British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — Investor Day (2024)
35 slides from British American Tobacco P.l.c's investor day presentation, Oct 25, 2024
Slide 1: Building a Smokeless World
Building a Smokeless World 7.83" Tadeu Marroco, Chief Executive
Slide 2: (Opening Video)
(Opening Video) Ww > q ” 2026
Slide 3: A predominantly Smokeless Business by 2035
An inspiring ambition A predominantly Smokeless Business by 2035 Smokeless - refers to Non-Combustibles, including Vapour products, Heated Products, Modern Oral and Traditional Oral. 3
Slide 4: Our refreshed strategy, which becomes our executional compass
Driven by… Our refreshed strategy, which A Better becomes our Tomorrow executional compass Quality Growth Inspiring New Category Tobacco Harm Reduction Exciting, Winning Innovations & Brands Acceptance Company Managed Combustible Shaping the Operational Transition Landscape Excellence Beyond Nicotin
Slide 5: Well on the way to transforming BAT
Well on the way to transforming BAT Smokeless revenue as % of group revenue 27% 18% of group revenue from 18% smokeless 13% 9% 27% of group revenue from 6% smokeless excluding U.S. 2% Combustibles* 2017 H1'24 NC Smokeless Smokeless excl U.S. Smokeless excl. US FMC * Combustibles* Smokeless - refers
Slide 6: Focus on executional discipline & culture were immediate top priorities
Focus on executional discipline & culture were immediate top priorities 1 2 3 4 5 Drive Consistent U.S. Significantly Lead responsible Enhance profitability in combustibles strengthen HP New Categories financial New Categories value growth development flexibility Quality Growth Sustainable Future Dy
Slide 7: Progress made over last 12 months
Progress made over last 12 months Quality Growth Sustainable Future Dynamic Business Drive profitability* Consistent U.S. Significantly Lead responsible Enhance financial in New Categories combustibles strengthen HP New Categories flexibility value growth development New Categories Commercial plans
Slide 8: Commitment to strong cash returns
Commitment to strong cash returns Over £30bn cash returned to shareholders since 2018 (£bn) Committed to progressive dividend policy 6.9 4.3 4.6 4.7 4.9 5.1 Sustainable share buy-backs starting with: • 2024: £700m; 2025: £900m 2018 2019 2020 2021 2022 2023 BAT Group Total Cash Returns Cash returns t
Slide 9: 10 key reasons to believe in BAT's future
10 key reasons to believe in BAT’s future 1. 2. 3. 4. 5. Industry Multi-category is a Transformed insights Enhanced innovation Our Quality Growth transformation will reality: positioned & foresights ecosystem delivering strategic imperative deliver long-term for success in all capabilities to a step
Slide 10: The nicotine industry is rapidly transforming as adult consumers move to New Categories
The nicotine industry is rapidly transforming as adult consumers move to New Categories Industry* adult New Category consumers (m) 140 120 14.7% CAGR 101 100 New Category consumers have more 80 than doubled since 2018 60 >50m 44 more New 40 Category c.1bn smokers remain globally – a consumers 20 sin
Slide 11: Industry transformation is accelerating nicotine value growth
Industry transformation is accelerating nicotine value growth Nicotine revenue CAGR is outpacing the pre-transformation era 2017-2023* 2024-2035** ~3.8% ~4.6% CAGR CAGR * Total Nicotine Organic Revenue at Constant FX. See Appendices A2 & A7. | Key industry players based on published results (BAT, IM
Slide 12: Only a multi-category portfolio can deliver full value potential
Only a multi-category portfolio can deliver full value potential Industry (T40) adult New Categories consumers* 101 74 Consumers are poly-using across New Categories** and choosing 44 16% CAGR different alternatives 33 28 16 Modern Oral is the fastest growing 11 20% CAGR category 70% CAGR 0 2018 201
Slide 13: We have built a competitive multi-category portfolio
We have built a competitive multi-category portfolio Combustibles revenue* glo HP category share**** 57.5% 63.4% 1.3% Aug’24 vs. Dec’23 SWE NOR + 40.4% CAGR 88.5% 55.2% YTD Aug’24 +0.3pp +1.6pp DNK UK share of top ITA POL markets*** 94.0% 7.5% +1.4pp +0.5pp 2020 2023 POL U.S. CZE JAP Sustainable rev
Slide 14: Driven by strong New Category capabilities
Driven by strong New Category capabilities 14
Slide 15: Insights & Foresights model has been substantially upgraded
Insights & Foresights model has been substantially upgraded NC preferences evolve over time See NC Poly-use definition at Appendix A8. 15
Slide 16: Substantial improvement in our innovation ecosystem
Substantial improvement in our innovation ecosystem Fully Upgraded Infrastructure 3 Innovation Centres U.S. UK CN Strategic Partners +50 Development partners Open Innovation Partners 2 First mover Manufacturing Sites ID IT • Global access to multiple levers • Proximity to network in Asia 16
Slide 17: A focus on transformation in Europe
Case study: Quality Growth imperative in action A focus on transformation in Europe 17
Slide 18: Growth of nicotine consumers in Europe fuelled by New Categories
Growth of nicotine consumers in Europe fuelled by New Categories New Categories represent 36% of Growth is driven by Adult Consumers Under 30 total adult nicotine consumers (+14ppts vs. ‘20) (+21ppts vs. ’20), confirming future potential* Industry Europe (T14) Adult Nicotine Consumers Adult Consumer
Slide 19: More than 1/3rd of nicotine consumers are actively using New Categories
More than 1/3rd of nicotine consumers are actively using New Categories 36% of adult nicotine consumers are actively using Vapour has the most solus consumers New Categories (NC) Industry Europe (T14) Adult Nicotine Consumers HP VAPOUR MO 12% 15% 16% 18% 18% 10% 13% 15% 17% 18% 22% 38% 41% 78% 62% 5
Slide 20: BAT's New Categories footprint expansion in Europe
BAT’s New Categories footprint expansion in Europe 44 markets Covering 97% of Industry Gross Margin (GM) pool HP VAPOUR MO 27 35 36 Markets Markets Markets 93% 98% 100% Source: Company data. 20
Slide 21: New Categories margins are accretive
New Categories margins are accretive Europe View BAT New Categories gross profit/mille vs. Combustibles Stick equivalent basis Heated Products Vapour Modern Oral Consumables MoDI & RCS consumables x1.9 x1.6 x4.1 1 stick = 1 stick 1.2ml = 20 stick pack 1 pouch = 1 stick Gross Profit + Customer Invest
Slide 22: HP: glo strong #2 and growing share in key markets
HP: glo strong #2 and growing share in key markets BAT share of category, %, AME T7 Improved performance in key markets 12.7% +0.3ppts ITA POL GER GRE HUN CZE ROM T7 c.70% of total Europe HP GM pool Dec-Aug’24 ITA 17.3 +0.3ppts Dec’23-Aug‘24 34.9% +1.6ppts Dec-Aug’24 17.0 POL 19.1% +1.4ppts Dec'23 J
Slide 23: Vapour: Vuse leads in strategic segment, over-indexed amongst premium consumers
Vapour: Vuse leads in strategic segment, over- indexed amongst premium consumers Leader in rechargeable closed system* Vuse over-indexed among affluent consumers** Index among 41.3% premium consumers UK vs the rest Premium 67.9% FRA 34.5% UK FRA SPA 188% 112% * Source: Retail Audit, YTD Aug’24. See
Slide 24: Velo clear leader in Modern Oral
Velo clear leader in Modern Oral Share of segment leader in all markets* where present SWE NOR DNK UK POL #1 57.5% 63.4% 88.5% 55.2% 94.0% SWI FIN CZE AUT SLK 95.0% 48.8% 77.9% 54.7% 47.7% EST LAT UKR CRO ITA 36.0% 67.5% 79.6% 85.0% 93.3% 64.8% FRA SPA ROM GRE 92.1% 54.3% 49.1% 55.4% Europe T6, Aug
Slide 25: New Categories a game changer in key markets
New Categories a game changer in key markets Poland Italy Czech NC revenue % of total NC revenue % of total 43% NC revenue % of total 53% 45% 2020 2021 2022 2023 2020 2021 2022 2023 2020 2021 2022 2023 TC Revenue NC Revenue TC Revenue NC Revenue TC Revenue NC Revenue +20% +73% +10% +16% +20% +87% To
Slide 26: A continuously transforming business
A continuously transforming business Europe view 18 markets reaching 30%+ share of Smokeless in total business 2023 share of Smokeless revenue by market (%) 77% 75% 72% 62% 55% 54% 54% 53% 50% 47% 46% 45% 43% 43% 40% 37% 35% 34% 25% 20% 19% 18% 15% SLK SWE FIN ICL UK LIT GRE POL EST AUS NOR CZE FRA
Slide 27: The U.S. remains the cornerstone of our future
The U.S. remains the cornerstone of our future Biggest nicotine revenue pool globally 2024 U.S. nicotine revenue pool Transformation since Reynolds acquisition (2017) £41bn +40% Nicotine revenue Vapour pool growth £9bn Combustibles +280% £27bn n.m. Oral £5bn Smokeless revenue pool growth Consumer la
Slide 28: Early results of our investments in U.S.
Early results of our investments in U.S. Combustibles Vapour* Modern Oral** Strong Combustibles brands with National leader Reinvigorating Our Modern Oral improved momentum performance Market leader in menthol 50.8% YTD value share 7.5% Fastest growing in premium Fastest growing in the market Share
Slide 29: More effective U.S. Vapour enforcement will be critical
More effective U.S. Vapour enforcement will be critical Size of illegal Vapour BAT actively supporting more effective U.S. Vapour enforcement c.£6bn Proposed rule requiring submission of tracking numbers at import for Vapour products Illegal flavour single-use revenue More than 11,500 Federal multi-
Slide 30: Front-footed to shape the regulatory landscape
Front-footed to shape the regulatory landscape Online Review the asmokelessworld.com evidence. Join the On social conversation. media @smokelessworld Focus on opening new markets and improve regulatory & enforcement frameworks where New Categories are present 30
Slide 31: Credible foundations in Beyond Nicotine as a future boost to growth
Credible foundations in Beyond Nicotine as a future boost to growth Build organically Btomorrow Ventures Cannabis 31
Slide 32: Unique global footprint & multi-category focus drives our sustainable growth algorithm
Unique global footprint & multi-category focus drives our sustainable growth algorithm Medium-term guidance A Better Global Footprint Multi-category Focus Tomorrow 3% to 5% Revenue* Quality Growth Inspiring New Category Tobacco Harm Reduction Exciting, Winning Innovations & Brands Acceptance Company
Slide 33: A proud & responsible company, our people make us "Stronger Together"
A proud & responsible company, our people make us “Stronger Together” Inclusion & Diversity are integral to both 33
Slide 34: Bringing together strategy, people, & a "Passion to Win"
Bringing together strategy, people, & a “Passion to Win” 34
Slide 35: 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