British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — Morgan Stanley Consumer Retail Conference 2010
21 slides from British American Tobacco P.l.c's conference presentation, November 2010
Slide 1: Morgan Stanley Consumer Retail Conference
Morgan Stanley Consumer Retail Conference New York November 2010 Morgan Stanley Consumer Retail Conference November 2010
Slide 2: Important information
Important information This presentation has been prepared by British American Tobacco p.l.c. ("British American Tobacco") for information purposes only and does not constitute, or form part of any offer or invitation to acquire, or any solicitation of any offer to acquire any securities of British A
Slide 3: Ben Stevens, Finance Director
Ben Stevens Finance Director Morgan Stanley Consumer Retail Conference November 2010
Slide 4: Agenda
Agenda Overview of the Group Group strategy Trading environment and outlook Summary Questions & answers Morgan Stanley Consumer Retail Conference November 2010
Slide 5: Back in November 2008…
Back in November 2008… In previous economic downturns… Tobacco is not recession proof… … but recession resistant Our geographic diversity mitigates risk Consumers are loyal to their brands Switching where they buy not what they buy High unemployment may lead to changing behaviour Balan
Slide 6: Group overview
Group overview Focus on Global Drive Brands + Vogue & Viceroy 180+ markets Leadership in over 50 markets Over 60,000 employees $65.5 bn gross turnover $22.8 bn net turnover $7.2 bn adjusted profit from operations Market capitalisation – top 10 in the UK Morgan Stanley Consumer Retail Confere
Slide 7: Consistent market outperformance
Consistent market outperformance Annual total shareholder return of 25%* Daily BATS Relative performance to FTSE100 since 2000 31/12/1999 - 01/11/2010 (GMT) Price Value GBp GBp 2,200 8.5 8 2,000 7.5 1,800 7 6.5 1,600 6 1,400 5.5 5 1,200 4.5 4 1,000 3.5 800 3 2.5 600 2 400 1.5 1 .12 .123 2000 2001 20
Slide 8: A strategy that works
A strategy that works Morgan Stanley Consumer Retail Conference November 2010
Slide 9: Delivering through good times and bad
Delivering through good times and bad CAGR 2004 to 2009: Adjusted EPS 14% 152.8 Dividends per share 17% 128.8 108.5 66.6 99.5 +13% 89.3 83.7 87.1 76.6 66.2 55.9 47.0 +19% 41.9 33.2 2004 2005 2006 2007 2008 2009 H1 2010 Adj EPS Div per share Morgan Stanley Consumer Retail Conference November 2010
Slide 10: The business model
The business model Organic volume growth 2008 +0.4% Volumes 1 - 1½% 2009 -3.3% 2010 9mths -3.0% Organic revenue growth 2008 +7% Revenue 3 - 4% 2009 +5% 2010 H1 +2% Organic profit growth 2008 +10% Profit 6 – 7% 2009 +7% 2010 H1 +8% Adjusted EPS growth 2008 +19% 2009 +19% HSF Adj
Slide 11: Competitive edge: Geographic diversity
Competitive edge through: Geographic diversity -Strong emerging markets exposure -Top 5 markets - Canada - Brazil - South Africa Commodity-based economies with stable currencies - Russia - Australia Morgan Stanley Consumer Retail Conference November 2010
Slide 12: Competitive edge: Diversified and balanced brand portfolio
Competitive edge through: Diversified and balanced brand portfolio -Balance between premium, mid and low priced segments -Global drive brands have maintained growth despite recession -Strong regional and local brands Morgan Stanley Consumer Retail Conference November 2010
Slide 13: Competitive edge: Marketing expertise - Trade marketing and distribution
Competitive edge through: Marketing expertise -Trade marketing and distribution - Successful trade partnerships - Mutually beneficial relationships - Rated best overall supplier in the FMCG industry in 13 out of 22 markets surveyed - Extending direct distribution – over 50% of volume Morgan Stanley
Slide 14: Competitive edge: Marketing expertise - Consumer insights
Competitive edge through: Marketing expertise -Trade marketing and distribution -Consumer insights - World class understanding of consumer trends and tastes - Responding to the needs of consumers Morgan Stanley Consumer Retail Conference November 2010
Slide 15: Competitive edge: Leader in innovation - Nanotek
Competitive edge through: Marketing expertise -Trade marketing and distribution -Consumer insights -Leader in innovation - Nanotek – first successful king-size super-slim - Accounts for 16% of Kent global volume - Kent Nanotek 1.2% share in Russia Morgan Stanley Consumer Retail Conference November 2
Slide 16: Competitive edge: Leader in innovation - Dunhill Reloc
Competitive edge through: Marketing expertise -Trade marketing and distribution -Consumer insights -Leader in innovation - Dunhill “Reloc” packaging - Almost 10% share in GCC - Dunhill share growth in Malaysia Morgan Stanley Consumer Retail Conference November 2010
Slide 17: Competitive edge: Leader in innovation - capsule technology
Competitive edge through: Marketing expertise -Trade marketing and distribution -Consumer insights -Leader in innovation - Success with capsule technology - Kent, Kool and Lucky Strike - Broad geographic roll out Morgan Stanley Consumer Retail Conference November 2010
Slide 18: Global Drive Brands: volume growth index 1999-2009
Competitive edge through: Marketing expertise -Trade marketing and distribution -Consumer insights -Leader in innovation Global Drive Brands: volume growth index - 1999-2009 260 British American 240 Tobacco 220 200 180 160 140 JTI 120 100 PMI 80 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Slide 19: Competitive edge: Productivity
Competitive edge through: Productivity -5 year programme 2003-07 - Annualised cost savings of £1 billion by 2007 - Focus on overheads and indirects and the supply chain -5 year programme 2008-12 - Targeting 35% operating margin by 2012 Target 36% 35.0% 34% 30.7% 31.4% 30.0% 32% 30% 28.1% 28.7% 28% 2
Slide 20: Competitive environment
Competitive environment: Recession’s impact on consumers continues -Key markets have been less affected -Volumes continue to hit by down-trading to illicit Continued good pricing -Revenue growth despite softer volumes -Governments’ share higher in 2010 Bi-polar recovery -East v west -Developed v
Slide 21: Outlook
Outlook Good momentum with brands and market share Well positioned in those markets least affected by recession Innovations pipeline is strong On track for another good year of earnings growth Strong cash flow Productivity strategy is delivering Balance sheet in excellent shape Morgan Stanley
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