British American Tobacco Malaysia Bhd. · MYX:BAT
British American Tobacco Malaysia Bhd — Q1 2018 Earnings Presentation
19 slides from British American Tobacco Malaysia Bhd's earnings presentation, May 21, 2018
Slide 1: 1st Quarter 2018 Performance
1st QUARTER 2018 PERFORMANCE 21ST MAY 2018
Slide 2: Agenda
Agenda ▪ Business Review ▪ Other Highlights ▪ Q1 2018 Financial Performance
Slide 3: Business Review
MALAYSIA Business Review
Slide 4: Business Highlights (Q1'18 vs SPLY)
Business Highlights (Q1’18 vs SPLY) Market Share Growth Market Value Share Growth Cost efficiencies achieved +1.1 ppt +1.5 ppt +1.4 ppt -17.1% Q1 2018: 54.7% Q1 2018: 56.7% Q1 2018: RM62 mil Q1 2017: 53.6% Q1 2017: 55.2% Q1 2017: RM75 mil Total Illegal Cigarette Total Legal Industry Volume Revenue &
Slide 5: BAT gaining market share behind Dunhill
BAT gaining market share behind Dunhill Share of Market – Malaysia (%) +1.1ppt 54.7 54.7 54.7 54.7 53.6 53.9 3.0 1.8 3.0 2.9 3.0 7.6 7.0 7.2 7.1 7.0 6.9 4.4 3.4 3.7 3.6 3.4 3.3 37.5 38.2 37.7 37.8 38.3 38.5 Q1'17 Q1'18 Q4'17 Jan'18 Feb'18 Mar'18 Dunhill Pall Mall Peter Stuyvesant Rothmans BAT Source
Slide 6: Strong Dunhill performance driving market share growth
Strong Dunhill performance driving market share growth Value Share 41% Share of Market (%) +1.5ppt vs. Q1 17 38.1 38.3 38.5 37.5 37.7 37.8 2017 Q1'17 Q4'17 Jan-18 Feb-18 Mar-18 Source: YTD Mar’18 Nielsen Retail Audit
Slide 7: Macro Environment
Macro Environment Consumer Price Index (CPI) Low CCI due to recessionary sentiments 119 119 120 121 121 81 83 83 77 77 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Business Confidence Index Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 113 114 103 102 Q1'17 Q2'17 Q3'17 Q4'17 Consumer and business confidence remains low Source: Tr
Slide 8: Legal market contraction due to high illegal cigarette incidence and remains a concern
Legal market contraction due to high illegal cigarette incidence and remains a concern Illegal volume share 63 63 (with fake tax stamps %) 60 58 59 59 59 Illegal volume share 57 (without fake tax stamps %) 642 603 605 -4.2% vs. 577 SPLY Volumes Monthly Average (mns) Q4'16 Q1'17 Q4'17 Q1'18
Slide 9: Other Highlights
BRITISH AMERICAN MALAYSIA Other Highlights
Slide 10: Latest development – GST Zero rated from 1 June
Latest development – GST Zero rated from 1 June • We welcome the removal of GST – clear commitment of the Government to address affordability issue Current market • We are committed to passing on the benefit of the zero GST reality to the consumer subject to MOH guidance - MOH does not allow for pri
Slide 11: Other Highlights
Other Highlights BEST EMPLOYER BRAND LEADERSHIP AWARD THE BRANDLAUREATE BEST BRAND AWARDS 2017/2018 The Best Employer Brand Leadership Award is conferred to companies that recognise the importance of human capital management in building a successful brand
Slide 12: Q1 2018 Financial Highlights
Q1 2018 Financial Highlights
Slide 13: Q1'18 Financial Highlights (vs preceding quarter)
Q1’18 Financial Highlights (vs preceding quarter) Positives Challenges Faced Market Contraction driven by Gross Profit margins stabilized -4.2ppt illegal trade growth +0.5ppt post VFM entry Cost base efficiencies Complex and slow tax stamp -24.3% materializing in Q1 2018 refund process Profit from o
Slide 14: Key Financial Metrics (Q1 2018 vs preceding quarter)
Key Financial Metrics (Q1’2018 vs preceding quarter) Revenue * Gross profit margin -6.9% +0.5 ppt Q1 2018: RM638 mil Q1 2018: 29.9% Q4 2017: RM685 mil Q4 2017: 29.4% Operating Expenses Profit from Operations -39.4% +23.2% (excl. one-off -24.3%) (excl. one-off +3.2%) Q1 2018: RM62 mil Q1 2018: RM130
Slide 15: Gross profit margins stabilized as VFM segment moderated
Gross profit margins stabilized as VFM segment moderated New Factory Volume Decline VFM entry Sourcing Gross Profit/ *Revenue (%) 34.1% 34.5% 31.3% 30.0% 29.4% 29.9% Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 * Revenue had been restated for all quarters due to MFRS15 adoption
Slide 16: Operating expenses optimal structure in Q1
Operating expenses optimal structure in Q1 120 100 • Cost base initiatives materializing in 2018 21 * • Overheads savings 80 -24.3% Excl. one off • Lower marketing investment and 60 distribution cost 40 82 • Timing of spend 62 • Regional recharges 20 0 Q4'17 Q1'18 • Absence of RM21 million provision
Slide 17: YTD Financials vs SPLY
YTD Financials vs SPLY Domestic & duty free volume Revenue 800 43 700 600 500 400 -9.5% 705 Excl.contract 638 1,077 -7.8% 300 994 mfg 200 100 - Q1 2017 Q1 2018 Q1 2017 Q1 2018 Operating Expenses (RM'mn) Profit from Operations (RM'mn) 75 158 -17.8% -17.1% 62 130 Q1 2017 Q1 2018 Q1 2017 Q1 2018
Slide 18: Shareholders' Return
Shareholders’ Return Dividend Payout Share performance 2017 2018 50 RM 1.69 RM 0.33 45 98% Payout 98% Payout 16th May 40 share price 35 30 34.18 31.56 25 28.40 0.43 0.43 0.43 26.42 0.40 20 24.50 0.33 15 10 Q1 Q2 Q3 Q4 Q1 Jan Feb Mar Apr May Share performance reflecting the expectations of a rebound
Slide 19: Thank You
BRITISH AMERICAN MALAYSIA THANK Y@E
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