British American Tobacco Malaysia Bhd. · MYX:BAT
British American Tobacco Malaysia Bhd — Q3 2019 Earnings Presentation
21 slides from British American Tobacco Malaysia Bhd's earnings presentation, Oct 31, 2019
Slide 1: Quarter 3, 2019 Performance
why BRITISH AMERICAN TOBACCO QUARTER 3, 2019 PERFORMANCE 31st October 2019
Slide 2: Agenda
01 Key highlights AGENDA 02 Q3 Business review 03 Other highlights 04 Q3 financial performance
Slide 3: Key Highlights
sl OL Key Highlights
Slide 4: Q3 highlights
Q3 highlights Industry volume Illegal trade BAT on -11% 65% -13% vs SPLY \ vs SPLY \ (Remains high) (-4% vs Q2'19) QS (-8% vs Q2'19) Revenue Profit from Market share -10% operations ae vs SPLY -16% -2.1ppt vs SPLY } \ Underlying vs SPLY \ \
Slide 5: Unregulated vaping disrupting total FMC segment
Unregulated vaping disrupting total FMC segment When Illegal cigarettes less accessible, consumers claim to… Maintain illegal 48% Adult smokers Vape 30% 4.6mn Cheap Illegal 65% cigarette Total market Roll Your Own (RYO) 8% Buy a legal brand 5% 25% Legal ~22bn sticks cigarette Quit/ Lower Consumption
Slide 6: Making sense of US vaping related acute lung injuries
Making sense of US vaping related acute lung injuries 1080 Cases as at 1st Oct 2019 Dr David O’ Reilly, Director, Scientific Research • Majority around 24 years old • Global BAT is engaging with CDC & FDA and offered their expertise • Most patients report a history of using THC (cannabis) • Oil-base
Slide 7: Q3 Business Review
sl OZ Q3 Business Review
Slide 8: The industry critically requires structural breakthrough in external environment
The industry critically requires structural breakthrough in external environment Illegal Volume Share (%) 63 63 62 63 61 YTD’19 vs SPLY 60 65 -1ppt Legal Volumes Monthly Avg (mns) Mainly driven by: 577 590 596 590 543 527 507 Unregulated vaping YTD’19 vs SPLY Public place smoking ban -11% PPS Ban SS
Slide 9: After 2018 stabilisation, market is back in turmoil
After 2018 stabilisation, market is back in turmoil 325 318 318 304 BAT Volumes Monthly Avg (mns) YTD’19 vs SPLY -13% -8% +4% 260 284 274 Q2’19 Q3’19 Q1’19 2018 2019 SST Pricing Q1 Q1-18 Q2 Q2-18 Q3 Q3-18 Q4-18
Slide 10: Driving harm reduction via Glo launch
Driving harm reduction via Glo launch Boost Mint Intense Fresh Dark Tobacco Boost Berry
Slide 11: Other highlights
sl OS Other highlights
Slide 12: BATM upholds high standard in governance and sustainability
BATM upholds high standard in governance and sustainability Sustained corporate governance standard Highest return on equity over 3 years The EDGE Billion Ringgit Club Excellence Award for Long Term Value Creation Top 20 Excellence Award for CG Disclosure BAT Global industry leader in DJSI for 18th
Slide 13: BATM – best company to work for
BATM – best company to work for Safety and health at workplace being recognized Being recognized as a excellent company to work for GOLD award in Asia Pacific HR EXCELLENCE AWARD: occupational health & safety ▪ Total Rewards Strategy ▪ Employee Engagement Obtained exception to participate in spite o
Slide 14: Q3 Financial performance
sl 4) Q3 Financial performance
Slide 15: Key financial highlights
Key financial highlights Q3’19 vs preceding quarter YTD vs SPLY LEGAL INDUSTRY VOL 1,522 mns -4% -11% VOLUME 781 mns -8% -13% REVENUE RM584 mil -9% -10% GROSS PROFIT RM162 mil -12% -22% OPERATING EXPENSES RM 49 mil -37% -5% PROFIT FROM OPERATIONS RM113 mil +5% -28% YTD financial performance impacted
Slide 16: Revenue and gross profit impacted due to market contraction and one-off benefit in 2018
Revenue and gross profit impacted due to market contraction and one-off benefit in 2018 REVENUE GROSS PROFIT GST removal 64 -13% underlying One-offs One-offs influencing 2018 gross profit: 111 71 -12% underlying • GST removal one-off benefit 1,988 • Tax stamps refund in 2018 1,735 601 526 YTD Q3'18
Slide 17: Protecting profit from operations with cost initiatives
Protecting profit from operations with cost initiatives OPERATING EXPENSE PROFIT FROM OPERATIONS -5% -16% YTD Q3’19 initiatives to reduce operating underlying expenses: 71 • Rationalizing investments 200 191 • Optimizing expenses 403 340 YTD Q3'18 YTD Q3'19 YTD Q3'18 YTD Q3'19
Slide 18: Q4 cost base initiatives – internal reorganisation
Q4 cost base initiatives – internal reorganisation BAT Malaysia • Legal market contract by ~45% vs 2015 BAT Global Reorganization • BAT financial performance greatly impacted • Optimise Ways of workings • Adjust to new reality and fund ‘Glo’ • Unlock cost NEXT STEPS: • Reinvest behind new categories
Slide 19: Dividend payout
Dividend payout ▪ Dividend per share of RM0.29 for Q3 2019 ▪ Dividend payout as follow: Interim dividend 2019 First interim RM 0.30 Second interim RM 0.26 Third interim RM 0.29 Total RM0.85 ▪ Payout Ratio Q3: 99%
Slide 20: Outlook of 2019
Outlook of 2019 • Deeply concerned with continued high incidence of illegal cigarettes • Unregulated new categories continue to impact the legal industry • Need integrated and holistic efforts to reduce the problem • Focus continue to work with authorities • Complete organisational restructuring to
Slide 21: Thank you
BRITISH AMERICAN ToBacco THANK YOU
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