Imperial Brands Plc · LSE:IMB
Imperial Brands — Imperial Tobacco Group — H1 2012 Earnings Presentation
67 slides from Imperial Brands's earnings presentation, May 1, 2012
Slide 1: Half Year Results 2012
Half Year Results 2012 Imperial Tobacco Group PLC 1 May 2012
Slide 2: Alison Cooper Chief Executive, Bob Dyrbus Finance Director
Alison Cooper Chief Executive Bob Dyrbus Finance Director 2
Slide 3: Disclaimer
Disclaimer Certain statements in this announcement constitute or may constitute forward-looking statements. Any statement in this announcement that is not a statement of historical fact including, without limitation, those regarding the Company’s future expectations, operations, financial performanc
Slide 4: Our Strategy
Our Strategy Delivering Sustainable Shareholder Returns Cost Sales Cash Optimisation Growth Utilisation Our Key Assets Market Total Brand People Footprint Tobacco Equity Sales Growth Drivers Portfolio Customer Innovation Pricing Management Engagement Key Enablers Consumer Centric Execution Excellenc
Slide 5: Maximising Shareholder Returns
Maximising Shareholder Returns High Margin Profits Sales Strong Cash Flow Reinvest Maximising Shareholder Returns 5
Slide 6: HY12 Performance Highlights
HY12 Performance Highlights Sales growth momentum through Total Tobacco +3.3% tobacco net revenue growth; -4.1% volumes Key strategic brands: +12% net revenue growth; +5% volume growth Strong Q2 performance; +8% tobacco net revenue growth*; -1% volumes* Disciplined cost management Investing
Slide 7: Sales Growth Momentum
Sales Growth Momentum strong Q2 performance +8% -1% -1% -7% Volumes Tobacco net revenue Volumes Tobacco net revenue 1Q12 vs 1Q11 2Q12 vs 2Q11 7
Slide 8: Sales Growth Momentum
Sales Growth Momentum key strategic brands leading growth +15% +10% +6% +3% Volumes Tobacco net revenue Volumes Tobacco net revenue Key strategic brands 1Q12 vs 1Q11 Key strategic brands 2Q12 vs 2Q11 Key strategic brands: Davidoff, Gauloises Blondes, West, JPS 8
Slide 9: Sales Growth Drivers
Sales Growth Drivers | ice
Slide 10: Portfolio Management
Portfolio Management More Consumers, More Occasions 10
Slide 11: Portfolio Management: Davidoff
Portfolio Management Davidoff: 18 billion sticks* Further emerging market gains +2% HY12 volume growth; +5% Q2** 126 124 EE: growing in growth segments cigarette volumes (indexed) 114 Asia-Pacific: +11% volume growth 109 This space appears blank because 100 we have removed the images that appe
Slide 12: Portfolio Management: Gauloises Blondes
Portfolio Management Gauloises Blondes: 30 billion sticks* Excellent performance in Africa and Middle East +11% volume growth +20% Africa and Middle East Brand initiatives to support growth This space appears blank because we have removed the images that appear Tactil GlideTec launched in Fr
Slide 13: Portfolio Management: West
Portfolio Management West: 25 billion sticks* Innovation supporting growth Gains in emerging markets +35% Taiwan Further growth in Russia and Ukraine This space appears blank because we have removed the images that appear New innovation launches in EE in the presentation. This is because we
Slide 14: Portfolio Management: JPS
Portfolio Management JPS: 25 billion sticks* Outstanding track record of growth +4% volume growth 144 138 stick equivalent volumes (indexed) +46% UK 121 +34% Australia Brand rejuvenation completed 106 100 This space appears blank because we have removed the images that appear in the presenta
Slide 15: Portfolio Management: Fine Cut Tobacco
Portfolio Management fine cut tobacco Driving profitable growth -1% volumes; +3% excluding Poland JPS, Ducados and News excellent growth in MYO +5% papers; +10% tubes This space appears blank because we have removed the images that appear in the presentation. This is because we currently do no
Slide 16: Portfolio Management: Habanos
Portfolio Management Habanos Strong sales and volume momentum +3% volume growth +8% sales growth Excellent performance in emerging markets +12% volume growth +17% sales growth Further gains in China, Russia and Middle East 16
Slide 17: Portfolio Management: Smokeless
Portfolio Management smokeless Excellent volume and share gains +74% snus volume growth 380 Share gains in Sweden and Norway can volumes (indexed) New brand Smålands launched 219 Capacity for future growth 185 148 100 HY08 HY09 HY10 HY11 HY12 Volumes measured in cans 17
Slide 18: Innovation
Innovation New Consumer Choices 18
Slide 19: Innovation: GlideTec
Innovation GlideTec reinforcing brand differentiation Strengthened Lambert & Butler UK performance Gauloises Tactil launched in France Further market roll-outs to come This space appears blank because we have removed the images that appear in the presentation. This is because we currently do n
Slide 20: Innovation: Fortuna GlideTec
Innovation Fortuna GlideTec launched in Spain This space appears blank because we have removed the images that appear in the presentation. This is because we currently do not feature tobacco product brand imagery on our website. 20
Slide 21: Innovation: High Growth Segments
Innovation high growth segments This space appears blank because we have removed the images that appear in the presentation. This is because we currently do not feature tobacco product brand imagery on our website. 21
Slide 22: Customer Engagement
Customer Engagement Availability and Advocacy 22
Slide 23: Customer Engagement
Customer Engagement strengthening availability and advocacy Strong retail partnerships Australia market share* 63 Extended sales coverage 62 61.3% 61 60.9% Supporting innovation launches 19.4% 19.7% 19 L&B: building on the UK’s #1 brand 18 17 16 HY11 HY12 FMC FCT * Imperial estimates; half y
Slide 24: Pricing
Pricing Maximising Revenue Growth 24
Slide 25: Pricing: Fortuna in Spain
Pricing Fortuna in Spain Offering consumers value and choice 14 Price increase Expanded Fortuna variant portfolio 2 July 2011 13 Successfully stabilised share 12 11 This space appears blank because we have removed the images that appear in the presentation. 10 Mar 12 Jan 12 Apr 10 Oct 10 Jan 1
Slide 26: Positive Market Share Momentum
Positive Market Share Momentum sales growth drivers delivering 30.8% 30.3% 21.1% 20.8% 10.6% 10.5% EU Cigarette EU FCT Non-EU Cigarette 1Q12 HY12 Imperial estimates; EU: weighted market share of key EU markets as well as Norway and Switzerland; Non-EU: key Imperial cigarette markets 26 outside the E
Slide 27: Group Results
Group Results +5.1% constant currency EPS growth Constant Constant Foreign Currency Currency HY11 Exchange Growth HY12 Change Change Tobacco net revenue 3,289 (11) 110 3,388 3.0% 3.3% Logistics distribution fees 452 (5) (8) 439 (2.9%) (1.8%) Tobacco operating profit 1,409 1 46 1,456 3.3% 3.3% Tobacc
Slide 28: EU Adjusted Operating Results
EU Adjusted Operating Results +£51m +£28m +£26m +£16m +£13m +£7m -£2m -£10m UK Germany Spain Rest of EU Tobacco net revenue Tobacco adjusted operating profit Represents constant currency absolute movement in HY12 versus HY11. Refer to slides 43 and 44 for detailed HY12 results 28
Slide 29: Non-EU Adjusted Operating Results
Non-EU Adjusted Operating Results +£73m +£21m -£22m -£45m Americas Rest of World Tobacco net revenue Tobacco adjusted operating profit Represents constant currency absolute movement in HY12 versus HY11. Refer to slides 43 and 44 for detailed HY12 results 29
Slide 30: Logistics
Logistics Tobacco logistics Robust profit performance Ongoing cost optimisation projects Other logistics Transport and pharma performing well Cost focus in all businesses 30
Slide 31: Financing and Cost of Debt
Financing and Cost of Debt Average all-in cost of net debt 5.5% (HY11: 5.5%) Net interest charge £276m (HY11: £280m) Interest cover* 5.5x (HY11: 5.3x) * Adjusted operating profit/adjusted net finance costs. Numbers are adjusted and presented on our usual basis, see slide 66 for details 31
Slide 32: HY12 Adjusted Net Debt
HY12 Adjusted Net Debt £0.3bn £0.1bn £0.7bn £0.5bn £1.5bn £0.2bn £1.0bn £8.8bn £9.9bn Opening Adjusted Working Net capex Tax and Dividends Share Foreign Closing adjusted operating capital interest buybacks exchange adjusted net debt profit and other net debt Opening adjusted net debt is as at 1 Octo
Slide 33: FY12 Financial Outlook
FY12 Financial Outlook investing for growth Supporting sales growth agenda Investing across the business Net capex c.£400m 33
Slide 34: FY12 Operational Outlook
FY12 Operational Outlook EU: capitalise on value trend through Total Tobacco Non-EU: significant opportunities for growth in value and premium Logistics: continued focus on sales growth and cost optimisation 34
Slide 35: Total Tobacco Portfolio
Total Tobacco Portfolio driving sales growth This space appears blank because we have removed the images that appear in the presentation. This is because we currently do not feature tobacco product brand imagery on our website. 35
Slide 36: Our Values
Our Values tT ee bacco We can lown We surprise l engage We enjoy w YY Keng
Slide 37: Maximising Shareholder Returns
Maximising Shareholder Returns High Margin Profits Sales Strong Cash Flow Reinvest Maximising Shareholder Returns 37
Slide 38: Half Year Results 2012
Half Year Results 2012 Imperial Tobacco Group PLC 1 May 2012 38
Slide 39: Appendices
Appendices 39
Slide 40: Financial
Financial 40
Slide 41: HY12 Income Statement
HY12 Income Statement £m HY12 HY11 Change % Revenue 13,962 13,701 +2 Adjusted operating profit 1,524 1,479 +3 Acquisition accounting adjustments 10 - Amortisation of acquired intangibles (190) (210) Restructuring costs (14) 5 Net finance costs* (222) (331) Profit before tax 1,108 943 Tax (272) (9) P
Slide 42: Reconciliation: Reported to Adjusted
Reconciliation: Reported to Adjusted Net fair value Acquisition Amortisation and exchange Post Reported accounting of acquired gains on financial employment Restructuring Adjusted HY12 adjustments intangibles instruments* net financing costs HY12 Operating 1.330 (10) 190 - - 14 1,524 profit Finance
Slide 43: Tobacco: HY12 regional net revenue analysis
Tobacco HY12 regional net revenue analysis HY12 % Change Foreign Constant Constant £m Actual1 Exchange Currency2 HY11 Currency UK 469 - 469 418 12.2 Germany 410 (5) 415 402 3.2 Spain 239 (3) 242 252 (4.0) Rest of EU 764 (16) 780 752 3.7 Total EU 1,882 (24) 1,906 1,824 4.5 Americas 294 4 290 335 (13.
Slide 44: Tobacco: HY12 regional operating profit analysis
Tobacco HY12 regional operating profit analysis HY12 % Change Foreign Constant Constant £m Actual1 Exchange Currency2 HY11 Currency UK 307 - 307 281 9.3 Germany 216 (3) 219 212 3.3 Spain 106 (1) 107 109 (1.8) Rest of EU 321 (6) 327 311 5.1 Total EU 950 (10) 960 913 5.1 Americas 84 1 83 105 (21.0) Re
Slide 45: Logistics
Logistics HY12 % Change Foreign Constant £m Actual1 Exchange Constant Currency2 HY11 Currency Distribution fees 439 (5) 444 452 (1.8) Operating profit 76 (1) 77 80 (3.8) Distribution margin % 17.3 17.3 17.7 1Based on average exchange rates for six months ended 31 March 2012; 2Assumes that average ex
Slide 46: Foreign Currencies
Foreign Currencies Average Closing £1 = HY12 HY11 HY12 HY11 Euro 1.183 1.169 1.199 1.130 US dollar 1.572 1.592 1.602 1.604 46
Slide 47: Balance Sheet
Balance Sheet 31 March 2012 £m HY12 HY11 Non-current assets: tangible 2,767 2,395 intangible 19,692 21,041 Current assets: inventories 3,810 3,588 other 4,246 3,799 Current liabilities (10,900) (8,873) Non-current liabilities (12,320) (14,435) Net assets 7,295 7,515 47
Slide 48: HY12 Cash Flow
HY12 Cash Flow £m HY12 HY11 Cash flows from operating activities pre tax 448 734 Tax paid (194) (250) Cash flows from operating activities 254 484 Net capex (includes software) (152) (171) ESOT - (19) Share buy backs (321) - Dividends paid (inc. minority interests) (673) (614) Net interest paid (320
Slide 49: Net Finance Costs
Net Finance Costs £m HY12 HY11 Net finance costs 222 331 Adjusted for: - expected return on retirement benefit assets 84 89 - interest on retirement benefit liabilities (94) (89) - unwind of discount on redundancy and social plans (4) (4) - net fair value and exchange gains on financial instruments*
Slide 50: 12 Month Cash Conversion
12 Month Cash Conversion 12 months 12 months 6 months to March to March to March £m 2012 2011 2012 Net cash flow from operating activities 2,326 2,914 254 Tax 473 443 194 Net capex (323) (319) (152) Cash flow post capex pre interest and tax 2,476 3,038 296 Adjusted operating profit 3,148 3,094 1,524
Slide 51: Net Debt Reconciliation
Net Debt Reconciliation Reported Accrued Fair value of Finance lease Adjusted £m HY12 interest derivatives creditors HY12 Opening net debt (9,441) 297 290 23 (8,831) Free cash flow (218) (1) (219) Share buy backs (321) (321) Dividends (673) (673) Accretion of interest 68 (68) - Change in fair values
Slide 52: Volumes
Volumes 52
Slide 53: HY12 Stick Equivalent Volumes
HY12 Stick Equivalent Volumes Billion stick equivalents HY12 HY112 FY112 UK (exc PMI1) 13.2 12.4 25.6 Germany 14.9 15.3 32.2 Spain 10.7 11.6 23.8 Rest of European Union 36.2 38.6 80.3 Total EU 75.0 77.9 161.9 Americas 4.7 6.2 12.8 Asia-Pacific 11.7 11.2 22.4 Eastern Europe 30.6 33.5 76.6 Africa & Mi
Slide 54: HY12 Cigarette Volumes
HY12 Cigarette Volumes Billion sticks HY12 HY11 FY11 UK (exc PMI1) 9.7 9.4 19.2 Germany 10.7 11.0 23.4 Spain 9.3 10.3 20.8 Rest of European Union 26.1 27.6 57.8 Total EU 55.8 58.3 121.2 Americas 4.4 5.9 12.3 Asia-Pacific 10.9 10.4 20.6 Eastern Europe 30.5 33.5 76.5 Africa & Middle East 34.6 34.5 67.
Slide 55: HY12 Fine Cut Tobacco Volumes
HY12 Fine Cut Tobacco Volumes Billion stick equivalents HY12 HY111 FY111 UK 3.5 3.0 6.4 Germany 4.2 4.3 8.8 Spain 1.4 1.3 3.0 Rest of European Union 10.1 11.0 22.5 Total EU 19.2 19.6 40.7 Americas 0.3 0.3 0.5 Asia-Pacific 0.8 0.8 1.8 Eastern Europe 0.1 0.0 0.1 Africa & Middle East 0.1 0.1 0.1 Duty F
Slide 56: HY12 EU SE Market Volumes
HY12 EU SE1 Market Volumes Billion stick equivalents Cigarette FCT Total UK 20.0 6.9 26.9 -6% +11% -2% Germany 40.6 19.5 60.1 - +9% +3% Spain 26.6 3.3 29.9 -10% -3% -9% Rest of EU 160.5 27.7 188.2 -3% +6% -1% Total EU2 247.7 57.4 305.1 -3% +7% -1% Imperial estimates; 1Stick equivalents; 2Imperial de
Slide 57: HY12 Cigar Volumes and USA Cigar Net Revenues
HY12 Cigar Volumes and USA Cigar Net Revenues Millions HY12 HY11 UK 28 30 Germany 1 1 Spain 131 138 Rest of European Union 183 171 Total EU 343 340 Americas 535 620 Rest of the World 95 105 Total Non-EU 630 725 Total Group 973 1,065 USA Cigar Net Revenues (£m) 168 200 Excludes eco-cigarillos 57
Slide 58: Market Shares
Market Shares 58
Slide 59: Cigarette Market Shares: European Union
Cigarette Market Shares European Union Cigarette (%) HY12* 1Q12** HY12 v 1Q12 HY11* UK 45.1 45.0 0.1 45.3 Germany 25.6 25.5 0.1 26.9 Spain1 28.4 27.1 1.3 28.2 France1 22.2 22.1 0.1 22.8 Austria 17.0 16.8 0.2 17.4 Czech Republic 14.1 14.4 (0.3) 14.0 Greece 11.9 11.9 0 11.02 Hungary 12.1 12.6 (0.5) 12
Slide 60: Cigarette Market Shares: Americas and Rest of World
Cigarette Market Shares Americas and Rest of the World Cigarette (%) HY12* 1Q12** HY12 v 1Q12 HY11* USA 3.5 3.6 (0.1) 3.9 Australia 19.5 18.8 0.7 18.4 Morocco 81.8 81.7 0.1 83.9 Russia 9.4 8.8 0.6 9.01 Taiwan 11.3 11.2 0.1 11.11 Turkey 3.3 3.1 0.2 3.4 Ukraine 21.6 21.5 0.1 22.51 Imperial estimates;
Slide 61: FCT Market Shares
FCT Market Shares European Union Fine cut tobacco (%) HY12* 1Q12** HY12 v 1Q12 HY11* UK 47.6 47.5 0.1 51.7 Germany 20.7 20.2 0.5 20.7 Spain 43.3 38.8 4.5 37.31 France 20.8 19.6 1.2 21.61 Belgium 15.5 13.9 1.6 13.61 Czech Republic 58.4 61.4 (3.0) 59.2 Greece 24.2 25.2 (1.0) 30.71 Hungary 35.3 32.5 2.
Slide 62: Financing
Financing 62
Slide 63: Senior Bank Facilities
Senior Bank Facilities 31 March 2012 Amount Description Maturity date £m equiv. Margin Committed 2 Year Revolving Credit Facility Nov-13 0.700% €300m EUR tranche £250m Committed 5 Year Revolving Credit Facility Dec-15 1.000%* $632m USD tranche £395m £600m GBP tranche £600m €1,785m EUR tranche £1,488
Slide 64: Bond Issues
Bond Issues 31 March 2012 Amount Issuer Coupon Issue Date Maturity Date £m equiv. Margin £350m Imperial Tobacco Finance PLC 6.875% Jun-02 Jun-12 £461m* 1.3%* €1,250m Imperial Tobacco Finance PLC 5.000% Jun-09 Jun-12 £1,042m 2.7% €500m Altadis Finance BV 5.125% Oct-03 Oct-13 £417m 0.8% €1,200m Imperi
Slide 65: Financing maturity profile at March 2012
Financing maturity profile at 31 March 2012 14,000 12,000 ECP Bank Facilities £m equivalent 10,000 Bond Issues 8,000 6,000 4,000 2,000 0 Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 7% ECP, 20% bank, 73% capital markets Headroom
Slide 66: Basis of Results Presentation
Basis of Results Presentation Use of Adjusted Measures Management believes that non-GAAP or adjusted measures provide a useful comparison of business performance and reflect the way in which the business is controlled. Accordingly, adjusted measures of operating profit, net finance costs, profit bef
Slide 67: Contacts
Contacts Investor Relations department Gerry Gallagher Director of Investor Communications gerry.gallagher@uk.imptob.com Tel: +44 (0) 117 933 7014 John Nelson-Smith Grant Edmunds Investor Relations Manager Investor Relations Manager john.nelson-smith@uk.imptob.com grant.edmunds@uk.imptob.com Tel: +4
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