New Category revenue growth driven by Velo Heated Modern 28.4% Vapour Products Oral Total 2020 – 2024 CAGR £889m £469m £351m £1,709m HY24 vs. HY23 1.7 breakdown by 1.6 Category 1.3 48.7% 0.9 0.6 2.6% 7.4% HY20 HY21 HY22 HY23 HY24 -4.0% New Category revenue (£bn) HY24 New Category revenue and growth*
Slide 12: Quality Growth drives improved NC Contribution margin and profitability
Quality Growth drives improved NC Contribution margin* and profitability** New Category Contribution** (£m) New Category Contribution Margin* FY22 FY23 HY24 FY22 FY23 HY24 136 8% 0 0% -366 +£165m +10ppts HY24 HY24 Improvement -13% Improvement vs. HY23*** vs. HY23*** Improving contribution* across al
Slide 13: Group margin: Successfully offsetting transactional FX and inflationary headwinds
Group margin: Successfully offsetting transactional FX and inflationary headwinds with NCs and efficiency gains flat* +0.2% Improvement in New Categories Contribution contributing to Operating Margin Performance partly offset by Transactional FX and traditional business * On an organic, adjusted con
Slide 14: Continued strong cash generation driving leverage reduction
Continued strong cash generation driving leverage reduction Strong operating cash conversion* Strengthening our balance sheet alongside a manageable maturity profile Expecting another year of strong Expect to be within our narrowed 2-2.5x adj. operating cash conversion >90%* net debt / adj. EBITDA c
Slide 15: Dynamic approach to capital allocation as we transform
Dynamic approach to capital allocation as we transform Cash Flow c.£40bn Investing Litigation/ 5-Year in our transformation Fiscal/Regulatory outcomes Cumulative Free Cash Flow*** Free Cash Flow* Growing Narrowed 2.0-2.5x** Bolt-On Sustainable Dividend Leverage Corridor M&A Share Buy-Back Committed
Slide 16: 2024 is the first step in delivering our mid-term sustainable growth algorithm
2024 is the first step in delivering our mid-term sustainable growth algorithm 2026 2025 Sustainable mid-term growth Progressive improvement 2024 Targeted investment • Continued U.S. recovery 3-5% Organic Revenue • Improved NC profitability*** Growth* • Low-single digit organic revenue* • Strengthen
Slide 17: Q&A
Q&A Fixed Income Update Call - Interim Results 2024 Soraya Benchikh – Chief Financial Officer | Neil Wadey – Group Head of Treasury
Slide 18: Appendix
Appendix A1: Adjusting (Adj.) Adjusting items represent certain items which the Group considers distinctive based upon their size, nature or incidence. A2: Constant currency Constant currency – measures are calculated based on the prior year's exchange rate, removing the potentially distorting effec
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