British American Tobacco Malaysia Bhd. · MYX:BAT
British American Tobacco Malaysia Bhd — Q4 2018 Earnings Presentation
18 slides from British American Tobacco Malaysia Bhd's earnings presentation, Feb 21, 2019
Slide 1: 4th Quarter 2018 Performance
4th QUARTER 2018 PERFORMANCE 21st FEBRUARY 2019
Slide 2: Agenda
Agenda ▪ Business Review ▪ Q4 2018 Financial Performance
Slide 3: Business Review
MALAYSIA Business Review
Slide 4: Business highlights
Business highlights Total illegal cigarette volume Total legal industry volume 63% -3.5% +1.4 ppt Full year stagnant -1.0% vs Q3’18 Q4’18: 64% Q4’18: 590mns Q3’18: 63% Q3’18: 596mns Revenue Profit from operations Inventories optimization -3.2% -2.2% +1.4 ppt ++1.4 RM75ppt mil +4.8% vs Q3’18 -15.5% v
Slide 5: Market remained stable despite SST impact
Market remained stable despite SST impact Illegal Volume Share (%) 63 63 63 64 60 59 61 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q4'18 Legal Volumes Amongst Big 3 Monthly Average (mns) Ramadan SST-led Price Increase 603 606 624 605 (Fasting) 577 590 596 590 Q4 vs Q3 -1.0% FY18 vs FY17 -3.5% Q1-17 Q2-17 Q
Slide 6: Slight recovery in Q4 driven by price speculation
Slight recovery in Q4 driven by price speculation BAT Volumes Monthly Average (mns) Ramadan SST-led Price (Fasting) Increase 337 336 331 324 318 318 325 304 Q4 vs Q3 +2.2% FY18 vs FY17 -4.6% Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18 Source: FY’18 Industry Exchange Data
Slide 7: Illegal trade remains big but Government measures gradually heading in right direction
Illegal trade remains big but Government measures gradually heading in right direction Budget 2019 RMC to step up enforcement, hope to recover at least RM1 billion Minimum 100k fine under amended Customs Act More than 25 cases in court since 2 Jan 2019 More than 12 people imposed RM100k or jail in d
Slide 8: Smoking ban effective 1st Jan 2019
Smoking ban effective 1st Jan 2019 Regulation Impact on business • Smoking is banned in ALL eateries • Initial signs indicates minimal impact ~2% • No smoking within 3 meters from any eating premises • Consumer behaviour likely to adjust
Slide 9: Financial highlights
Financial highlights
Slide 10: Q4 Financial performance
Q4 Financial performance FY 2018 Q4’2018 vs SPLY vs Q4’17 REVENUE -3.2% +12.5% OPERATING EXPENSES -4.5% -21.8% PROFIT FROM OPERATIONS -2.2% +54.2% WORKING CAPITAL RM75mil
Slide 11: Q4 Financial performance
Q4 Financial performance FY 2018 Q4’2018 vs SPLY vs Q4’17 REVENUE -3.2% +12.5% OPERATING EXPENSES -4.5% -21.8% PROFIT FROM OPERATIONS -2.2% +54.2% WORKING CAPITAL RM75mil
Slide 12: Q4 underlying improving excluding one-offs
Q4 underlying improving excluding one-offs Q4’2018 ONE-OFF Adjusted vs Q4’17 REVENUE +12.5% Due to GST removal +6% OPERATING Provision for impairment EXPENSES -21.8% of prepaid excise duties FLAT PROFIT FROM 2017 provision for OPERATIONS +54.2% impairment of prepaid +30% excise duties
Slide 13: Revenue and profit from operations stabilizing
Revenue and profit from operations stabilizing * Restated due to MFRS15 Revenue RM’000 -21% GST/SST impact 42 27 -6% 13 82 3,669 709 728 2,916 2741 685 666 638 2016 * 2017 * 2018 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Profits from operations RM’000 -29% GST Impact 25 12 919 -8% 37 167 162 651 130 140 600 105
Slide 14: Improving fundamentals in Income Statements
Improving fundamentals in Income Statements Stabilized gross profit margin VFM introduction Key initiatives: • Full year new business operating model • Productivity efficiencies 34% 32% 32% • Pricing partially offset with VFM launch 2016 2017 2018 Continue to optimize cost base whilst funding strate
Slide 15: Improving fundamentals in Balance sheet
Improving fundamentals in Balance sheet Working capital optimization leveraging new business model Inventories (RM million) -RM75m 237 Inventories initiatives: 162 • Optimal stock level at warehouse • Improvement in transit days 2017 2018
Slide 16: Dividend payout and share performance
Dividend payout and share performance Dividend > 90% payout Stable share performance +47% RM 1.55 vs Apr lowest 37.7 36.1 0.47 34.2 0.40 31.1 0.33 0.35 28.4 26.4 24.5 Q1 Q2 Q3 Q4 Jan Feb Mar Apr Oct Nov Dec Dividend yield 4.3%
Slide 17: Foundation set for 2019
Foundation set for 2019 2018 HAD SHOWED SIGNS OF STABILIZATION GOOD Q4 2018 PERFORMANCE Q1 2019 LIKELY TO BE INFLUENCED BY PRICING AND PUBLIC PLACE SMOKING BAN 2019 OUTLOOK REMAINED CHALLENGING WITH HIGH INCIDENCE OF ILLEGAL CIGARETTE TRADE
Slide 18: Thank you
BRITISH AMERICAN MALAYSIA THANK Y@@
British American Tobacco (Malaysia) Berhad — Q4 2018 Earnings Presentation on 6ix