British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — H1 2019 Earnings Presentation
29 slides from British American Tobacco P.l.c's earnings presentation, 2019
Slide 1: Interim Results 2019
Interim Results 2019 Jack Bowles Chief Executive Tadeu Marroco Group Transformation Director & Deputy Finance Director
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 filed on 15 March 2019 and Current Reports on Form 6
Slide 4: Delivering a stronger, simpler, faster organisation
Delivering a stronger, simpler, faster organisation COMBUSTIBLE VALUE GROWTH STEP-CHANGE IN NEW CATEGORIES SIMPLIFY THE COMPANY
Slide 5: Strong H1 results | on track for a good year
Strong H1 results | on track for a good year NEW CATEGORY REVENUE STRONG COMBUSTIBLES DELIVERING OUR GROWTH ON TRACK FOR PERFORMANCE FINANCIAL OBJECTIVES FULL YEAR
Slide 6: Delivering on our financial objectives
Delivering on our financial objectives REPORTED HY 2019 ADJUSTED HY 2019 @ Current rates 2019 Guidance @ Constant rates Mid-Upper end Revenue +4.6% +3-5%* +4.1% of range New Category Revenue +31.3% +30-50%* +27.3% Operating Margin -210 bps +50-100 bps +110 bps Current rates Upper end of Profit From
Slide 7: A strong performance in combustibles
A strong performance in combustibles +7.0% +10bps +50bps Cig Price Corporate Value Strategic Brand Value mix Share YTD growth Share YTD growth -3.5% Flat +60bps Volume Corporate Volume Strategic Brand Volume H1 BAT Share YTD growth Share YTD growth (Cigs+THP) source: Company data. Share growth versu
Slide 8: Winning in the US where it matters
Winning in the US where it matters +3.7 % Revenue * -10 bps Volume share +40 bps Premium share +11.2% +30bps +70bps Adj Profit From Value share ASU30 share Ops* Industry volume HY -5.4%** FY estimate c. -5.5% *Adjusted and constant rate basis. See Appendix A1-A2. Share growth versus FY18. ** STW: Sh
Slide 9: New Category revenue growth on track for FY guidance
New Category revenue growth on track for FY guidance Around the middle of +27% +30-50% FY19 growth*~ H1 growth* +58% H1 Vapour growth* +284% H1 Modern Oral growth* +4% H1 THP growth* *Adjusted and constant rate basis. See Appendix A1-A2. ~ FY19 guidance Source: Company data
Slide 10: Focus on fewer stronger brands
Focus on fewer stronger brands
Slide 11: Vapour | Great products driving growth
Vapour | Great products driving growth Vuse Vype Vype +150bps value share 14.0% +230bps +610bps value share 17.3% value share 11.6% Vuse Alto value share 5.9% Vype ePen3 value share 7.7% Vype ePen3 value share 13.6% 3.6% 2.7% 3.8% D J'19 F M A M J D J'19 F M A M J D J'19 F M A M J Source: Company da
Slide 12: Modern Oral products drive category growth in Europe
Modern Oral products EPOK & LYFT continue to drive category growth in Europe +280bps Share of total oral volume Share of total oral volume +110bps 66.6% EPOK share of total oral in Norway, 12.1% in Sweden, 13.4% volume in Denmark Source: Nielsen 41.9% EPOK volume share of Total Oral LYFT volume shar
Slide 13: THP | Total nicotine volume share growth continues in Japan
THP | Total nicotine volume share growth continues in Japan Share of category +30bps >10% 5-10% Romania Serbia National glo share in Japan 5% Poland +80bps Total nicotine volume Kazakhstan Russia Ukraine Key cities share in Japan 17.5% Source: CVS BC Bulgaria Source: Share data based on Jun 19 with
Slide 14: H2 New Category activity expected to accelerate growth
H2 New Category activity expected to accelerate growth nano pro sens
Slide 15: H2 New Category activity expected to accelerate growth
H2 New Category activity expected to accelerate growth
Slide 16: H2 New Category activity expected to accelerate growth
H2 New Category activity expected to accelerate growth + New ENA market › US manufactured Modern Oral › 4 SKUs offering Mint/Citrus flavours launches › Nationwide US distribution to 75k outlets planned by year end › Brand building campaign with direct planned consumer engagement set to: – Reach over
Slide 17: Delivering a stronger, simpler, faster organisation
Delivering a stronger, simpler, faster organisation COMBUSTIBLE VALUE › Deliver 50-100bps of margin GROWTH improvement pa STEP-CHANGE › Release funds for growth IN NEW CATEGORIES › Focus on investment returns › Generate cash to de-lever the SIMPLIFY THE balance sheet COMPANY
Slide 18: Strong revenue growth
Strong revenue growth Strategic Combustible revenue up +5.2%* +4.1% Revenue Strong pricing growth* v H1 18 New Categories growth *Adjusted and constant rate basis. See Appendix A1-A2. Source: Company data
Slide 19: Good growth across the regions
Good growth across the regions Adjusted Value Adjusted Profit Revenue* Share from operations* Volume APME +1.6% +20bps +4.6% -2.3% AMSSA +7.5% Flat +0.8% -3.5% ENA +4.6% -10bps +0.1% -4.0% US +3.7% +30bps +11.2% -6.0% *Adjusted and constant rate basis. See Appendix A1-A2. Source: Company data
Slide 20: Increasing investment and growing margin
Increasing investment and growing margin +1.1% -1.1% 42.9% +110bps 2.5% -0.3% 41.8% growth v H1 18 2018 Adjusted Changes in underlying Incremental Impact of 2019 Adjusted Operating Margin business New Categories transactional FX Operating Margin investment impact
Slide 21: Strong profit growth
Strong profit growth Strong revenue growth* +5.9% driven by pricing Continued drive for Adjusted Profit from efficiency gains Operations growth* v H1 18 Increased investment in New Categories *Adjusted and constant rate basis. See Appendix A1-A2. Source: Company data
Slide 22: Adjusted Net Debt higher due to MSA payment timing and IFRS 16
Adjusted Net Debt higher due to MSA payment timing and IFRS 16 0.2 -0.1 1.6 *0.6 -0.2 45.4 45.5 43.4 2018 average: 1.335 Close: 1.274 2019 H1 average: 1.294 Close: 1.273 *Opening Net Debt includes IFRS16 impact £0.6bn
Slide 23: On track to de-lever at 0.4x ex-currency
On track to de-lever at 0.4x ex-currency Adj Net Debt*/ FY19 guidance Adj EBITDA* Committed to FY Free cashflow 2018 Closing 4.0x after dividends of £1.5bn FY Operating cash 2019 Outlook 3.6x conversion target above 90% Dividend – 65% pay-out ratio / 2020 Outlook 3.2x growth in GBP terms *Adjusted N
Slide 24: High Single Figure earnings growth
High Single Figure earnings growth* +7.1% +8.8% 149.3 +7.1%* 0.5 0.3 0.0 146.9 2.4 -1.8 1.5 9.1 137.2 H1 2018 EPS Adjusted Net Finance Associates Taxation Non-controlling Number H1 2019 EPS FX Impact H1 2019 EPS Profit from Cost interests of shares at Constant at Current Operations FX FX *Adjusted a
Slide 25: Strong H1 results
Strong H1 results Adjusted Volume Adjusted Profit from Adjusted Revenue Operations Diluted EPS -3.5% +4.1%* +5.9%* +7.1%* Strategic Strategic Group Group brand market share value share brand market value share share Flat +10bps +60bps +50bps *Adjusted and constant rate basis. See Appendix A1-A2. Sou
Slide 26: On track for a good year
On track for a good year COMBUSTIBLE VALUE › On track for the full year guidance GROWTH › New Category revenue expected around the middle of 30-50% range STEP-CHANGE IN NEW CATEGORIES › Building a stronger, simpler, faster organisation SIMPLIFY THE › Delivering high single figure EPS COMPANY growth
Slide 27: Tobacco
| TOBACCO
Slide 28: Interim Results 2019
Interim Results 2019 Jack Bowles Chief Executive Tadeu Marroco Group Transformation Director & Deputy Finance Director
Slide 29: Appendix
Appendix A1: Adjusting (Adj.) Adjusting items are significant items of certain financial measures which individually or, if of a similar type, in aggregate, are relevant to an understanding of the Group’s underlying financial performance because of their size, nature or incidence. In identifying and
British American Tobacco p.l.c. — H1 2019 Earnings Presentation on 6ix