British American Tobacco Malaysia Bhd. · MYX:BAT

British American Tobacco Malaysia Bhd — Q4 2013 Earnings Presentation

26 slides from British American Tobacco Malaysia Bhd's earnings presentation, February 2014

  1. Slide 1: Analyst Briefing Quarter 4, 2013

    ANALYST BRIEFING QUARTER 4, 2013 February 2014

  2. Slide 2: Agenda

    AGENDA  Industry Review, Market Share and Volumes  BATM Review  Quarter 4, 2013 Results  Other Highlights  Future Prospects

  3. Slide 3: FY 2013 Headlines

    FY 2013 Headlines • Declining domestic volume -5.8% V’s 2012. Notable price impact in Q4. • Significant y.o.y. growth in contract manufacturing volume (+16%) • Consumer price increase : +0.30/pk (June 2013) and +1.50/pk (Sept 2013) • Illicit up by +1.2ppt V’s 2012 driven by illicit whites • Domestic

  4. Slide 4: Industry Review, Market Share, Volumes and BATM Review

    INDUSTRY REVIEW, MARKET SHARE, VOLUMES AND BATM REVIEW

  5. Slide 5: Industry Volume: Total Big3 Softened by 6% (FY2013 vs. FY2012)

    Industry Volume: Total Big3 Softened by 6% (FY2013 vs. FY2012) Source: Industry Exchange, IMS Volumes (Kretek + Whites) Industry Volumes (bns) 2012 2013 Big3 + Sub VFM + Kretek 3.69 3.65 3.56 3.73 3.56 3.47 6.0% 2.6% 3.50 4.5% 2.92 16.6% Q1 Q2 Q3 Q4 Volume Variance % Variance Volume Variance % Varia

  6. Slide 6: Premium segment and Aspirational Premium are growing at the expense of VFM

    Premium segment and Aspirational Premium are growing at the expense of VFM Source: FY 2013 Malaysia Retail Audit (Base: Total Legal Market – White + Kretek) 72.8 74.0 2012 2013 SOM % 23.5 23.8 3.7 2.2 Premium Aspirational Premium VFM SPLY 2012 FY 2013 Share of Premium 2012 Share of Premium 2013 BAT

  7. Slide 7: Sharp increase in illicit whites witnessed after cigarette price increase

    Sharp increase in illicit whites witnessed (W3’13) after cigarette price increase Source: Illicit Cigarette Study, 2010 - 2013 *Survey methodology does not capture sub-VFM brands selling at below minimum price. 36.3 38.9 40 36.1 35.7 34.9 -0.2ppt 34.5 34.7 34.4 -1.6ppt +1.2ppt +0.2ppt -1.1ppt 33.8 3

  8. Slide 8: BAT continues to grow in Q4'2013, closing the year with 62.0% SOM

    BAT continues to grow in Q4’2013, closing J&J - Oil 3 the year with 62.0% SOM Period Ended DEC13 | Hide NA's | Colour % Chg | Share of Sum(PROD) Source: FY 2013 Malaysia Retail Audit (Base: Total Legal Market – White + Kretek) +1.5ppt Peter Stuyvesant has been showing month-on-month gradual improvem

  9. Slide 9: Dunhill: Closed 2013 with remarkable achievement of +1.3ppt growth

    Dunhill: Closed 2013 with remarkable achievement of BAT +1.3ppt growth Source: FY 2013 Malaysia Retail Audit (Base: Total Legal Market – White + Kretek) +1.3ppt +2.5ppt Mar 2013 Sept 2013 Dec 2013 Dunhill Ice – High Menthol Capsule Dunhill Kretek - Longer satisfaction with Dunhill FF & Lts - Limited

  10. Slide 10: DH Ice has been showing resilient performance in 2013

    DH Ice has been showing resilient performance in 2013 Source: FY 2013 Malaysia Retail Audit (Base: Total Legal Market – White + Kretek) DH Ice National SOM (%) 4.0 3.8 3.8 3.8 3.8 3.9 National 3.7 3.7 3.7 3.7 launch 3.6 3.6 3.5 3.5 3.5 3.5 3.5 3.4 3.4 3.4 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.4 DH Ice 0

  11. Slide 11: BAT Aspirational Premium gradually rising in recent months

    BAT Aspirational Premium gradually rising in recent months Source: FY 2013 Malaysia Retail Audit (Base: Total Legal Market – White + Kretek) BAT -1.7ppt -0.7ppt Source: Malaysia Retail Audit (Base: Total Whites, YTD DEC13) Peter Stuyvesant contributed to the gains, post pack upgrade in Jul ‘13

  12. Slide 12: Peter Stuyvesant rejuvenated since Jul'13

    BAT Peter Stuyvesant rejuvenated since Jul’13 Source: FY 2013 Malaysia Retail Audit (Base: Total Legal Market – White + Kretek) -0.1ppt +0.2ppt Source: Malaysia Retail Audit (Base: Total Whites, YTD DEC13) Produk ini mengandungi lebih 4,000 bahan kimia termasuk tar, nikotina dan karbon monoksida yan

  13. Slide 13: Pall Mall: Positive indication of +0.2ppt share gains post product upgrade

    Pall Mall: Shown positive indication of +0.2ppt share gains BAT post product upgrade in Dec’13 Source: FY 2013 Malaysia Retail Audit (Base: Total Legal Market – White + Kretek) -0.5ppt -0.1ppt Dec 2013: Pall Mall FF & Lts Product Upgrade: New Blend Plus Capsule Jun 2013: Dec 2013: Pall Mall Menthol

  14. Slide 14: Financial Highlights

    FINANCIAL HIGHLIGHTS OBACCO

  15. Slide 15: Q4: Volume and Revenue

    Q4: Volume and Revenue Domestic & DF Volumes (mn stick)) Contract Manufacturing Volumes (mn stick) Cigarette Semi Finished 2,315 2,642 - 14.9% +6.9% 2,200 1,873 1,407 1,338 Q4 2012 Q4 2013 Q4 2012 Q4 2013 Revenue (RM'mn) Net Turnover (RM'mn) +7.7% 1,094 0% 623 579 1,093 Q4 2012 Q4 2013 Q4 2012 Q4 20

  16. Slide 16: Key Metrics: Total Q4, 2013 vs SPLY

    Key Metrics: Total Q4, 2013 vs SPLY Profit from Operation (RM'mn) Earning per Share (Sen/share) -3.9% 68.9 +3.2% 251 259 66.2 Q4 2012 Q4 2013 Q4 2012 Q4 2013

  17. Slide 17: 2013: Volume and Revenue

    2013: Volume and Revenue whe BRITISH AMERICAN TOBACCO MALAYSIA 5 - Contract Manufacturing Volumes (mn stick) Domestic & DF Volumes (mn stick) mCigarette Semi Finished +16.14H ——— 6,716 7,229 2012 2013 2012 2013 Revenue (RM'mn) Net Turnover (RM'mn) +10.3% : 2012 2013 Ss— —— oO +3.5%

  18. Slide 18: Key Metrics: 2013 vs. 2012

    Key Metrics: 2013 vs. 2012 me... TOBACCO Gross Profit (RM'mn) Operating Expenses (RM'mn) MALAYSIA +1.5% -7.8% 431 398 2012 2013 2012 2013 Profit from Operation (RM'mn) Earning per Share (Sen/share) Profit from Operation (RM'mn)

  19. Slide 19: YoY Dividend Growth 3.7%

    2012: RM2.72 - 97.4% Payout 2013: RM2.82 - 97.8% Payout 0.77 0.78 0.68 0.68 0.68 0.65 0.65 0.65 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 YoY Dividend Growth 3.7%

  20. Slide 20: Other Highlights

    OTHER HIGHLIGHTS OBACCO

  21. Slide 21: BATM Foundation contributions

    BATM Foundation Scholarship Day 12th Higher Education Starter Kit (HESK) (4th December 2013) Awards Ceremony (13th November) BATM Foundation awarded A total of 86 aspiring students from scholarships amounting to the tobacco growing community RM406,000 to 23 aspiring students. awarded RM59,200 for HE

  22. Slide 22: Recent External Recognition

    Recent External Recognition ACCA Malaysia Sustainability Reporting Awards (MaSRA) 2013 Winner for Reporting in the Annual Report category • Recognition for disclosure of sustainability initiatives in the Company’s Annual Report, as well as for its strong governance structure and corporate responsibi

  23. Slide 23: Regulatory update

    Regulatory update New Pictorial Health Warnings (PHWs) Requirements – 1st Jan 2014 • Increase of front panel PHW to 50% of cigarette pack from 40%. Back panel remains at 60%. • 6 new sets of PHWs - total of 12 sets of PHWs currently. • Possession of cigarette packs without PHWs an offence, punishabl

  24. Slide 24: Regulatory update

    Regulatory update New Pictorial Health Warnings (PHWs) Front Panel Back Panel Front Panel Back Panel Front panel Back panel 50% 60% (from 40%) (no change)

  25. Slide 25: Future Prospects

    Future Prospects  2014 volume decline following excise led price increase in September 2013  Increasing illicit trade;  2014 results will be heavily influenced by Government’s approach to illicit trade;  Concern about any further excise increases. CAUTIOUS OUTLOOK FOR 2014

  26. Slide 26: Thank You

    THANK YOU BRITISH AMERICAN TOBACCO MALAYSIA

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