Imperial Brands Plc · LSE:IMB
Imperial Brands — Imperial Tobacco Group — FY2012 Earnings Presentation
61 slides from Imperial Brands's earnings presentation, Oct 30, 2012
Slide 1: Preliminary Results 2012
Preliminary Results 2012 Imperial Tobacco Group PLC 30 October 2012
Slide 2: Disclaimer
Disclaimer Certain statements in this announcement constitute or may constitute forward-looking statements. Any statement in this announcement that is not a statement of historical fact including, without limitation, those regarding the Company’s future expectations, operations, financial performanc
Slide 3: Sales Growth - A Differentiated Approach
Sales Growth - A Differentiated Approach consumer understanding; total tobacco; how we grow 3
Slide 4: Creating Sustainable Value
Creating Sustainable Value High Margin Profits Sales Strong Cash Flow Key enablers Reinvest Consumer insights Maximising Shareholder Operation & supply chain alignment Returns Shaping our environment 4
Slide 5: FY12 Results Overview
FY12 Results Overview sales growth momentum Driving Quality Sales Growth: +4%(1) +13% key strategic brands(1); 30% of group volumes (2010: 26%) +10% Rest of World(1); +3% EU(1) High Margin Profits c.42%(2) +4% tobacco adjusted operating profit; +8% adjusted EPS £1.3bn Free Cash Flow Non-cash
Slide 6: Building Total Tobacco Brands
Building Total Tobacco Brands +53% +46% +13% +13% +11% +10% +7% -% Key strategic brands Fine cut tobacco Premium Cigar Division Snus Volume growth Net revenue growth FY12 volume growth on a stick equivalent basis; net revenue growth on constant currency basis; snus volumes measured in cans 6
Slide 7: Building Brands – Key Strategic Brands
Building Brands – Key Strategic Brands High Margin Profits Gross Margin(1) +15% This space appears blank because we have removed the images Sales Strong that appear Cash Flow in the presentation. Volumes +7% Net Brand Revenues +13% Contribution(2) This is because we +13% currently do not feature tob
Slide 8: Building Brands - Davidoff
Building Brands - Davidoff +9% volume growth 19.7 +13% Saudi Arabia Cigarette volumes (bns) 18.1 +16% Taiwan 17.0 +16% Russia iD launched in 19 markets FY10 FY11 FY12 Cigarette volumes. Volume growth is for FY12. 8
Slide 9: Building Brands - Davidoff iD
Building Brands - Davidoff iD 9
Slide 10: Building Brands - Gauloises Blondes
Building Brands - Gauloises Blondes +11% volume growth 32.0 +20% Africa and Middle East SE volumes (bns) Innovation supporting growth 28.8 28.1 This space appears blank because we have removed the images that appear in the presentation. This is because we currently do not feature tobacco produ
Slide 11: Building Brands - West
Building Brands - West +5% volume growth 25.8 +12% Rest of World +6% Russia; >50% Turkey SE volumes (bns) 25.2 Gains in high growth segments 24.7 This space appears blank because we have removed the images that appear in the presentation. This is because we currently do FY10 FY11 FY12 not fe
Slide 12: Building Brands - JPS
Building Brands - JPS +3% volume growth 24.8 +23% UK 24.1 +29% Australia SE volumes (bns) Innovation strengthening momentum 21.6 This space appears blank because we have removed the images that appear in the presentation. This is because we currently do FY10 FY11 FY12 not feature tobacco pro
Slide 13: Focusing Beyond Key Strategic Brands
Focusing Beyond Key Strategic Brands +22% SE volume growth FY12 v FY11 +12% +7% +5% News Bastos Maxim Fine 13
Slide 14: Building Brands – Fine Cut Tobacco
Building Brands – Fine Cut Tobacco Stable volumes; +4% ex Poland 124 +13% net revenue growth £m net revenues (indexed) +8% MYO volumes; +20% ex Poland 109 +4% papers; +8% tubes 100 This space appears blank because we have removed the images that appear in the presentation. This is because we
Slide 15: Building Brands – Premium Cigar Division
Building Brands – Premium Cigar Division +11% volume growth 116 +10% net revenue growth £m net revenues (indexed) Emerging markets 105 +7% volume growth 100 +16% net revenue growth This space appears blank because we have removed the images that appear in the presentation. FY10 FY11 FY12 T
Slide 16: Building Brands - Smokeless
Building Brands - Smokeless +53% snus volume growth 37.3 +46% snus net revenue growth can volumes (millions) Volumes: +28% Skruf; +112% Knox 24.3 Sweden: share +4.0% to 7.5% 18.7 Norway: share +3.2% to 27.4% FY10 FY11 FY12 Net revenues in constant currency terms. Volume growth is for FY12.
Slide 17: New Consumer Experiences
New Consumer Experiences This space appears blank because we have removed the images that appear in the presentation. This is because we currently do not feature tobacco product brand imagery on our website. 17
Slide 18: Scaling Glide-Tec
Scaling Glide-Tec Reinforcing brand differentiation Strengthening brand performances Over 1bn sticks in 13 markets; further roll out in 2013 Number of skus Number of markets 18
Slide 19: Pricing and Customer Engagement
Pricing and Customer Engagement Pricing +7% price/mix Enhanced pricing analysis Broadened brand price options Customer Engagement Driving availability and advocacy Supporting sustainable growth Australia – share growth: cigarette +0.3%, FCT +0.8% 19
Slide 20: Driving Sustainable Growth - EU
Driving Sustainable Growth - EU Bias to driving revenue (+3%) and profit (+4%) Innovation supporting price/mix £4.0bn £2.0bn 161.9 £1.9bn 154.0 £3.8bn Billions SE Volume Tobacco Net Revenues Tobacco Adj. Operating Profit FY11 FY12 Tobacco net revenues and adjusted operating profit on constant cu
Slide 21: Americas
Americas USA – strengthening our position Applying sales growth drivers to % Cigarette Market Share 2012 strengthen position New pricing strategy Driving growth state by state in 19 states New pricing strategy Strong premium cigar performance +11% volume growth +10% net revenue growth Q1
Slide 22: Driving Sustainable Growth - RoW
Driving Sustainable Growth - RoW Bias to driving volume and share +10% net revenues; +7% profit Reinvesting to support growth £2.6bn £0.9bn 171.3 171.8 £0.8bn £2.3bn Billions SE Volume Tobacco Net Revenues Tobacco Adj. Operating Profit FY11 FY12 Tobacco net revenues and adjusted operating prof
Slide 23: Group Results
Group Results 7.8% constant currency EPS growth Constant Constant Foreign Currency Change Currency FY11 Exchange Growth FY12 Change Tobacco net revenue 6,913 (189) 281 7,005 1.3% 4.1% Logistics distribution fees 932 (48) (12) 872 (6.4%) (1.3%) Tobacco operating profit 2,924 (44) 109 2,989 2.2% 3.7%
Slide 24: Investment
Investment driving sustainable growth 26.4p 15.2p 3.4p 1.6p 188.0p 201.0p 2011 EPS Growth pre Incremental Tax rate change Foreign 2012 EPS incremental investment exchange investment and tax rate Adjusted EPS 24
Slide 25: Group Results
Group Results Spanish goodwill £1.2bn impairment; further deterioration in Spanish economic indicators Non-cash; accounting requirement Altadis returns in line with expectations Financing and cost of debt Average all-in cost of net debt 5.5% (FY11: 5.7%) Net interest charge £535m Tax rate
Slide 26: Logistics
Logistics Excellent results in tough environment Tobacco: price increases and cost savings offset lower volumes Non-Tobacco: maintaining profitability; opportunities to grow 26
Slide 27: FY12 Adjusted Net Debt
FY12 Adjusted Net Debt £3.2bn £0.5bn £1.0bn £0.9bn £0.3bn £0.5bn £8.8bn £8.8bn Opening Adjusted Working Net capex Tax and Dividends Share Closing adjusted operating capital interest buybacks adjusted net debt profit net debt Opening adjusted net debt is as at 1 October 2011. Adjusted debt figures ex
Slide 28: FY12 Net Revenues and Profits
FY12 Net Revenues and Profits building momentum 9% 91% 6% 4% 5% 4% Split of tobacco net revenue Tobacco net revenue growth Tobacco adjusted operating profit growth Group ex Americas Americas Group In constant currency terms 28
Slide 29: Maximising Shareholder Returns
Maximising Shareholder Returns increasing cash returns High Margin £1,511m Profits £1,074m Sales Strong £773m Cash Flow Reinvest Maximising 2010 2011 2012 Shareholder Returns Share buy-back in year Dividends paid in year 29
Slide 30: Regulation
Regulation a sense of perspective Australia Brazil Canada This space appears blank because we have removed Ireland the images that appear Display Bans: less New Zealand in the presentation. than 2 countries per Norway annum over 10 This is because we currently years (10%*) Do not feature tobacco Sin
Slide 31: Sales Growth - A Differentiated Approach
Sales Growth - A Differentiated Approach consumer understanding; total tobacco; how we grow 31
Slide 32: Preliminary Results 2012
Preliminary Results 2012 Imperial Tobacco Group PLC 30 October 2012
Slide 33: Appendices
Appendices 33
Slide 34: Financial
Financial 34
Slide 35: Income Statement
Income Statement £m FY12 FY11 Change % Revenue 28,574 29,223 (2) Adjusted operating profit 3,161 3,103 +2 Acquisition accounting adjustments 10 - Amortisation and impairment of acquired intangibles (1,552) (402) Restructuring costs (101) (61) Net finance costs* (437) (487) Profit before tax 1,081 2,
Slide 36: Reconciliation: Reported to Adjusted
Reconciliation: Reported to Adjusted Net fair value and exchange Acquisition Amortisation Impairment of gains on Post Tax Reported accounting of acquired acquired certain employment Restructuring provisions Adjusted FY12 adjustments intangibles intangibles instruments net financing costs released FY
Slide 37: Regional Tobacco Net Revenue
Regional Tobacco Net Revenue FY12 % Change Foreign Constant Constant £m Actual1 Exchange Currency2 FY11 Currency UK 936 - 936 869 7.7 Germany 861 (47) 908 879 3.3 Spain 470 (26) 496 497 (0.2) Rest of EU 1,534 (94) 1,628 1,592 2.3 Total EU 3,801 (167) 3,968 3,837 3.4 Americas 660 12 648 731 (11.4) Re
Slide 38: Regional Tobacco Operating Profit
Regional Tobacco Operating Profit FY12 % Change Foreign Constant Constant £m Actual1 Exchange Currency2 FY11 Currency UK 627 3 624 577 8.1 Germany 448 (22) 470 461 2.0 Spain 202 (11) 213 200 6.5 Rest of EU 626 (40) 666 658 1.2 Total EU 1,903 (70) 1,973 1,896 4.1 Americas 214 6 208 234 (11.1) Rest of
Slide 39: Logistics
Logistics FY12 % Change Foreign Constant Constant £m Actual1 Exchange Currency2 FY11 Currency Distribution fees 872 (48) 920 932 (1.3) Operating profit 176 (10) 186 183 1.6 Distribution margin % 20.2 20.2 19.6 1Based on average exchange rates for twelve months ended 30 September 2012; 2assumes that
Slide 40: Foreign Currencies
Foreign Currencies Average Closing £1 = FY12 FY11 FY12 FY11 Euro 1.216 1.153 1.253 1.162 US dollar 1.577 1.606 1.620 1.560 40
Slide 41: Balance Sheet
Balance Sheet £m FY12 FY11 Non-current assets: tangible 2,917 2,692 intangible 17,609 20,487 Current assets: inventories 3,132 3,055 other 3,981 4,333 Current liabilities (9,142) (10,620) Non-current liabilities (12,413) (12,237) Net assets 6,084 7,710 41
Slide 42: Cash Flow
Cash Flow £m FY12 FY11 Cash flows from operating activities pre tax 2,561 3,085 Tax paid (442) (529) Cash flows from operating activities 2,119 2,556 Net capex (includes software) (303) (342) Net acquisitions (businesses and trademarks) - - Employee Share Option Trust 8 (18) Share buy backs (528) (1
Slide 43: Cash Conversion
Cash Conversion £m FY12 FY11 Net cash flow from operating activities 2,119 2,556 Tax 442 529 Net capex (303) (342) Cash flow post capex pre interest and tax 2,258 2,743 Adjusted operating profit 3,161 3,103 Cash conversion 71% 88% Working capital (outflow) (505) (6) 43
Slide 44: Net Finance Costs
Net Finance Costs £m FY12 FY11 Net finance costs 437 487 Adjusted for: - expected return on retirement benefit assets 168 178 - interest on retirement benefit liabilities (187) (180) - unwind of discount on redundancy and social plans (8) (8) - net fair value and exchange gains on certain instrument
Slide 45: Net Debt Reconciliation
Net Debt Reconciliation Reported Accrued Fair value of Finance lease Adjusted £m FY12 interest derivatives creditors FY12 Opening net debt (9,441) 297 290 23 (8,831) Free cash flow 1,324 (30) (2) 1,292 Share buy backs (528) (528) Dividends (1,002) (1,002) Accretion of interest 10 (10) - Change in fa
Slide 46: Volumes and Market Shares
ii Imperial Tobacco Volumes and Market Shares 46
Slide 47: Volume Bridge
Volume Bridge 346.0 336.6 FY11 Syria Ukraine Poland Other FY12 FCT Billion stick equivalents 47
Slide 48: Key Strategic Brand Volumes
Key Strategic Brand Volumes Davidoff, Gauloises Blondes, West, JPS 2012 Performance Total SE Volume Split +13% 26% 30% +7% FY FY10 FY12 SE Volumes Tobacco net revenue Key strategic brands Other brands SE is stick equivalents 48
Slide 49: Stick Equivalent Volumes
Stick Equivalent Volumes Billion stick equivalents FY12 FY11 UK (exc PMI(1)) 25.3 25.6 Germany 32.0 32.2 Spain 22.0 23.8 Rest of European Union 74.7 80.3 Total EU 154.0 161.9 Americas 10.8 12.8 Asia-Pacific 22.9 22.4 Eastern Europe 72.6 76.6 Africa & Middle East 71.2 67.3 Duty Free 5.1 5.0 Total Res
Slide 50: Cigarette Volumes
Cigarette Volumes Billion sticks FY12 FY11 UK (exc PMI1) 18.7 19.2 Germany 22.6 23.4 Spain 18.7 20.8 Rest of European Union 53.4 57.8 Total EU 113.4 121.2 Americas 10.3 12.3 Asia-Pacific 21.0 20.6 Eastern Europe 72.4 76.5 Africa & Middle East 71.0 67.2 Duty Free 4.4 4.3 Total Rest of the World 168.8
Slide 51: Fine Cut Tobacco Volumes
Fine Cut Tobacco Volumes Billion stick equivalents FY12 FY11 UK 6.6 6.4 Germany 9.4 8.8 Spain 3.3 3.0 Rest of European Union 21.3 22.5 Total EU 40.6 40.7 Americas 0.5 0.5 Asia-Pacific 1.9 1.8 Eastern Europe 0.2 0.1 Africa & Middle East 0.2 0.1 Duty Free 0.7 0.7 Total Rest of the World 3.0 2.7 Total
Slide 52: EU SE Market Volumes
EU SE1 Market Volumes Billion stick equivalents Cigarette FCT Total UK 39.7 14.2 53.9 -6% +8% -3% Germany 83.3 37.8 121.1 -2% +3% +0% Spain 54.6 8.5 63.1 -13% +17% -10% Rest of EU 327.6 59.1 386.7 -5% +5% -3% Total EU2 505.2 119.6 624.8 -5% +6% -3% Imperial estimates; 1stick equivalents; 2Imperial d
Slide 53: Cigarette Market Shares
Cigarette Market Shares European Union Cigarette (%) FY12 FY11 UK ongoing focus on balancing profit and share 45.0 45.1 Germany improving trend: FY above HY by 20 bps 25.8 26.6 Spain1 Fortuna and Nobel growth 28.3 28.1 France1 FY above HY by 30 bps 22.5 22.6 Greece Davidoff and JPS growth 11.5 11.22
Slide 54: FCT Market Shares
FCT Market Shares European Union Fine cut tobacco (%) FY12 FY11 UK rate of decline slowing: -20bps FY vs HY 47.4 51.0 Germany JPS, Route 66, Fairwind growth 22.3 20.42 Spain Ducados, Fortuna growth 41.6 40.32 France improving trend FY + 40bps vs HY 21.2 21.42 Belgium consistent growth 16.1 14.72 Net
Slide 55: Cigarette Market Shares
Cigarette Market Shares Americas and Rest of the World Cigarette (%) FY12 FY11 Algeria Gauloises Blondes and West growth 15.2 12.2 Australia JPS growth 19.4 19.1 Morocco Marquise partly offset by Gauloises and Davidoff growth 81.2 83.1 Russia Strong mix improvement: Davidoff, West, Style, Maxim grow
Slide 56: Financing
Financing 56
Slide 57: Senior Bank Facilities
Senior Bank Facilities Description Maturity date Amount £m equiv. Margin EUR Committed 2 Year Revolving Credit Facility Nov-13 €300m £239m 0.700% GBP Committed 2 Year Revolving Credit Facility Aug-14 £400m £400m 1.200% Committed 5 Year Revolving Credit Facility Dec-15 £2,414m 1.000%* USD tranche $63
Slide 58: Bond Issues
Bond Issues Amount Issuer Coupon Issue Date Maturity Date £m equiv. Margin €500m Altadis Finance BV 5.125% Oct-03 Oct-13 £399m 0.8% €1,200m Imperial Tobacco Finance PLC 4.375% Nov-06 Nov-13 £958m 0.6% €750m Imperial Tobacco Finance PLC 7.250% Sep-08 Sep-14 £599m 2.7% €500m Altadis Emisiones Financie
Slide 59: Core Financing
Core Financing maturity profile at 30 September 2012 14,000 ECP 12,000 Bank Facilities Bond Issues £m equivalent 10,000 8,000 6,000 4,000 2,000 0 Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep Sep 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Facilities in place as at 30 September c.£12.5b
Slide 60: Basis of Results Presentation
Basis of Results Presentation Use of Adjusted Measures Management believes that non-GAAP or adjusted measures provide a useful comparison of business performance and reflect the way in which the business is controlled. Accordingly, adjusted measures of operating profit, net finance costs, profit bef
Slide 61: Contacts
Contacts Investor Relations department Gerry Gallagher Director of Investor Communications gerry.gallagher@uk.imptob.com Tel: +44 (0) 117 933 7014 John Nelson-Smith Grant Edmunds Investor Relations Manager Investor Relations Manager john.nelson-smith@uk.imptob.com grant.edmunds@uk.imptob.com Tel: +4
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