British American Tobacco P.l.c. · LSE:BATS
British American Tobacco P.l.c — British American Tobacco (Malaysia) Berhad — Global Consumer & Food Retail Conference 2009
37 slides from British American Tobacco P.l.c's conference presentation, Jun 10, 2009
Slide 1: British American Tobacco (Malaysia) Berhad Global Consumer & Food Retail Conference
British American Tobacco (Malaysia) Berhad Global Consumer & Food Retail Conference 10 June 2009 Paris
Slide 2: Agenda
Agenda Snapshot of Malaysia Industry review, rarket share and volumes Brand activities and performance Trade marketing & distribution Financial highlights Other highlights
Slide 3: Malaysia – Market snapshot
Malaysia – Market snapshot TOBACCO MARKET (2008) Industry Volume : 23.1 billion West Malaysia: Legal Whites : 17 billion Population: 80% Illicit trade incidence: 25.7% Legal tob. Vol: 94% East Malaysia: Total Population : 27.7 million Population: 20% Smoker Population : 4.0 million (3.7 for male, 0.
Slide 4: British American Tobacco (Malaysia) Berhad
British American Tobacco (Malaysia) Berhad More than 90 years of history in Malaysia Employs approximately 2,000 staff Works with over 3,000 tobacco growing and curing families Partners close to 90,000 retailers nationwide A fully equipped factory, which exports cut rag, DIET and cigarette
Slide 5: Grow, invest & accelerate our high value business model
GROW , INVEST & ACCELERATE our HIGH VALUE BUSINESS MODEL OUR FUTURE : OUTRIGHT LEADERSHIP • High single digit EPS growth • 100% GDB portfolio • #1 Supply chain • Sensible regulatory environment • Most respected organisation • Talent development and export hub Growth Productivity Responsibility Winni
Slide 6: Industry review, market share and volumes
Industry review, market share and volumes
Slide 7: Illicit trade incidence continues to grow
Illicit trade incidence continues to grow 27.5 25.7 26 23.8 22 20.8 +1.9 pp 18 17.5 % Illicit 14.4 +3.0 pp 14 +3.3 pp 10 +3.1 pp 6 2 2004 2005 2006 2007 2008 2008 (Wave 3)
Slide 8: Illicit trade incidence: moving forward
Illicit trade incidence: moving forward 27.5 25.7 26 23.8 22 20.8 +1.9 pp 18 17.5 % Illicit 14.4 +3.0 pp 14 +3.3 pp 10 +3.1 pp 6 2 2004 2005 2006 2007 2008 2008 (Wave 3) • Economic downturn will continue to drive demand • Need a balanced approach to excise • PHW may disrupt their supply chain as sec
Slide 9: Market share developments
Market share developments 65 25 Competitors % share 60 20 BAT % share 55 15 50 10 45 5 40 0 2004 2005 2006 2007 2008 2009 (Q1) BAT(LHS) 63.2 63.4 61.8 61.0 60.8 59.8 PMI 14.5 14.6 14.0 13.3 12.8 13.0 JTI 19.1 19.4 18.3 18.3 18.6 19.5 Others 3.1 2.6 5.9 7.5 7.8 7.8 Source: Nielsen Retail Audit • Othe
Slide 10: BAT's portfolio strengthened
BAT’s portfolio strengthened 55 20 53 18 51 16 49 14 Others Share % GDB Share % 47 12 45 10 43 8 41 6 39 4 37 2 BAT's GDBs BAT Other 35 0 2004 2005 2006 2007 2008 2009 (Q1) Source: Nielsen Retail Audit • BAT’s tail brands declined by over 10%pts, while our GDBs grew by over 7%pts, enhancing the stre
Slide 11: Increased value share with the portfolio mix improvement
Increased value share with the portfolio mix improvement 100% 0.9% 1.5% 95% (Share of industry profit pool, market contribution) 7.8 11.7% 9.3% 14.5% 13.6% 11.7% 90% 12.8 85% 10.8% 9.9% 9.5% 10.4% 10.8% 2008 80% RA share 75% 70% 18.6 65% 78.4% 78.4% 77.9% 75.1% 75.6% 60% 60.8 55% 50% 2004 2005 2006
Slide 12: Legal white volume trend in 2009
Legal white volume trend in 2009 Monthly In Market Sales (mns) 2000 1800 Industry Price PHW Increase 1600 1400 Vs. SPLY 1200 -9.5% 1000 800 -10.0% 600 400 -0.3% 200 -19.8% 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan- Feb Mar -08 09 BATM JTI PMI Total White (Big-3) Source: Nielsen Retail Au
Slide 13: Decline in industry volumes, but not value
Decline in industry volumes, but not value 4.0 1,500 (R M millions) 3.0 (billions) 1,000 2.0 500 1.0 0.0 0 Q1' 2008 Q1' 2009 Industry volumes Industry values Despite a sharp drop in industry volumes, the industry value continued to increase
Slide 14: BAT & GDB share
BAT & GDB share General Price Industry 59.7 60.0 59.8 60.0 59.9 60 59.3 59.4 59.5 Record 54.3 54.4 54.1 54.6 highest 55 52.7 ever 51.3 52.0 50.8 50 7.9 7.2 7.3 9.4 8.4 8.3 8.3 8.3 2.7 2.7 45 2.6 2.3 2.5 2.0 2.2 1.4 40 43.4 43.8 44.2 41.1 41.6 42.0 35 40.6 40.6 30 Aug-08 Sep Oct Nov Dec Jan-09 Feb Ma
Slide 15: Price segments
Price segments General Share of Market (%) Price Industry 80 70.9 71.4 71.4 68.0 68.4 68.7 69.1 70 60 50 40 30 23.7 23.7 23.5 22.8 21.4 20.8 20.8 20 10 8.2 7.9 7.8 8.1 7.7 7.8 7.8 0 Sep Oct Nov Dec Jan-09 Feb Mar Premium VFM Sub VFM Source: Nielsen Retail Audit Though the industry volume is declinin
Slide 16: Market remained strongly premium-skewed
Market remained strongly premium-skewed Q4 2008 Q1 2009 Sub-VFM Sub-VFM VFM 8% VFM 8% 23% 21% PREMIUM PREMIUM 69% 71% Share of Premium % Share of Premium % BAT 72.3 BAT 73.2 JTI 13.2 JTI 12.7 PMI 14.6 PMI 14.1 Share of Value for Money Share of Value for Money BAT 36.5 BAT 43.2 JTI 49.4 JTI 43.0 PMI
Slide 17: Brand activities and performance
Brand activities and performance
Slide 18: Increased regulation of the industry in Malaysia
Increased regulation of the industry in Malaysia 9 Prohibition on tobacco advertising 9 Ban on vending machines 9 Ban on sampling and free gifts 9 Ban on selling of loose sticks 9 Ban on sponsorship (e.g. football, F1 etc) 9 Public Place smoking restrictions e.g. government buildings, theatre, publi
Slide 19: Dunhill achieved highest ever market share
Dunhill achieved highest ever market share 44.2% 12 Mths Moving Avg Volume (Mns) 1000 44 800 42 Retail Audit Share (%) 40 600 38 400 36 34 200 32 0 30 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 2009 2008 RA 2009 RA Source: Nielsen Retail Audit March market share at 44.2 % (+3.6 pp post GPI
Slide 20: Pall Mall performance softens
Pall Mall performance softens 10 12 Mths Moving Avg Volume (Mns) 9 8 120 7 Retail Audit Share (% ) 6 5 70 4 3 2 1 20 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 2009 2008 RA 2009 RA Source: Nielsen Retail Audit YTD Pall Mall market share at 7.5% (-1.0pp vs. SPLY)
Slide 21: Kent's continuous momentum
Kent’s continuous momentum 60 3.0 12 Mths Moving Average Volume (Mns) 12 Mths Retail Audit Share (%) 50 2.0 40 1.0 30 - 20 (1.0) 10 (2.0) 0 (3.0) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 2009 2009 RA 2008 RA Source: Nielsen Retail Audit Kent YTD 2009 market share at 2.7pp (+1.9 vs SPLY)
Slide 22: Global drive brands strong performance
Global drive brands strong performance 900 54.6% Record highest share 56 1 2 M th s M ovin g Ave ra g e Vo lum e (M n s) 850 54 R e ta il Au d it Sh a re (% ) 800 52 750 50 700 48 650 46 600 44 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 2009 2009 RA 2008 RA Source: Nielsen Retail Audit Mar
Slide 23: Trade marketing & distribution
Trade marketing & distribution
Slide 24: DSS and route to market
DSS and route to market ‘07 DSS • BAT Direct Selling Operations now BW EDx KB expanded to 58% of volume coverage DSS PG • It gives us significantly greater: o speed to market o control over brand activities DSS o reduction in out of stocks KL ‘06 o reduced market returns o better relationship with o
Slide 25: Customer satisfaction measurement 2008
Customer satisfaction measurement 2008 Which company would you rate best overall? Others Tobacco FMCG 11% 7% 8% BAT [ Base: (N=1485) ] (CSM 2005) (CSM 2004) 74% Base: (N=761) Base: (N=997) • 74% retailers rate BAT as best supplier overall • BAT significantly ahead of FMCG & tobacco benchmarks on all
Slide 26: Financial highlights
Financial highlights
Slide 27: 2005 to 2008 results
2005 to 2008 results *MYR/GBP = 6.148 Strong and consistent financial performance
Slide 28: 2005 to 2008 (RM)
2005 to 2008 (RM) Strong and consistent financial performance
Slide 29: Maintained excellent cash flow delivery
Maintained excellent cash flow delivery Year 2003 2004 2005 2006 2007 2008 OCF/UOP Conversion % 100% 97% 97% 99% 108% 101% ¾ Consistently delivering high levels of OCF/UOP conversion ratios ¾ Average of > 100% over the 6 years
Slide 30: Dividend policy
Dividend policy 850 100% 93% 120% 101% 750 650 550 450 350 250 150 2005 2006 2007 2008 Interim Interim 2 Special Final Profit After Tax BAT Malaysia’ s dividend policy is: • To return excess cash to shareholders by paying at least 90% of PAT in dividends • In addition to this, we aim to increase the
Slide 31: Increased market capitalisation
Increased market capitalisation 2,500 10.0 9.0 2,000 8.0 Market Capitalisation Share Price (GBP) KLCI close points 7.0 (GBP mn) 1,500 6.0 5.0 1,000 4.0 500 3.0 Mar '08 Dec '08 Mar'09 Jan '08 Jun '08 Sep '08 M kt C ap ( G B P' mn) KLC I clo sing M kt C ap ( GB P' mn) The market capitalisation has inc
Slide 32: Other highlights
Other highlights
Slide 33: BATM's Corporate Responsibility (CR) framework
BATM’s Corporate Responsibility (CR) framework BATM Foundation Business + Guiding Responsible Operation Social Reporting Principles + Standards of Business Conduct Scholarship Programmes: Stakeholder Dialogue Employees’ Children, Leaf Growers & Curers children Retailers children Afforestation Progra
Slide 34: CR for the environment
CR for the environment Through our afforestation programme, we remain a carbon positive business until 2024 Continued certification by external auditors, LRQA on: ISO9001:2000 for Quality Management Systems ISO14001:2004 for Environmental Management Systems OHSAS18001:2007 for Occupational Health &
Slide 35: External recognition on shareholder value and corporate governance
External recognition on our commitment to shareholder value and corporate governance National Annual Corporate Report Awards (NACRA) 2008 – Silver Overall Excellence Award – Award for the Main Board, Consumer Products category Top 10 in FinanceAsia’s Best Managed Companies 2008 – Best Managed Compan
Slide 36: We value our people and aim to be the Best Employer
British American Tobacco AP: BAT MALAYSIA 2008 (1403) CATEGORY SCORES 2008 vs 2007 BAT Malaysia (Grade 34+) Favourable Scores Difference from 2007 72 85 +17 Strategic Leadership Corporate Responsibility Engagement 70 83 +7 Engagement Corporate Responsibility 69 79 +12 79 +10 Communication & Informat
Slide 37: ied
& A ied BRITISH AMERICAN TOBACCO MALAYSIA
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