British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — Debt Investor Presentation (February 2020)
18 slides from British American Tobacco P.l.c's debt investor presentation, Feb 27, 2020
Slide 1: Preliminary Results 2019
Preliminary Results 2019 27 February 2020 Tadeu Marroco Finance Director Neil Wadey Group Head of Treasury 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 2019 and Current Reports on Form 6
Slide 4: Delivering on our priority areas
Delivering on our priority areas… COMBUSTIBLE VALUE GROWTH › +4.6% Revenue growth* from combustibles STEP-CHANGE IN NEW CATEGORIES › Product roll-outs across New Categories SIMPLIFY THE › Simpler, faster, more agile COMPANY organisation * Adjusted and constant rate basis. See Appendix A1-A2. 4
Slide 5: Delivered on our commitments
Delivered on our commitments ADJUSTED FY 2019 2019 Guidance @ Constant rates Mid-Upper end Revenue +3-5%* +5.6% of range New Category Revenue +30-50%* +32.4% Operating Margin +50-100 bps +50 bps Current rates Upper end of Profit From Operations +5-7%* +6.6% range Diluted EPS High Single Figure* +8.4
Slide 6: Creating value
Creating value EXCELLENCE IN DELIVERING A POSITIVE ROBUST CORPORATE ENVIRONMENTAL SOCIAL IMPACT GOVERNANCE MANAGEMENT 24% reduction in CO2e Supplier code of conduct 100%* adherence to our Youth scope 1&2 emissions v 2010 defines minimum standards Access Prevention guidelines 60% reduction in waste t
Slide 7: … in a sustainable way
… in a sustainable way A STRONG APPROACH TO ESG* COMMITMENT TO TOBACCO HARM REDUCTION Consumers Employees CREATING VALUE Shareholders Society EXTERNAL RECOGNITION FOR PROGRESS TO DATE * ESG: Environmental Social Governance 7
Slide 8: Combustibles | Delivering value growth
Combustibles | Delivering value growth Revenue* from Combustibles 22.9 Growth drivers: • Value share growth +4.6% • Strong brands • Cigarette Price/Mix** 9% • Improved geographic mix 21.9 2018 £bn 2019 £bn *Adjusted and constant rate basis. See Appendix A1-A2 ** See Appendix A4.. 8
Slide 9: Combustibles | Value growth driven by strong brands
Combustibles | Value growth driven by strong brands +180bps +70bps Strategic brand +110bps volume share +100bps +120bps +100bps +20bps +110bps +20bps +40bps +50bps Group volume +40bps +20bps +10bps share 2012 2013 2014 2015 2016 2017 2018 2019 Strategic Brand Combustibles Value share Volume share Va
Slide 10: Step-change in New Categories | Strong progress
Step-change in New Categories | Strong progress Modern Oral Vapour +273% 32% + New Category 23% FY revenue FY revenue THP + growth* growth* FY revenue + 23% FY revenue growth* growth* *Adjusted and constant rate basis. See Appendix A1-A2. 10
Slide 11: Delivering today while investing in the future
Delivering today while investing in the future Margin growth* +50bps Investment £500m incremental marketing investment Strong Cash-Flow £1.9bn free cashflow after dividends De-leveraging on track 0.4 x (constant rates) Dividend 65% pay-out ratio *Adjusted basis See Appendix A1. Source: Company data
Slide 12: Strong cash generation driving de-leveraging
Strong cash generation driving de-leveraging Adj. Net Debt / Adj. EBITDA 4.0x -0.4x 3.6x -0.1x 3.5x 1.8 0.6 0.9 43.4 -0.5x 0.4 £bn 42.6 41.7 Adj. Net Debt 2018 Free Cash Flow after Other cash & non IFRS16 Adoption Adj. Net Debt FY FX Adj. Net Debt FY Dividends @CONR cash @CONR @CONR 2019 @ CONR 2019
Slide 13: Committed to de-lever to below 3.0x by end of 2021
Committed to de-lever to below 3.0x by end of 2021 Adj Net Debt*/Adj EBITDA** 2020 Guidance 4.0 x FY Operating cash 3.5 x conversion target above 90% c.3.2 x <3.0 x Dividend – 65% pay-out ratio ratio/ growth in GBP terms Medium term aspiration of BBB+ / Baa1 with S&P and Moody’s No significant debt
Slide 14: Delivering sustainable High Single Figure EPS growth
Delivering sustainable High Single Figure EPS growth Guidance 3-5% Revenue growth* › Dynamic New Category regulation £5bn New Category Revenue^ in 2023/24 › Agile and responsive Increased New Category Investment › Retain flexibility to Continued margin growth invest Cash generation Continued delever
Slide 15: Looking into 2020
Looking into 2020 Guidance 3-5% Revenue growth* › Vapour markets yet to £5bn New Category Revenue^ in 2023/24 return to previous levels Increased New Category Investment › Modern Oral sales suspension in Russia; Continued margin growth Vapour ban in Mexico Cash generation › First signs of Coronaviru
Slide 16: Long-term sustainable growth
Long-term sustainable growth › Delivering on our three priorities › Investment in expanding New Category business › Quantum provides the efficiencies and capabilities › Creating a Better Tomorrow High Single Figure constant currency earnings** growth ** Adjusted diluted earnings per share at constan
Slide 17: Q&A
Q&A 27 February 2020 Tadeu Marroco Finance Director Neil Wadey Group Head of Treasury 17
Slide 18: Appendix
Appendix A1: Adjusting (Adj.) Adjusting items represent certain items which the Group considers distinctive based upon their size, nature or incidence. A2: Constant currency Constant currency – measures are calculated based on a re-translation, at the prior year’s exchange rates, of the current year
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