British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — Debt Investor Presentation (July 2023)
20 slides from British American Tobacco P.l.c's debt investor presentation, July 2023
Slide 1: Resilient performance, renewed energy, full-year guidance on track
Resilient performance, renewed energy, full-year guidance on track Fixed Income Update Call - Interim Results 2023 Javed Iqbal – Interim Finance Director | 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: Resilient H1 performance, on track for Full Year
Resilient H1 performance, on track for Full Year Group New Category Profit from Operations / Earnings per Revenue Revenue Operating Margin Share +61.4% Reported +4.4% +29.0% £5,935m +118% £13,441m £1,656m +15.6ppts 176.0p 44.2% Adjusted Constant +2.6% * +3.6%** Currency £13,201m +26.6 %* £5,850m +5.
Slide 5: Adjusted results demonstrate continued delivery
Adjusted results demonstrate continued delivery Organic Group Adjusted Adjusted Diluted Revenue* Operating Profit** EPS** Key performance drivers +2.8% +3.6% +5.3% • New Category revenue*** +26.6% • Combustibles volume –5.8% • Cigarette price/mix^ +6.0% 12.5 12.8 5.8 176.3 167.4 • +£201m New Categor
Slide 6: Delivering strong New Category revenue momentum
Delivering strong New Category revenue momentum 33% 2019-2023 New Category revenue 27% CAGR H1’23 NC 3,267 revenue growth 2,454 1,698 * 1,335 1,049 12 months to 12 months to 12 months to 12 months to 12 months to Jun 2019 Jun 2020 Jun 2021 Jun 2022 Jun 2023 New Category revenue* (£m) Confident in de
Slide 7: As we continue to transform rapidly
As we continue to transform rapidly >30% Non-Combustibles revenue in 23 markets 16.6% Non-Combustibles 23 as a % of Group revenue 16 in H1’23 * 9 4 4 Jun'19 Jun'20 Jun'21 Jun'22 Jun'23 Number of markets* Reaching >30% Non-Combustibles revenue in 23 markets *Number of markets with over 30% Non-Combus
Slide 8: With Non-Combustibles revenue significantly higher in many markets
With Non-Combustibles revenue significantly higher in many markets Our Non-Combustible products revenue % H1’23* FRA AUS EST JPN UK DEN POR SLO ITA POL KAZ LIT SWE FIN GUA LAT D REP NOR GRE ICE CZE SLK UAE >30% >40% >50% >70% 8 * Revenue from Non-Combustible products as a % of total revenue in each
Slide 9: Our immediate areas of focus are…
Our immediate areas of focus are… 1 Sharpen execution 2 3 4 5 6 Drive Consistent U.S. Significantly Lead Enhance profitability in Combustibles strengthen THP responsible financial New Categories value growth New Category flexibility development Collaborative and inclusive culture 9
Slide 10: 1. Sharpening execution: Disciplined application of Market Archetypes
1 2 3 4 5 6 1. Sharpening execution: Disciplined application of Market Archetypes 1 2 3 4 5 6 Combustibles Drive Drive NC & Drive NC & Simplify & Multi- Value Growth Combustibles Protect Maximise Extract Value Category & Prepare for Value & Grow Combustibles Combustibles from Growth NC* NC Value Val
Slide 11: 2. Continuing to improve New Category profitability
1 2 3 4 5 6 2. Continuing to improve New Category profitability New Category contribution (£bn) Non-linear Profitability* 2021 2022 H1’23 progression 2020 2024 • Innovation phasing -0.4 -1.0 • Geographic -1.1 expansion and market openings +£1.1bn* On track to deliver New Category profitability* in 2
Slide 12: 3. Delivering early signs of U.S. Combustibles recovery
1 2 3 4 5 6 3. Delivering early signs of U.S. Combustibles recovery Activating focused plans to drive … implementing carefully and thoroughly consistent value… will take time YTD’23 v H1’22 YTD’23 v H2’22 May’23 v Jan’23 YTD’23 v H1’22 YTD’23 v H2’22 May’23 v Jan’23 Volume share* Value share* -40bps
Slide 13: California: Still adjusting across all categories post-flavour ban
1 2 3 4 5 6 California: Still adjusting across all categories post-flavour ban California Outstanding Vuse BAT Combustibles performance 45% volume exposure 60% volume exposure >85%* 100% Total volume retention Total volume retention vs pre-ban vs pre-ban Multi-category portfolio and agile commercial
Slide 14: 4. Accelerating innovation cadence across New Categories
1 2 3 4 5 6 4. Accelerating innovation cadence across New Categories DEFINE DISCOVERY DEVELOP DEPLOY Set consumer*-driven Rapid cycles Accelerated scale- Mass production & innovation direction of innovation up and launch and product (technologies readiness optimisation and products) Priority NC Val
Slide 15: 5. Lead responsible New Category development
1 2 3 4 5 6 5. Lead responsible New Category development Science & Proactive Innovation Driven Engagement Regulatory foresights Multi-Category portfolio and engagement Advocate for optimal Research-driven product regulatory and fiscal development frameworks Evidence-based by reducing the Promote enf
Slide 16: 6. Enhancing financial flexibility
1 2 3 4 5 6 6. Enhancing financial flexibility Increasing agility in the near term… …To drive long-term value creation P&L • Accelerate investment in transformation • Sustainable multi-category growth • Drive consistent combustibles value • Growing financial returns • Navigate regulatory development
Slide 17: Continued strong cash generation driving leverage reduction
Continued strong cash generation driving leverage reduction Strengthening our balance sheet alongside Strong Operating Cash Conversion* a manageable maturity profile Expecting another year of strong Making good progress towards middle of operating cash conversion >90%* 2-3x adj. net debt / adj. EBIT
Slide 18: Dynamic and flexible approach to capital allocation
Dynamic and flexible approach to capital allocation Cash Flow c.£40bn Investing Litigation/ 5 Year in our Transformation Fiscal/Regulatory outcomes Cumulative Free Cash Flow*** Free Cash Flow* Growing Leverage Bolt-On Share Dividend middle 2-3x** M&A Buy-Backs Committed to sustainably returning cash
Slide 19: On track to deliver full-year 2023 guidance
On track to deliver full-year 2023 guidance • Continued strong New Category revenue growth* 3-5% • Organic performance expected to be H2 weighted • U.S. commercial plans driving early signs of stabilisation Organic Revenue Growth* • U.S. SAP-related inventory phasing in H1’22 (Excluding Russia/Belar
Slide 20: 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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