British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — Debt Investor Presentation (February 2023)
22 slides from British American Tobacco P.l.c's debt investor presentation, February 2023
Slide 1: New Category Acceleration Drives Profitability Forward to 2024
New Category Acceleration Drives Profitability Forward to 2024 Fixed Income Update Call - Preliminary Results 2022 Tadeu Marroco – Finance and Transformation Director | Neil Wadey – Group Head of Treasury
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 and Current Reports on Form 6-K, which may be obtain
Slide 4: We are building A Better Tomorrow
We are building A Better Tomorrow TM From To Multi-Category CPG Cigarettes Nicotine & Beyond* Declining Volume Growing Volume Growing Value & Value 50 million consumers of Carbon neutral £5bn New Category Revenue Non-Combustible** operations Net zero value chain <1% waste from direct operations 2025
Slide 5: We are Delivering on Our Three Priorities
We are Delivering on Our Three Priorities A Step Change in New Categories Combustible Value Growth Simplify the Company 5
Slide 6: We are Accelerating our ESG Agenda across the Business
We are Accelerating our ESG Agenda across the Business E S G 33 36 % % 41 100 % % 1 100 st % 2022 Renewable Operations Female Identified child Chief SoBC training highlights energy sites AWS representation in labour incidents Sustainability & Compliance use* certified** management resolved^ Officer
Slide 7: Adjusted Results Demonstrate Our Resilience
Adjusted Results Demonstrate Our Resilience +2.3% +4.6% Flat £8.0bn Group Combustibles Cigarette & THP Free Cash Flow*** Revenue* Price/Mix** Value Share^ +37% + 150 bps +4.3% +5.8% New Category Adjusted Operating Adjusted Profit Adjusted Diluted Revenue* Margin^^ from Operations* EPS* Share growth
Slide 8: Our Multi-Category Strategy is Working…
Our Multi-Category Strategy is Working… >25% Revenue Growth* Across All Three New Category Brands *** • Revenue* up +44% • Revenue* up +27% • Revenue* up +46% • Volume up +14% • Volume up +26% • Volume up +22% • Category Share** 35.9% • Category Share** 19.4% • Category Share** 30.4% Growth FY versu
Slide 9: We are Well on Track to Achieve 50m Consumers of Non-Combustible Products by 2030
We are Well on Track to Achieve 50m Consumers of Non-Combustible Products by 2030 22.5m 30% 22.5 2018-2022 CAGR 18.3 13.5 10.5 8 2018 2019 2020 2021 2022 Consumers of Non-Combustible products* Source: Company data. * See Appendix A6. 9
Slide 10: Vuse Extending Global Leadership
Vuse Extending Global Leadership** + 250bps • Vapour revenue up 44%*, ahead of 14% Value share volume growth growth FY22 vs FY21 • Vuse extends US leadership; leading in 35 states with total Vapour value share of 40.9%, up 8.4 ppts 35.9% 33.5% • Continued value share leadership of closed systems***
Slide 11: Modern Disposable Segment Accelerating Total Vapour Category Growth
Modern Disposable Segment Accelerating Total Vapour Category Growth Vuse Go Total Vapour +30% • Positioned with premium pricing • Very limited cannibalisation • Already #2 value share in the UK, FRA, GER, SA • Take-Back scheme for devices Modern Disposables +158% • Youth Access Prevention controls R
Slide 12: glo Continues to Make Category Share Gains
glo Continues to Make Category Share Gains + 140 bps • glo revenue up 27%* with sequential growth Volume share growth accelerating in H2 FY22 vs FY21 • glo consumables outpacing industry volume growth 1.7 times 19.4% 17.9% • glo pricing increased while maintaining volume share of THP category 12.4%
Slide 13: …and £5bn New Category Revenue by 2025
…and £5bn New Category Revenue by 2025 2.9bn 33% 2,894 2018-2022 NC Revenue CAGR Non-Combustible 2,054 % of Group Revenue 14.8% 1,443 +2.4 ppts* 1,255 917 2018 2019 2020 2021 2022 Source: Company data. *Growth versus FY21. 13
Slide 14: … Driving Strong Improvement in Category Contribution
… Driving Strong Improvement in Category Contribution New Category Contribution (£bn) 2020 2021 2022 -0.4 While investing -1.0 -1.1 >£2bn in 2022 +£0.7bn* New Category Profitability Now Expected in 2024 * Improvement versus FY20 at constant rates at category contribution level: Profit from operation
Slide 15: Combustibles Delivered a Resilient Performance
Combustibles Delivered a Resilient Performance Flat -20 bps +10 bps Combustibles Combustibles US Value Share* Value Share* Volume Share* -5.2 % +4.6 % -0.6 % Combustibles Combustibles Combustibles Volume Price/Mix** Revenue*** Financials growth FY22 versus FY21 * Share growth versus FY21. Cigarette
Slide 16: US: Excellent Vuse Performance Offset by Macro Headwinds in Combustibles
US: Excellent Vuse Performance Offset by Macro Headwinds in Combustibles • Total Nicotine value share 37.2% up 40bps** +52 -2.8 +10 • Vuse value share leadership at 41%*** • Leader in 35 states % % bps • 46% revenue growth* • Strong category contribution growth New Category US Total Revenue Growth*
Slide 17: Strong Group Operating Margin Expansion: Successfully Offsetting Increasing Inflation
Strong Group Operating Margin Expansion: Successfully Offsetting Increasing Inflation +1.5 pts + 150 bps Margin Margin Improvement** improvement 2021 Adjusted Price/mix* and Incremental Transactional FX 2022 Adjusted Operating Margin Operational Efficiencies New Categories Operating Margin** (Rest o
Slide 18: Continued Strong Operating Cash Conversion
Continued Strong Operating Cash Conversion Strong Operating Cash Short Term Bond Maturity Leverage Reduced to 2.9x Conversion* Profile Adjusted net debt / £ in billions adjusted EBITDA** 103% 104% 100% 4.2 4.4 3.26 2.5 2.99 2.89 FY20 FY21 FY22 FY20 FY21 FY22 Due'23 Due'24 Due'25 £1.8bn Hybrid Bond**
Slide 19: 2022 Continued Delivery in a Challenging Macro-Environment
2022 Continued Delivery in a Challenging Macro- Environment 2022 highlights Transforming our +37% £0.6 bn business Revenue growth* Contribution improvement** Delivering robust +2.3% +5.8% financial results Revenue growth* Adjusted diluted EPS growth*** Successfully navigating £1.9 bn +150 bps the ma
Slide 20: We are Maintaining an Active Capital Allocation Framework for 2023
We are Maintaining an Active Capital Allocation Framework for 2023 Cash Flow Investing Litigation/ in our Fiscal/Regulatory Transformation outcomes Free Cash Flow* Growing Leverage Bolt-On Share Dividend within 2-3X** M&A Buybacks +6% Dividend Growth and Further Deleverage * Free cash flow before di
Slide 21: FY 2023 Group Guidance
FY 2023 Group Guidance 3-5% 2023 performance reflects Organic Revenue Growth* (Excluding Russia/Belarus)** expectations of: • Incremental New Category investment Mid Single Figure • Rising interest costs Adjusted Diluted EPS Growth*** • H2’23 weighted US performance • c.2% transactional FX headwind
Slide 22: Appendix
Appendix A1: Adjusting (Adj.) Adjusting items represent certain items which the Group considers distinctive based upon their size, nature or incidence. A2: Constant currency Constant currency – measures are calculated based on the prior year's exchange rate, removing the potentially distorting effec
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