British American Tobacco Malaysia Bhd. · MYX:BAT
British American Tobacco Malaysia Bhd — Q2 2019 Earnings Presentation
25 slides from British American Tobacco Malaysia Bhd's earnings presentation, Jul 25, 2019
Slide 1: British American Tobacco Quarter 2, 2019 Performance
why BRITISH AMERICAN TOBACCO QUARTER 2, 2019 PERFORMANCE 25™ July 2019
Slide 2: Agenda
01 Key highlights AGENDA 2 Business review 03 Q2 financial performance
Slide 3: Key Highlights: Oxford Economics Report
eo MI— © Key Highlights Oxford Economics Report
Slide 4: Illicit tobacco is a burning platform in Malaysia
Illicit tobacco is a burning platform in Malaysia British American Tobacco commissioned a report to study the social and economic impact of the illicit tobacco trade in Malaysia. These findings were presented in a roundtable to members of the media and key stakeholders to educate all Malaysians and
Slide 5: Robust forum discussion headed by high-calibre experts
Robust forum discussion headed by high-calibre experts. Pete Collings Kenneth Head David Lum Dato’ Sri Akhbar Sattar Dato Charon Wardini Director of Economic Impact Former IMF AFRITAC South Criminal Investigations Attaché, IRS Ex-President, Transparency Group Managing Director, Consulting EME US Con
Slide 6: Members of the press invited to roundtable discussion
Members of the Malaysian and regional press were invited to attend a roundtable discussion on the illicit tobacco trade.
Slide 7: Coverage featured from OE
Coverage featured from OE o 2 amas xaunean wax
Slide 8: During and post OE, the conversation is growing in Malaysia
During and post OE, the conversation is growing in Malaysia. Key Spokespeople Media Champions Investigative Pieces Stakeholders Industry Articles
Slide 9: Q2 Business Review
sl OZ Q2 Business Review
Slide 10: Q2 highlights
Q2 highlights Industry volume -8% vs SPLY (-3% vs Q1'19) Market share 54.8% -2.5ppt vs SPLY \ \ (40.1 ppt vs Q1'19) Illegal trade BAT volume 60% -10% \ (remained high but ie not growing) vs Q1’19) Revenue Profit from tions -4% opera vs SPLY f -1 9% \ vs SPLY Q1'19 \ vs ») \erevary
Slide 11: The industry requires structural breakthrough in external environment
The industry requires structural breakthrough in external environment Illegal Volume Share (%) 63 63 62 63 60 60 YTD’19 vs SPLY -2ppt Legal Volumes Monthly Avg (mns) Mainly driven by: 577 590 596 590 543 527 SST led pricing YTD’19 vs SPLY Public place smoking ban -8% SST PPS Pricing Ban Q1-18 Q2-18
Slide 12: BAT volume holding better in Q2 vs. industry
BAT volume holding better in Q2 vs. industry BAT Volumes Monthly Avg (mns) 325 318 318 304 SST Pricing Q1’18 Q1-18 Q2’18 Q2-18 Q3’18 Q3-18 Q4’18 Q4-18
Slide 13: BAT volume holding better in Q2 vs. industry
BAT volume holding better in Q2 vs. industry BAT Volumes Monthly Avg (mns) 325 318 318 304 284 274 Q2’19 YTD’19 vs SPLY Q1’19 -10% -11% -10% SST Pricing Q1’18 Q1-18 Q2’18 Q2-18 Q3’18 Q3-18 Q4’18 Q4-18
Slide 14: Illegal trade enforcement: gradual increase in coordinated approach
Illegal Trade enforcement: gradual increase in coordinated approach Regulations Multi LEAs Police getting YTD Jun: Seized traction targeting enabled activated organized crime Customs: 712 retailers raided 218mns Police: 24 supply networks 66mns • Retail • Syndicates • FTS Marine Police: 55 feeder ou
Slide 15: Illegal cigarette with fake tax stamps on the rise
Illegal cigarette with fake tax stamps on the rise Illicit Cigarette Study (ICS) - Wave 1, 2019 Key Takeout Total Illegal cigarette incidence: ▪ Sizeable drop of 4.1ppt in Smuggled 59.7% cigarettes 1.5ppt vs W3’18 ▪ Good results were partially offset by fake tax stamps that gained 2.6ppt Smuggled Ci
Slide 16: Vaping should be legalised as alternative to smoking
Vaping should be legalised as alternative to smoking • Progressive harm reduction agenda • Sustainable revenue growth • Reduction of illegal (FMC & Vaping)
Slide 17: THP – New investment and technology for long term sustainability
THP – New investment and technology for long term sustainability • Approved by MOH • Launch Q4 2019 • New capability for Malaysia
Slide 18: Continued recognition of good corporate governance and contribution to the nation
Continued recognition of good corporate governance and contribution to the nation Sustained corporate governance standard Strategic business partnering - Shell, Eraman & Pernama ▪ Excellence Award for CG Disclosure ▪ Excellence Award for Long Term Value Creation JB plant recognized for business cont
Slide 19: Q2 Financial Performance
sl OS Q2 Financial performance
Slide 20: Key financial highlights
Key financial highlights Q2’19 vs preceding quarter YTD vs SPLY LEGAL INDUSTRY VOL 1,582 mns -3% -8% VOLUME 853 mns +4% -10% REVENUE RM641 mil +3% -4% GROSS PROFIT RM184 mil +2% -9% PROFIT FROM OPERATIONS RM107 mil -11% -19%
Slide 21: Key financial highlights
Key financial highlights Q2’19 vs preceding quarter YTD vs SPLY LEGAL INDUSTRY VOL 1,582 mns -3% -8% VOLUME 853 mns +4% -10% REVENUE RM641 mil +3% -4% GROSS PROFIT RM184 mil +2% -9% PROFIT FROM OPERATIONS RM107 mil -11% -19%
Slide 22: Financials impacted by volume decline and expenses phasing
Financials impacted by volume decline and expenses phasing Revenue Operating expense 13 -9% 76 +20% 1,304 Increase in operating expenses 1,186 142 119 mainly due to : • Investment in new categories YTD Q2'18 YTD Q2'19 GST removal YTD Q2'18 YTD Q2'19 • Phasing of operating costs Gross profit Profit f
Slide 23: Gross profit margin stable
Gross profit margin stable YTD Q2’18 Volume % Pricing benefit offset mix impact SST pricing since Nov’18 6% 30% 29% 29% 29% YTD Q2’19 Volume % YTD Q2'18 Q4'18 Q1'19 Q2'19 10%
Slide 24: Outlook of 2019
Outlook of 2019 • Deeply concerned with continued high level of illegal cigarettes • Lack of progress on efforts to reduce the problem • Emerging new categories which is not regulated is a threat to the legal industry • Second half focus will be to work with authorities and rationalise expenses
Slide 25: Thank you
BRITISH AMERICAN ToBacco THANK YOU
British American Tobacco (Malaysia) Berhad — Q2 2019 Earnings Presentation on 6ix