British American Tobacco Malaysia Bhd. · MYX:BAT
British American Tobacco Malaysia Bhd — Q1 2019 Earnings Presentation
16 slides from British American Tobacco Malaysia Bhd's earnings presentation, May 28, 2019
Slide 1: British American Tobacco Quarter 1, 2019 Performance
why BRITISH AMERICAN TOBACCO QUARTER 1, 2019 PERFORMANCE 28T4 May 2019
Slide 2: Agenda
01 Key highlights AGENDA 2 Business review 03 Q1 financial performance
Slide 3: Key highlights
sl OL Key highlights
Slide 4: Q1 2019 At a glance
Q1 2019 At a glance Legal market volume -8% vs Q4'18 (affordability impact- SST & PPS) ROTHMANS market share +0.6ppt \ vs Q4'18 (Growing in VFM segment) 7 Illegal trade 61% \ (Low enforcement power) Revenue -3% vs SPLY Market share -0.5ppt vs Q4'18 Profit from operations -8% vs SPLY
Slide 5: Excise moratorium preferred given price elasticity and affordability stretch
Excise moratorium preferred for 2019 given high price elasticity and affordability stretch SST-led price increase Nov ‘18 impacting legal industry higher impact to BAT due to Premium mix Illegal Volume Share (%) Q1’19 vs SPLY 63 63 63 63 -2ppt 61 SST Smoking % change Pricing Ban 577 590 596 590 543
Slide 6: The brutal reality of illegal trade – syndicates outpacing enforcement
The brutal reality of illegal trade – syndicates outpacing enforcement Syndicates innovative in their distribution • Increasing trend on online selling • Change of operating hours by retailers • Agile selling methods – coupon, credit and carton purchase • Out of store storage & selling to regulars •
Slide 7: Smoking restriction 2% impact on tobacco consumption since Jan'19
Smoking restriction 2% impact on tobacco consumption since Jan’19 Regulation Update Issues / impact • There is still confusion on compliance given • Smoking is banned in ALL eateries inconsistent enforcement/ advice from MOH and • MOH extended “grace” period local municipal councils from Jul’19 to J
Slide 8: THP still pending MOH approval after 6 months – unprecedented delay
THP still pending MOH approval after 6 months – unprecedented delay • BAT fully ready – unclear of MOH’s unjustified pricing approval delay • No legal ground as the product fully certified and classified by Customs • Shareholder’s interest undermined by unlevel playing field • The first market to ha
Slide 9: HTL – BAT's effort to bring alternative to illegal cigarettes
HTL – BAT’s effort to bring alternative to illegal cigarettes Pilot in 6000 outlets in East Malaysia SABAH 85% Illicit Incidence SARAWAK 84% Illicit Incidence • HTL is cigarillo category (not cigarettes) sold at RM9 • Initial results encouraging – 80% trial by illegal smokers • Incremental revenue p
Slide 10: Business Review
sl OZ Business Review
Slide 11: Premium segment stabilising post correction of price increase
Premium segment stabilising post correction of price increase VFM growth heavily driven by affordability Nielsen RA Price Segment Share (%) Pricing +RM0.40 2019 LE PREMIUM 64.8 (vs 2017) 63.1 61.4 62.2 61.2 61.0 61% (-5ppt) 20% (-8ppt) 24.6 22.7 23.0 22.3 AP 23.0 22.7 19% 16.7 (+13ppt) 15.9 15.1 15.
Slide 12: BAT share stabilising as Dunhill holds share and Rothmans grow
BAT share stabilising as Dunhill holds share and Rothmans grow Pricing +RM0.40 56.0 55.5 55.5 55.2 55.0 54.8 54.7 54.8 54.5 54.0 Q3'18 Q4'18 Jan'19 Feb'19 Mar'19 Nielsen RA Corporate Share (%) Dunhill stabilised in the last 2 months, performing better than competition Rothmans outpaced competition i
Slide 13: Q1 Financial performance
sl OS Q1 Financial performance
Slide 14: Key financial highlights
Key financial highlights Q1’19 vs SPLY vs preceding quarter VOLUME 0.8mns -9.6% -15.5% RM621 mil -2.6% -19.4% REVENUE (underlying -9.1%) -0.9ppt FLAT GROSS PROFIT % 29.1% -7.5% -26.1% PROFIT FROM OPERATIONS RM120 mil
Slide 15: Financials impacted by volume decline following pricing and legal market downtrading
Financials impacted by volume decline following pricing and legal market downtrading Revenue Gross margin maintained GST removal -9% 41 SST pricing since Nov’18 638 580 30% 29% 29% Q1'18 Q1'19 Profit from operations Q1'18 Q4'18 Q1'19 -8% Q1’18 Volume % Q1’19 Volume % 130 120 Q1'18 Q1'19 6% 10%
Slide 16: Thank you
BRITISH AMERICAN ToBacco THANK YOU
British American Tobacco (Malaysia) Berhad — Q1 2019 Earnings Presentation on 6ix