British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — Debt Investor Presentation (2022)
28 slides from British American Tobacco P.l.c's debt investor presentation, 2022
Slide 1: 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 2: 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 3: New Category Growth Driving Faster Transformation
Fixed Income Update Call - Interim Results 2022 New Category Growth Driving Faster Transformation Tadeu Marroco – Finance and Transformation Director | Neil Wadey – Group Head of Treasury
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 Carbon neutral Eliminate unnecessary single- 50 million consumers of £5bn New Category operations Net zero value chain use plastic in our packaging & No
Slide 5: Our Faster Transformation is well underway
Our Faster Transformation is well underway STEP-CHANGE IN We are transforming and delivering NEW CATEGORIES Driven by our multi-category strategy Actively encouraging adult smokers to switch* Delivering on our Purpose * To reduced risk products. Based on the weight of evidence and assuming a complet
Slide 6: Harm Reduction is at the core of our strategy
Harm Reduction is at the core of our strategy H Reducing the HEALTH impact of our business CONSUMER CHOICE WORLD-CLASS SCIENCE STANDARDS & REGULATION E S G Excellence in Delivering a positive Robust corporate ENVIRONMENTAL SOCIAL impact GOVERNANCE management • Climate change • Human rights • Busines
Slide 7: We are Transforming and Delivering
We are Transforming and Delivering Transforming Delivering robust Successfully our business financial results navigating the macro environment Superior shareholder returns: Dividend growth and £2bn Buyback 7
Slide 8: Delivering robust financial results
Delivering robust financial results +3.7% +4.8% +10bps £2.3bn Group Combustibles Cigarette & THP Free Cash Flow*** Revenue* Price/Mix** Value Share^ +45% -4.2% +4.9% +5.7% New Category Combustibles Adjusted Profit Adjusted Diluted Revenue* BAT Volume from Operations* EPS* Share growth YTD versus FY2
Slide 9: Strong revenue growth ahead of volume growth across all three New Category brands
Strong revenue growth ahead of volume growth across all three New Category brands *** • Revenue* up +48% • Revenue* up +44% • Revenue* up +37% • Volume up +19% • Volume up +30% • Volume up +10% • Category Share** 34.7% • Category Share** 19.6% • Category Share** 31.4% • Brand Power^ +7% • Brand Powe
Slide 10: Further reduction in New Category losses of £281m
Further reduction in New Category losses of £281m* • Prices increased in all 3 New Categories across both Revenue Growth devices and consumables Management • Improved Trade Margins for Vuse** • Further scale benefits Reduced Cost of • c.£120m productivity savings*** delivered Goods • Vuse Cost of Go
Slide 11: Over 20m consumers of our Non-Combustible products
Over 20m consumers of our Non-Combustible* products 20.4 30% 2018-2022 18.3 Compound Growth Rate 16.1 13.5 11.6 10.5 8.9 8 2018 Dec 2019 Jun 2019 Dec 2020 Jun 2020 Dec 2021 Jun 2021 Dec 2022 Jun Consumers of Non-Combustible* products Source: Company data. * See Appendix A6. 11
Slide 12: Strong New Category revenue momentum
Strong New Category revenue momentum 31% 2018-2022 H1’22 NC Revenue CAGR Non-Combustible % of Group H1’21 Revenue H1’20 14.6% H1’19 H2’21 +2ppts* H2’20 H2’19 H2’18 12 months to 12 months to 12 months to 12 months to Jun 2019 Jun 2020 Jun 2021 Jun 2022 New Category revenue (Rolling 12 months trading)
Slide 13: On track for £5bn New Category revenue and profitability by 2025
On track for £5bn New Category revenue and profitability** by 2025 50%+ >£1bn 10% Reduction in Invested in Reduction in New Category New Categories New Category losses* in H1 2022 in H1 2022 losses* in 2021 2/3 1/3 9 New Category New Category New Category loss reduction loss reduction countries driv
Slide 14: glo hyper X2 – now launched in Japan
glo hyper X2 – now launched in Japan 14
Slide 15: Vuse Go – New disposable fast approaching #2 in UK
Vuse Go – New disposable fast approaching #2^ in UK 15 ^ Value share of disposables segment, UK.
Slide 16: Vuse ePod 2+ – Our first Bluetooth connected device
Vuse ePod 2+ – Our first Bluetooth connected device 16
Slide 17: Velo – Driving growth through innovation and ESG
Velo – Driving growth through innovation and ESG 17
Slide 18: glo share of total nicotine up YTD in all T9 markets
glo share of total nicotine* up YTD in all T9 markets Record YTD glo Nicotine* Share in many key markets (c.80% of Industry Revenue) Japan Italy Romania Poland Czech Rep +0.6 ppts +1.0 ppts +0.3 ppts +1.9 ppts +1.0 ppts YTD YTD YTD YTD YTD 2.8% 7.3% 7.0% 3.2% 1.8% 1.8% 1.0% 0.7% 0.7% 1.5% 3Q21 4Q21
Slide 19: Vuse growing closed system value share in all T5
Vuse growing closed system value share in all T5** Continued closed system momentum across T5** Markets (c.80% of Industry Revenue) US Canada UK France Germany 63.9% 49.2% 83.3% 89.0% 39.9% 88.2% 61.7% 42.1% 76.8% 31.0% 37.8% 33.4% 37.8% 45.8% 39.6% 15.6% 9.2% 3Q21 4Q21 1Q22 2Q22 3Q21 4Q21 1Q22 2Q22
Slide 20: Velo: Continued International leadership
Velo: Continued International leadership* Continued Share Growth Across Key** Markets (c.80% of Industry Revenue) USA Sweden Norway Denmark Switzerland 93.8% 92.0% 91.5% 93.0% 64.4% 64.3% 86.2% 61.6% 61.3% 85.3% 57.7% 21.1% 10.0% 56.3% 18.9% 6.3% 10.2% 8.9% 2.0% 1.5% 3Q21 4Q21 1Q22 2Q22 3Q21 4Q21 1Q
Slide 21: Combustibles: Delivering value growth
Combustibles: Delivering value growth +10 bps -10 bps +20 bps Combustibles Combustibles Strategic Brand Value Share^ Volume Share^ Value Share^ +0.6 % +4.8 % +30 bps Combustibles Combustibles US value share^ Revenue* Price/Mix** Financials growth versus H1’21 ^ Share growth versus FY21. Cigarette sh
Slide 22: US: Continued Vuse strength and robust pricing in a challenging environment
US: Continued Vuse strength and robust pricing in a challenging environment • Vuse now #No.1 value share*** +59 • 19.4% volume growth -0.3 +380 • 60% revenue growth* % bps • 36.3% YTD May, up % 380bps US Revenue US New Category Revenue Growth* Vapour Growth* value share • Sequential combustible volu
Slide 23: Successfully navigating the challenging macro environment
Successfully navigating the challenging macro environment Quantum Agility Margin expansion* • Successfully £1.5bn managing inflation 43.9% • Activating Business Annualised Continuity Plans +90bps cost savings • Ensuring end market supply continuity * Growth versus H1’21. On an adjusted basis at curr
Slide 24: Strong Group Operating Margin expansion
Strong Group Operating Margin expansion +90bps + 90 bps Margin improvement H1 2021 Adjusted Price/mix** and Incremental Transactional FX H1 2022 Adjusted Operating Margin Operational Efficiencies New Categories Operating Margin* * On an adjusted current rate basis. See Appendix A1. ** See Appendix A
Slide 25: Cash: On track for another year of strong cash conversion in excess of 90%
Cash: On track for another year of strong cash conversion in excess of 90% Further strong cash flow delivery: H1 Operating Cash Flow Conversion • Continued working capital focus • New ways of working releasing cash 80% 77% from business c.£40bn 67% 5 Year Cash flow weighted to H2, as normal 65%* Cum
Slide 26: Bond Maturity Profile and Debt Mix
Bond Maturity Profile and Debt Mix 10% 90% Fixed (%) Floating (%) As at 30 June 2022, the average centrally managed debt maturity of bonds was 10.1 years 27
Slide 27: Full Year 2022 – Transforming and Delivering
Full Year 2022 – Transforming and Delivering Successfully Transforming Delivering robust navigating the our business financial results macro environment • Continued New Category • Revenue growth of 2-4%** • Leveraging our growth momentum • Mid-Single figure EPS organisational agility • Strong H2 inv
Slide 28: 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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