British American Tobacco Malaysia Bhd. · MYX:BAT

British American Tobacco Malaysia Bhd — Q2 2018 Earnings Presentation

17 slides from British American Tobacco Malaysia Bhd's earnings presentation, Jul 19, 2018

  1. Slide 1: 2nd Quarter 2018 Performance

    2nd QUARTER 2018 PERFORMANCE 19th JULY 2018

  2. Slide 2: Agenda

    Agenda ▪ Business Review ▪ Q2 2018 Financial Performance

  3. Slide 3: Business Review

    MALAYSIA Business Review

  4. Slide 4: Key metrics year-to-date vs same period last year

    Key metrics year-to-date vs same period last year Market Share Growth Market Value Share Growth Cost base reduction +1.3 ppt +1.6 ppt +1.4 ppt -8.0% YTD Q2 2018: 57.8% * YTD Q2 2018: 59.2% * YTD Q2 2018: RM119 mil YTD Q2 2017: 56.5% YTD Q2 2017: 57.6% YTD Q2 2017: RM129 mil Total Illegal Cigarette T

  5. Slide 5: Last quarters of stability in CPI starts translating into improving consumer sentiments

    Last 3 quarters of stability in CPI starts translating into improving consumer sentiments Consumer Price Consumer Sentiment Index (CSI) Business Confidence Index (BCI) Index (CPI) 113 114 103 102 Levels of Optimism 100 Levels of Optimism 100 91.0 99 82.6 80.7 76.6 77.1 CSI BCI 119 119 120 121 121 12

  6. Slide 6: New Government manifesto suggests intent to address illegal cigarette trade and affordability

    New Government manifesto suggests intent to address illegal cigarette trade and affordability Strong 60 point government manifesto Focus on 10 promises in 100 Days • Addressing consumer affordability (oil, electricity, other subsidies, GST) • 1 million new job opportunities – reducing dependency on

  7. Slide 7: However, thus far no noteworthy action to clamp down on 63% illegal trade, therefore pressure remains

    However, thus far no noteworthy action to clamp down on 63% illegal trade, therefore pressure remains Illegal Volume Share (%) 61 63 63 63 58 60 59 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 to-date Volumes Monthly Average (mns) 642 -3.5% vs 624 603 606 605 SPLY 590 577 Q2 vs Q1 +2.2% BAT +4.8% (Q2’1

  8. Slide 8: Market share to be restated from Q2 2018 onwards

    Market share to be restated from Q2 2018 onwards CURRENT SHARE REPORTING SHARE REPORTING AFTER REBASE YTD May 2018 YTD May 2018 54.2% 57.8% 21.7% 23.1% 17.8% 19.1% Local manufacturer 6.3% 80% of TAX STAMPS ARE ILLEGAL 100% 100% Source: YTD May’18 Nielsen Retail Audit (Total Industry inc Other Whites

  9. Slide 9: BAT market share remains strong vs SPLY

    BAT market share remains strong vs SPLY Share of Market – Malaysia (%) +1.3ppt 56.5 57.8 56.2 57.1 56.3 57.1 58.3 57.2 3.3 1.9 3.2 3.4 7.9 7.5 8.0 7.9 7.9 7.7 7.4 7.6 4.6 3.5 4.6 4.4 4.2 3.9 3.6 3.4 40.0 40.3 39.4 40.7 40.2 40.0 40.7 39.7 YTD Q2'17 YTD Q2'18 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Dunhi

  10. Slide 10: Dunhill market share impacted by growth of VFM and illegal cigarette/quasi legal

    Dunhill market share impacted by growth of VFM and illegal cigarette/quasi legal (illegal tax stamps) Nielsen RA Share of Market (%) 40.7 40.2 40.0 40.7 39.4 39.7 Volume Share +0.5ppt vs. SPLY Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 to-date Source: YTD May’18 Nielsen Retail Audit (Big 3 Only)

  11. Slide 11: Q2 2018 Financial Highlights

    Q2 2018 Financial Highlights

  12. Slide 12: Q2 2018 Financial Highlights

    Q2 2018 Financial Highlights Positives Challenges Faced Revenue growth mainly driven YTD Market Contraction driven +6.5ppt by volume growth Q2 2018 vs -3.5ppt by high illegal cigarette trade Q1 2018 impacting domestic volumes +0.7ppt Gross Profit margins stabilized post VFM entry Progressed in tax s

  13. Slide 13: Gross profit margins stabilizing for consecutive quarters

    Gross profit margins stabilizing for 2 consecutive quarters Gross Profit/ *Revenue (%) 34.5 VFM entry 30.6 29.4 29.9 Q3'17 Q4'17 Q1'18 Q2'18 * Revenue had been restated for all quarters due to MFRS15 adoption

  14. Slide 14: Delivering efficiencies in operating expenses

    Delivering efficiencies in operating expenses 140 Cost base 120 Cost base reduction continued in Q2 100 -8.0% 2018 80 60 129 119 • Overheads savings 40 • Lower regional recharges 20 • Timing of spend 0 YTD Q2'17 YTD Q2'18

  15. Slide 15: However, YTD metrics are still under pressure driven by market contraction

    However, YTD metrics are still under pressure driven by market contraction Revenue Like for like Domestic & Duty Free Volume -7% -3% : Exports Q1’17 -2% : Brand mix impact -6.7% -12.0% 2,212 1,497 2,063 1,317 YTD Q2'17 YTD Q2'18 YTD Q2'17 YTD Q2'18 Operating Expenses Profit from operations -8.0% -20

  16. Slide 16: Dividend payout and share performance

    Dividend payout and share performance Dividend > 90% payout 60 Share performance 50 2017 2018 40 34.18 34.78 RM 1.69 RM 0.68 32.34 28.40 26.42 30 24.50 20 0.40 0.43 0.43 0.43 10 0.33 0.35 0 Jan Feb Mar Apr May Jun Q1 Q2 Q3 Q4 Q1 Q2 Closing share price

  17. Slide 17: Thank you

    BRITISH AMERICAN MALAYSIA THANK Y@E

British American Tobacco (Malaysia) Berhad — Q2 2018 Earnings Presentation on 6ix