Japan Tobacco Inc. · TSE:2914
Japan Tobacco — JT International — H1 2011 Earnings Presentation
36 slides from Japan Tobacco's earnings presentation, Sep 19, 2011
Slide 1: JT International Investor Field Trip: First Half Results and Full Year Outlook
JT International Investor Field Trip First Half Results and Full Year Outlook Luxembourg / Trier September 19-20, 2011
Slide 2: Forward-Looking and Cautionary Statements
Forward-Looking and Cautionary Statements This presentation contains forward-looking statements about our industry, business, plans and objectives, financial conditions and results of operations based on current expectations, assumptions, estimates and projections. These statements discuss future ex
Slide 3: Roland Kostantos, Chief Financial Officer
Roland Kostantos Chief Financial Officer
Slide 4: Agenda
Agenda Strategic Framework First Half Results First Half Results by Cluster Full Year Outlook Concluding Remarks Appendix 4
Slide 5: Strategic Framework
- Strategic Framework -
Slide 6: Strategic framework, focusing on top-line growth and broadening our earnings base
Strategic framework, focusing on top-line growth and broadening our earnings base JTI Mission Group Profit Growth Engine Growth Priorities Quality Top-Line Broadened Earnings Base Key Strategies Build and nurture outstanding brands Continue to enhance productivity Continue to focus on responsibility
Slide 7: Global Flagship Brands focus drives quality top-line growth
Global Flagship Brands focus drives quality top-line growth GFB Shipment Volume and GFB Mix within Total Shipment Volume (BNU, %) Volume Mix (BnU) (%) 65 62 400 58 60 300 53 55 249.8 203.2 50 200 47 149.1 45 95.7 100 40 0 35 2000 2001 2002 2003 2004 2005 2006 2007(1) 2008 2009 2010 GFB Mix GFB Shipm
Slide 8: Significant position in a growing number of markets
Significant position in a growing number of markets # of markets above 20% SOM JTI held 20% market share or more in 29 markets by +24 2010 29 Increase of 24 markets over 10 years via organic & 13 external growth #1 or #2 position in 23 markets including Russia, 11 Ukraine, UK, Ireland, Austria, Swed
Slide 9: Strategic framework has delivered strong results
Strategic framework has delivered strong results EBITDA and EBITDA margin, 2000-2010 EBITDA EBITDA margin (US$MM) (%) 5,000 32 35 30 4,000 3,336 25 3,000 20 15 2,000 10 10 1,000 338 5 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Reported +26% CAGR EBITDA margin (%) EBITDA (US$MM) Note:
Slide 10: First Half Results
- First Half Results -
Slide 11: Strong 2011 1H business performance
Strong 2011 1H business performance Year-over-Year Growth Total Shipment Volumes 0.1% GFB Shipment Volumes 3.2% Core Net Sales(1)(2) 6.2% EBITDA(2) 13.4% Note: (1) Core Net Sales excludes revenue from distribution, private label, contract manufacturing and other peripheral businesses (2) At constant
Slide 12: GFB portfolio continues to capture growth opportunities
GFB portfolio continues to capture growth opportunities 2011 H1 GFB shipment volumes vs. 2010 (BnU) % Total YoY Shipment Growth Volume 2010 H1 118.3 58% -2% Engine 1.7 40% 2% Stronghold 2.0 17% 6% Future Potential 0.0 3% 1% 2011 H1 122.0 60% 3% 12
Slide 13: Engine brands – Winston: the #2 international brand in the world
Engine brands – Winston: the #2 international brand in the world Winston continued to Winston shipment volume (BnU) capture consumers across JTI’s geographic footprint +3.9% 61.5 Winston capitalized on key 59.1 trends of up trading in emerging markets & down trading in mature markets 2010 H1 2011 H1
Slide 14: Engine brands – Camel: leveraging this strong iconic brand
Engine brands – Camel: leveraging this strong iconic brand Camel performance Camel shipment volume (BnU) impacted by industry contraction in Spain -2.9% 20.3 19.7 Excluding Spain, Camel grew by 1.3% due to strong performance in Turkey and France 2010 H1 2011 H1 THIS SLIDE HAS BEEN DEVELOPED TO EXPLA
Slide 15: Stronghold brands – LD, Mild Seven, B&H, Silk Cut
Stronghold brands – LD, Mild Seven, B&H, Silk Cut: strong growth of 6% driven by LD and Mild Seven 2011 H1 GFB shipment volumes vs. 2010 (BNU) % Total YoY Stronghold Growth Volume 2010 H1 33.4 - 0% 1.6 52% 10% 0.5 28% 6% -0.0 15% 0% -0.2 6% -9% 2011 H1 35.4 - 6% 15
Slide 16: Continued share gains in most of key markets
Continued share gains in most of key markets, proving our competitiveness 2011(1) ppt. change vs. last year Russia 37.1% +0.2 France 16.2% +0.6 Italy 20.3% +1.2 Spain 20.5% -0.1 UK 39.1% +0.2 Turkey 23.5% +2.5 Taiwan 38.4% +1.2 Note: (1) 12 month moving average share of market; market shares do not
Slide 17: Double-digit EBITDA growth driven by pricing
Double-digit EBITDA growth driven by pricing H1 EBITDA Roadmap ($MM) +$229MM (13.4%) -44 1,939 274 1,711 -1 2010 H1 Volume Price/Mix Other 2011 H1 at Constant FX 17
Slide 18: First Half Results by Cluster
- First Half Results by Cluster -
Slide 19: CIS+: Drives overall JTI growth
CIS+: Drives overall JTI growth Year-over-year growth, 1H 2011 vs. 1H 2010, % Total Shipment GFB volume and pricing -1 drove strong Core Net Volume Sales and EBITA growth GFB Shipment Volume 8 Seized pricing opportunities in Russia, Romania and Kazakhstan Core Net Sales 16 at Constant FX Challenging
Slide 20: Russia: Industry contraction is slowing and up-trading continues
Russia: Industry contraction is slowing and up-trading continues Total Industry Size (BnU) RMC Price Segment Evolution (%) -3% -2% Prestige 11.5 11.3 11.3 11.8 12.0 12.0 12.1 390 380 372 Premium 4.7 4.6 4.5 4.4 4.4 4.3 4.3 Sub-Premium 26.0 26.1 26.5 26.6 26.8 27.1 27.3 Mid-Price 19.8 20.5 20.8 21.2
Slide 21: Russia: Strengthened our market share leadership
Russia: Strengthened our market share leadership Market share (%) 37.4 37.0 37.1 37.1 37.2 36.7 36.8 JTI total SOM 35.8 35.8 35.3 JTI total SOV 34.7 34.7 34.8 34.6 11.8 11.2 11.5 Winston 10.5 10.8 10.8 10.3 6.1 5.5 5.7 LD 5.2 5.2 5.2 5.2 4.0 4.0 4.0 4.0 4.1 4.1 3.8 Peter I 2.1 2.1 2.1 2.0 2.0 2.0 2.
Slide 22: Russia: Pricing environment remains robust and regulatory environment rational
Russia: Pricing environment remains robust and we expect continued rational regulatory environment JTI as market leader has Pricing evolution Sep. ‘10-Sep. ‘11 consistently increased prices (RUB/20 pack) Latest excise tax increase 50 48 Russian proposal, being discussed by 46 Style government, is mo
Slide 23: South and West Europe: Solid performance despite challenges in Spain
South and West Europe: Solid performance despite challenges in Spain Year-over-year growth, 1H 2011 vs. 1H 2010, % Total Shipment Industry contraction in -4 Spain drove volume Volume reduction GFB Shipment Volume -4 Excluding Spain, total shipment and GFB shipment volumes have Core Net Sales grown 4
Slide 24: North and Central Europe: Expanding scale and profitability
North and Central Europe: Expanding scale and profitability Year-over-year growth, 1H 2011 vs. 1H 2010, % Total Shipment Czech, Germany, Poland 0 Volume and Hungary delivered enhanced GFB and profitability growth GFB Shipment 4 Volume Seized pricing opportunities in Poland, Germany, Czech Core Net S
Slide 25: Rest-of-the-World: Expanding the base for sustainable future growth
Rest-of-the-World: Expanding the base for sustainable future growth Year-over-year growth, 1H 2011 vs. 1H 2010, % Total Shipment Impressive total shipment 5 volume growth of 5%, Volume driven by Middle East and Central Africa GFB Shipment 2 Volume Profitability improved through both favorable Core N
Slide 26: Full Year Outlook
- Full Year Outlook -
Slide 27: Solid business fundamentals support EBITDA target achievability
Solid business fundamentals support EBITDA target achievability Year-over-Year Growth Full Year H1 Act Aug. YTD Outlook Total Shipment Volumes 0.1% 0.0% 0.0% GFB Shipment Volumes 3.2% 3.7% 2.7% Core Net Sales(1)(2) 6.2% 7.6% EBITDA(2) 13.4% 11.2% Note: (1) Core Net Sales excludes revenue from distri
Slide 28: Year to date FX development broadly in line with expectations
Year to date FX development broadly in line with expectations while prevailing Ruble rate is weakening 8 month average Weekly average Full Year 2011 Change 2011 Change Sept. 12-16 Act vs. 2010 Assumption vs. 2010 RUB 28.57 6% 30.40 28.50 7% GBP 0.62 5% 0.63 0.61 7% EUR 0.72 4% 0.73 0.70 7% CHF 0.89
Slide 29: Strong record to continue
Strong record to continue EBITDA and EBITDA margin, 2000-2011 EBITDA (US$MM) EBITDA margin (%) 5,000 34 35 32 4,500 30 4,000 3,710 3,500 3,336 25 3,000 +11.2% 20 2,500 2,000 15 1,500 10 1,000 5 500 0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 at constant FX Note: Excludes impact o
Slide 30: Further broadening the base through the acquisition of HCTF
Further broadening the base through the acquisition of Haggar Cigarette & Tobacco Factory Ltd (HCTF) THIS SLIDE HAS BEEN DEVELOPED TO EXPLAIN JTI’S PERFORMANCE TO OUR INVESTORS. IT IS NOT INTENDED TO PROMOTE THE PURCHASE OF OUR PRODUCTS. Leadership position in both Sudan and South Sudan We will bene
Slide 31: Concluding Remarks
- Concluding Remarks -
Slide 32: Delivered a strong set of results in the first half, and on track to meet our target
Delivered a strong sets of result in the first half, and on track to meet our target Continued focus on executing our growth priorities Quality top-line growth Broadening earnings base Strong first half performance driven by: Robust pricing GFB growth of 3.2% Market share gains in most key markets S
Slide 33: Appendix
- Appendix -
Slide 34: Core Net Sales: 1H
Core Net Sales: 1H 2011 1H core net sales vs. 2010 ($MM) +306MM +458MM (+6.2%) (+9.3%) 5,372 +152 5,220 +272 34 4,914 2010 1H Volume Price/Mix 2011 1H at FX 2011 1H constant FX reported Note: Core Net Sales excludes revenue from distribution, private label, contract manufacturing and other periphera
Slide 35: EBITDA: 1H
EBITDA: 1H 2011 1H EBITDA vs. 2010 ($MM) +229MM +251MM (+13.4%) (+14.7%) +23 1,961 -44 1,939 +274 1,711 -1 2010 1H Volume Price/Mix Other 2011 1H at FX 2011 1H constant FX reported Note: Core Net Sales excludes revenue from distribution, private label, contract manufacturing and other peripheral bus
Slide 36: EBITDA: Q2
EBITDA: Q2 2011 Q2 EBITDA vs. 2010 ($MM) +92MM +165MM (+10.4%) (+18.5%) 1,058 73 -34 986 +144 893 -17 2010 Q2 Volume Price/Mix Other 2011 Q2 at FX 2011 Q2 constant FX reported Note: Core Net Sales excludes revenue from distribution, private label, contract manufacturing and other peripheral business