British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — Debt Investor Presentation (2019)
16 slides from British American Tobacco P.l.c's debt investor presentation, 2019
Slide 1: Fixed Income Investor Update 2019
Fixed Income Investor Update 2019 Tadeu Marroco Group Transformation Director & Deputy Finance 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 filed on 15 March 2019 and Current Reports on Form 6
Slide 4: Delivering a stronger, simpler, faster organisation
Delivering a stronger, simpler, faster organisation COMBUSTIBLE VALUE › Deliver 50-100bps of margin GROWTH improvement pa STEP-CHANGE › Release funds for growth IN NEW CATEGORIES › Focus on investment returns › Generate cash to de-lever the SIMPLIFY THE balance sheet COMPANY 4
Slide 5: A sustainable business
A sustainable business Industry leader in DJSI and Gold Class award Top 5 FTSE 100 ranking 81% score in Workforce Disclosure Initiative 5
Slide 6: Delivering on our financial objectives
Delivering on our financial objectives REPORTED HY 2019 ADJUSTED HY 2019 @ Current rates 2019 Guidance @ Constant rates Mid-Upper end Revenue +4.6% +3-5%* +4.1% of range New Category Revenue +31.3% +30-50%* +27.3% Operating Margin -210 bps +50-100 bps +110 bps Current rates Upper end of Profit From
Slide 7: Winning in the US where it matters
Winning in the US where it matters +3.7 % Revenue * -10 bps Volume share +40 bps Premium share +11.2% +30bps +70bps Adj Profit From Value share ASU30 share Ops* Industry volume HY -5.4%** FY estimate c. -5.5% *Adjusted and constant rate basis. See Appendix A1-A2.** STW: Shipments to wholesale. Sourc
Slide 8: New Category revenue growth on track for FY guidance
New Category revenue growth on track for FY guidance Around the middle of +27% +30-50% FY19 growth*~ H1 growth* +58% H1 Vapour growth* +284% H1 Modern Oral growth* +4% H1 THP growth* *Adjusted and constant rate basis. See Appendix A1-A2. ~ FY19 guidance Source: Company data 8
Slide 9: Adjusted Net Debt higher due to MSA payment timing and IFRS 16
Adjusted Net Debt higher due to MSA payment timing and IFRS 16 0.2 -0.1 1.6 *0.6 -0.2 45.4 45.5 43.4 2018 average: 1.335 Close: 1.274 2019 H1 average: 1.294 Close: 1.273 *Opening Net Debt includes IFRS16 impact £0.6bn 9
Slide 10: On track to de-lever at 0.4x ex-currency
On track to de-lever at 0.4x ex-currency Adj Net Debt*/ FY19 guidance Adj EBITDA* 4.0x Committed to FY Free cashflow 2018 Closing after dividends of £1.5bn FY Operating cash 2019 Outlook 3.6x conversion target above 90% Dividend – 65% pay-out ratio / 2020 Outlook 3.2x growth in GBP terms *Adjusted N
Slide 11: Financing strategy
Financing strategy Financial Policy › De-leveraging at 0.4x per annum at constant FX, returning to the higher end of historic Net Debt / EBITDA target of 1.5x to 2.5x › Targeting £1.5bn free cash flow after dividends › Medium term aspiration of BBB+ / Baa1 with S&P and Moody’s › No significant debt
Slide 12: Bond maturity profile & fixed / floating mix
Bond maturity profile & fixed / floating mix Recent activities › 2017: issued USD denominated bonds under Rule 144A to finance the Reynolds acquisition › 2018: completed exchange offer of unregistered 144A bonds for registered bonds › 2019: filed inaugural SEC shelf programme EMTN and Shelf Programm
Slide 13: Strong H1 results
Strong H1 results Adjusted Volume Adjusted Profit from Adjusted Revenue Operations Diluted EPS -3.5% +4.1%* +5.9%* +7.1%* Strategic Strategic Group Group brand market share value share brand market value share share Flat +10bps +60bps +50bps *Adjusted and constant rate basis. See Appendix A1-A2. Sou
Slide 14: On track for a good year
On track for a good year › On track for the full year guidance COMBUSTIBLE VALUE › New Category revenue expected GROWTH around the middle of 30-50% range STEP-CHANGE › Building a stronger, simpler, faster IN NEW CATEGORIES organisation › On track to de-lever at 0.4x ex- SIMPLIFY THE currency COMPANY
Slide 15: Transforming Tobacco
TRANSFORMING FOBACCS
Slide 16: Appendix
Appendix A1: Adjusting (Adj.) Adjusting items are significant items of certain financial measures which individually or, if of a similar type, in aggregate, are relevant to an understanding of the Group’s underlying financial performance because of their size, nature or incidence. In identifying and
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