British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — H1 2017 Earnings Presentation
27 slides from British American Tobacco P.l.c's earnings presentation, Jul 27, 2017
Slide 1: Interim Results Presentation
INTERIM RESULTS PRESENTATION 27th July 2017
Slide 2: Interim Results Presentation - Nicandro Durante, CEO
INTERIM RESULTS PRESENTATION 27th July 2017 NICANDRO DURANTE CEO
Slide 3: Important notice
Important notice 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 that is a citizen or resident or
Slide 4: A Good Organic Performance
INTERIM RESULTS 2017 A Good Organic Performance A good organic performance Strong growth in NGPs Reynolds acquisition complete
Slide 5: Interim Results Presentation - Ben Stevens, Finance Director
INTERIM RESULTS PRESENTATION 27th July 2017 BEN STEVENS Finance Director
Slide 6: Summary
INTERIM RESULTS 2017 Summary FINANCIALS VOLUME CURRENT CONSTANT Adjusted Revenue Volume +14.7% +2.5% -5.6% £7,648m 314bn Adjusted Profit +15.8% +3.2% Total Tobacco £2,841m -5.3% 326bn Adjusted Margin +30bps GDBs 37.1% -1.3% 155bn Adjusted EPS +21.0% +6.2% 134.4p A good organic performance
Slide 7: Operating Margin
INTERIM RESULTS 2017 Operating Margin* 37.3% +50 bps -20 bps 37.1% 36.8% 2016 HY Operating Margin Organic 2017 HY Organic Margin Organic adjustments 2017 HY Operating Margin *based on adjusted NTO and profit margin improvement
Slide 8: Asia Pacific – Regional Performance
INTERIM RESULTS 2017 Asia Pacific – Regional Performance FINANCIALS VOLUME CONSTANT CURRENT Adjusted Revenue Volume -2.9% +10.3% -9.8% £1,929m 95bn Adjusted Profit GDBs +2.3% +14.4% -13.1% £779m 38bn
Slide 9: Americas – Regional Performance
INTERIM RESULTS 2017 Americas – Regional Performance FINANCIALS VOLUME CONSTANT CURRENT Adjusted Revenue Volume +6.5% +19.1% -6.5% £1,381m 53bn Adjusted Profit GDBs +2.3% +14.8% +0.2% £549m 20bn
Slide 10: Western Europe – Regional Performance
INTERIM RESULTS 2017 Western Europe – Regional Performance FINANCIALS VOLUME CONSTANT CURRENT Volume +0.7% 58bn Adjusted Revenue +2.6% +13.4% Organic Volume £1,774m -0.4% 57bn Adjusted Profit GDBs +4.8% +16.8% +8.2% £619m 38bn
Slide 11: EEMEA – Regional Performance
INTERIM RESULTS 2017 EEMEA – Regional Performance FINANCIALS VOLUME CONSTANT CURRENT Adjusted Revenue Volume +5.9% +17.8% -4.6% £1,754m 108bn Adjusted Profit GDBs +3.5% +17.7% +1.2% £584m 59bn
Slide 12: Drivers of adjusted EPS growth
INTERIM RESULTS 2017 Drivers of adjusted EPS growth +16.4p 134.4p +1.1p -0.1p 118.0p +3.0p +2.9p 0.0p 111.1p EPS H1 2016 Profit Performance Net Finance Costs Associates Taxation Non-controlling EPS H1 2017 Exchange EPS H1 2017 interest constant FX current FX
Slide 13: Cash Flow
INTERIM RESULTS 2017 Cash Flow £234m £899m £187m £40m £326m £547m £2,841m £106m £465m £352m £1,083m Adj operating Non cash items Working Net Capex Pension fds - Net interest Tax Dividends to Restructuring Div from Free cash flow profit Capital chg s'fall funding NCI and associates settlements
Slide 14: Financing/Shareholder returns
INTERIM RESULTS 2017 Financing/Shareholder returns Net Debt up £1.7bn to £18.5bn Credit ratings confirmed at BBB+/Baa2 stable by S&P and Moody’s post announcement of RAI recommended offer Seeking medium-term recovery to BBB+/Baa1 Targeting Net Debt/EBITDA of around 3.0x by end 2019 with furt
Slide 15: RAI Acquisition: Accounting considerations
RAI ACQUISITION Accounting considerations US reported as separate division Annualised cost synergies of at least $400m by the end of the third full year following completion Benefits expected from early 2018 One off costs of around $350m US GAAP to IFRS accounting differences EPS accreti
Slide 16: Interim Results Presentation - Nicandro Durante, CEO
INTERIM RESULTS PRESENTATION 27th July 2017 NICANDRO DURANTE CEO
Slide 17: Share growth momentum continues
INTERIM RESULTS 2017 Share growth momentum continues +50bps +100bps GDB Share +120bps +90bps +90bps +40bps BAT Share +30bps +80bps +50bps +40bps +20bps +10bps +40bps +10bps 2010 2011 2012 2013 2014 2015 2016 2017 YTD Note: Reported Year-End Figures/ Independent retail audit data / FMC Only/YTD May’1
Slide 18: Global Drive Brands performance
INTERIM RESULTS 2017 › Impacted by market declines and downtrading in Malaysia and Indonesia › Vol: 27 bn, -4.5% › #1 international kretek brand in Indonesia › Share down 10bps › Strong performance in Romania and South Africa › Fastest growing cigarette brand in Japan › Vol: 32 bn, -1.6% › Strong sh
Slide 19: Differentiated strategy to win in NGPs
INTERIM RESULTS 2017 Differentiated strategy to win in NGPs Vapour THP SOCIAL CONSIDERATION TOBACCO TASTE AND AND HYGIENE SENSORIALS FLAVOUR EXPERIENCES NICOTINE SATISFACTION • Longer-term margin upside • Margin enhancing • New consumers • Greatest opportunity in markets with • New behaviours • High
Slide 20: Vapour
INTERIM RESULTS 2017 Vapour BAT VOLUME SALES GROWTH H1 ’17 YTD VS SPLY VAPOUR SHARE IN RETAIL Vype Q2 '16 Vype Q2 '17 10M / Chic Q2 '17 1 56.1% 50% 1 41.5% +17% +147% -25% 30.7% 13.0% 10.8% 10.0% 8.5% 8.0% 7.0% 6.0% 6.0% +50% +77% 5.0% 2.0% UK IT DE FR PO Source: BAT volume pack sales sell out; Vype
Slide 21: THP
INTERIM RESULTS 2017 THP JAPAN › Volume share around 8% share in Sendai OFFTAKE SHARE – SENDAI1 8% › National awareness at 25% post Sendai launch 7% 7% 7% 7% 7% 7% 7% 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% 6% 6% 6% 7% › Week 3 share at 3.1% across Tokyo, Osaka and Miyagi1 5% 5% 6% 6% › Flagship stores in Sen
Slide 22: Summary of results
INTERIM RESULTS 2017 Summary of results VOLUME SHARE FINANCIALS VOLUME CORPORATE ADJUSTED REVENUE ADJUSTED PROFIT ADJUSTED EPS SHARE -5.6% +30bps GDB GDB VOLUME SHARE +2.5% +3.2% +6.2% -1.3% +50bps constant currency constant currency constant currency Confident of another good year of constant curre
Slide 23: Interim Results Presentation
INTERIM RESULTS PRESENTATION 27th July 2017
Slide 24: Cigarette volumes by region HY 2017
INTERIM RESULTS 2017 Cigarette volumes by region HY 2017 Region Billions 2017 2016 % change Asia Pacific 95 105 -9.8 Americas 53 56 -6.5 Western Europe 58 57 +0.7 Eastern Europe, Middle East and Africa 108 114 -4.6 Group 314 332 -5.6
Slide 25: Adjusted Revenue by region HY 2017
INTERIM RESULTS 2017 Adjusted Revenue by region HY 2017 Region £m 2017 2016 % change Asia Pacific 2,191 1,987 +10.3 Americas 1,545 1,297 +19.1 Western Europe 1,961 1,729 +13.4 Eastern Europe, Middle East and Africa 1,951 1,656 +17.8 Group 7,648 6,669 +14.7 All numbers as reported
Slide 26: Adjusted profit from operations HY 2017
INTERIM RESULTS 2017 Adjusted profit from operations HY 2017 Region £m 2017 2016 % change Asia Pacific 871 761 +14.4 Americas 616 536 +14.8 Western Europe 689 590 +16.8 Eastern Europe, Middle East and Africa 665 565 +17.7 Group 2,841 2,452 +15.8 All numbers as reported
Slide 27: Foreign currencies
INTERIM RESULTS 2017 Foreign currencies Average Closing 2017 2016 2017 2016 Australian dollar 1.670 1.954 1.693 1.795 Brazilian real 4.006 5.308 4.304 4.283 Canadian dollar 1.681 1.907 1.687 1.736 Euro 1.163 1.284 1.139 1.203 Indian rupee 82.766 96.300 83.961 90.227 Japanese yen 141.509 159.892 145.
British American Tobacco p.l.c. — H1 2017 Earnings Presentation on 6ix