British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — FY2018 Earnings Presentation
30 slides from British American Tobacco P.l.c's earnings presentation, Feb 28, 2019
Slide 1: Preliminary Results 2018
Preliminary Results 2018 28th February 2019 Nicandro Durante 1
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 2018 and Current Reports on Form 6
Slide 4: 2018 - A strong performance across all categories
2018 ‐ A strong performance across all categories Strong Strong Strategic Portfolio growth in the revenue Strategic growth, Portfolio, revenueup up+8.5%* 8.5%* Outperforming in Combustibles: market share up +40bps NGP revenue up +95%* to £901m* Strong results across the US business Dividend up + 4%
Slide 5: 2018 Results Highlights
2018 Results Highlights PROFIT FROM VOLUME REVENUE OPERATIONS REPORTED +3.3% +25.2% +45.2% ADJUSTED CURRENT^ ‐3.5% ‐2.3% ‐1.5% ADJUSTED CONSTANT* ‐3.5% +3.5% +4.0% ^ Representative and adjusted basis. See Appendix, notes A1 and A2. 5 * Representative, adjusted and constant rate basis. See Appendix,
Slide 6: Transforming Tobacco strategy driving growth
Transforming Tobacco strategy driving growth THP Oral Vapour +184% +11% +26% Revenue* Revenue* Revenue* New category revenue target of £5bn by 2023/24 6 * Representative, adjusted and constant rate basis. See Appendix, note A1, A2 and A3. Oral revenue comprises strategic portfolio revenue.
Slide 7: Consistent growth in earnings and dividends
Consistent growth in earnings^ and dividends Earnings per share^ growth* Dividends per share Average growth 2005 ‐ 2018: 11% p. a. CAGR: 12% 203 195 169 148 154 142 135 127 114 100 84 66 56 47 5% 10% 10% 9% 5% 5% 12% 15% 12% 12% 10% 9% 9% 10% 11% 10% 8% 10% 10% 9% ‐4% ‐5% ‐4% ‐7% ‐12% ‐10% 2005 2006
Slide 8: We have the right strategy
We have the right strategy FMC THP Oral Vapour Multi‐category Product platforms 8
Slide 9: Preliminary Results 2018
Preliminary Results 2018 28th February 2019 Jack Bowles 9
Slide 10: Long term sustainable performance - Combustibles + THP
Long term sustainable performance‐ Combustibles + THP +200bps +110bps Strategic brand +100bps Market Share +120bps +40bps +100bps +110bps +40bps +50bps Group Market Share +40bps +10bps +20bps 2012 2013 2014 2015 2016 2017 2018 Strategic Brand Global Market Share including THP US Strategic Brand Mark
Slide 11: THP - Growth in Japan as our global footprint increases
THP – Growth in Japan as our global footprint increases Japan Global footprint: Presence in markets comprising 96% of global THP market 26.7% SOUTH KOREA POLAND UKRAINE RUSSIA ROMANIA 28.0% 8.0% Value Share 26.0% 7.5% of THP* 24.0% 22.4% 7.0% 23.1% 22.0% 6.5% Volume Share 20.0% 6.0% ITALY CZECH SWIT
Slide 12: Vapour - New markets and new products driving growth
Vapour – New markets and new products driving growth Vype ePen3 Vuse Alto Consumable volume grew^ by +36% Share of consumable kits UK US National National value share value share 41.9% 3.9% 4.6% 38.6% France 27.4% value share* Phased roll‐ 27.6% 7.1% out now in 10.8% ~70k outlets JAN18 FEB18 MAR18 A
Slide 13: Oral - Strong pricing and portfolio growth
Oral – Strong pricing and portfolio growth Traditional Oral Modern Oral Strategic portfolio revenue grew` +9% driven by strong Modern oral revenue grew* +140% pricing in the US driven by EPOK • US oral revenue growth` +8% EPOK – achieved a 8% market share in • Volume down ‐2.3%^ Norway and 17% in Sw
Slide 14: US
US Value share growth +25bps (Premium share +30bps) Volume ‐5.3%^ Good pricing Strategic brands volume ‐3.5%^ Industry volumes impacted by gas prices, PY excise changes in California and the growth of the vapour category Revenue 1.5%* Newport and Natural American Spirit – good Adjusted Profit from 5
Slide 15: APME
APME Volume 0.7%^ Good revenue and profit from operations growth*, despite heavy investment in THP Strategic brands volume Volume increase* driven by Pakistan and THP 6.3%^ performance in Japan and South Korea Revenue 5.7%* Strong market share growth driven by Kent, glo, Dunhill and Rothmans Adjuste
Slide 16: AMSSA
AMSSA Revenue growth* driven by strong pricing across Volume ‐5.4%^ the region Strong profit from operations growth* driven by Strategic brands volume 3.1%^ Nigeria, Mexico and Chile Industry volume decline^ partially driven by illicit Revenue 5.6%* trade growth, mainly in Brazil and South Africa St
Slide 17: ENA
ENA Volume ‐5.3%^ Good revenue and profit from operations growth Good volume performances in Turkey, Egypt and Strategic brands volume 5.2%^ Poland offset by market decline in Russia, Ukraine, Italy and France Revenue 3.5%* Good pricing across the region Strong Strategic brand market share growth dr
Slide 18: Preliminary Results 2018
Preliminary Results 2018 28th February 2019 Ben Stevens 18
Slide 19: 2018 Results Highlights
2018 Results Highlights PROFIT FROM VOLUME REVENUE EPS~ OPERATIONS REPORTED +3.3% +25.2% +45.2% ‐86.0% ADJUSTED CURRENT ‐3.5%^ ‐2.3%^ ‐1.5%^ +5.2% ADJUSTED CONSTANT ‐3.5%* +3.5%* +4.0%* +11.8% ^ Representative and adjusted basis. See Appendix, notes A1 and A2. 19 * Representative, adjusted and const
Slide 20: 2018 Results - Adjusted Operating Margin % Up 40bps
2018 Results – Adjusted Operating Margin % Up 40bps^ +0.4 1.8 42.6^ 42.2 1.4 41.1 1.1 2017 Representative 2017 Changes in the Incremental 2018 Adjusted adjustment Representative business NGP impact Adjusted Margin AOM Margin 20 ^ Representative and adjusted basis. See Appendix, notes A1 and A2.
Slide 21: 2018 Results - Adjusted Cash Generated from Operations
2018 Results – Adjusted Cash Generated from Operations £1,684m £845m £75m £1,533m £523m £1,891m £142m £601m £214m £10,347m^ £8,071m^ £7,684m^ Adj operating Non cash items Working Capital Net Capex Pension fds ‐ Net interest Tax Dividends to NCI Adjusted Cash Restructuring Div from Free cash flow pro
Slide 22: 2018 Results - Adjusted Diluted EPS Growth Drivers
2018 Results – Adjusted Diluted EPS Growth Drivers +11.8% +5.2% 107.5 18.9 11.5 0.7 28.9 315.5* 37.1 296.7^ 282.1^ 18.8 2017 FY Adjusted Net Finance Associates Taxation Non‐controlling Number 2018 FY FX Impact 2018 FY Reported Profit from Cost Interests of shares Constant FX Current FX Operations 22
Slide 23: 2018 Results - Leverage
2018 Results – Leverage £1.6bn of debt paydown in 2018 Adjusted net debt/ Adjusted net debt/adjusted EBITDA at 4.0x on a current and approximately 3.6x Adjusted EBITDA on a constant currency basis Target further deleveraging 0.4x‐0.5x, returning to the higher end of historic adjusted net debt/
Slide 24: 2018 Results - Adjusted Net Debt / Adjusted EBITDA
2018 Results – Adjusted Net Debt / Adjusted EBITDA (£b) Adjusted Net Debt 3.6x +0.2x 4.0x +0.2x 4.0x 3.9x / Adjusted EBITDA 1.7 44.6 43.4 41.7 41.7 41.9 Opening Adj Net Debt Adj Net Debt / Adj EBITDA Adjustment FX & Other 2018 Adj Net Debt 2018 Adj Net Debt @ Constant @ Constant for Adj EBITDA Non‐C
Slide 25: 2018 Results - Summary
2018 Results – Summary Volume Financials Adjusted Revenue* Adjusted Profit* Adjusted Diluted EPS~ Volume^ ‐3.5% c c c +3.5% +4.0% +11.8% Constant currency Constant currency Constant currency Strategic Cigarette Volume^ Share Group Market Strategic Brands US Strategic Brands +4.8% Share Share c c c +
Slide 26: 2018 - A strong performance across all categories
2018 ‐ A strong performance across all categories Strong Strong Strategic Portfolio growth in the revenue Strategic growth, Portfolio, revenueup up+8.5%* 8.5%* Outperforming in Combustibles: market share up +40bps NGP revenue up +95%* to £901m* Strong results across the US business Dividend up + 4%
Slide 27: Appendix
Appendix A1: Representative basis Where appropriate, the Group is also presenting (as a supplement to the results) the 2018 performance against 2017, as though the Group had owned the acquisitions made in 2017 for the whole of that year. Comparison of results on this basis are termed “on a represent
Slide 28: Top BAT Market Share Movements (1)
Top BAT Market Share Movements (1) SOM FY18 Movement SOM FY18 Movement Market Market (%) (ppt) (%) (ppt) Argentina 23.3 (0.4) France 17.3 (0.1) Australia 41.2 1.0 KSA 38.9 9.3 Bangladesh 67.1 1.6 Germany 20.4 (0.2) Belgium 25.3 (0.7) Indonesia 8.0 0.5 Brazil 77.6 (1.7) Italy 18.7 0.0 Canada 48.6 (0.
Slide 29: Top BAT Market Share Movements (2)
Top BAT Market Share Movements (2) SOM FY18 Movement SOM FY18 Movement Market Market (%) (ppt) (%) (ppt) New Zealand 71.6 1.2 Spain 11.4 0.2 Pakistan 71.3 0.0 Switzerland 37.0 (0.5) Poland 28.4 (0.1) Taiwan 9.9 (0.7) Russia 22.0 (0.3) Turkey 23.0 0.7 South Africa 78.3 (0.5) UK 9.4 (0.2) South Korea
Slide 30: Preliminary Results 2018
Preliminary Results 2018 28th February 2019 30
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