ANALYST BRIEFING QUARTER 2, July 2012

Transcription

1 ANALYST BRIEFING QUARTER 2, July 2012

2 Agenda Industry Review, Market Share and Volumes BATM Review Financial Highlights Other Highlights Future Prospects

3 INDUSTRY REVIEW, MARKET SHARE, VOLUMES AND BATM REVIEW

4 Industry Volumes Source: Confederation of Malaysian Tobacco Manufacturers (CMTM) Note: Sub-VFM volumes extrapolated from Retail Audit Industry Volumes (bns) Big3 + Sub VFM 3% % Q1 Q2 Q3 Q Volume Variance % Variance Volume Variance % Variance Q Q Q vs Q vs H H H 2012 vs H 2012 vs BATM (0.03) -1.2% % Industry (CMTM Members) % % Sub VFM (estimate) (0.08) -32.3% (0.22) -40.7% Total (0.06) -1.8% % Note: Sub-VFM volumes extrapolated from Retail Audit Industry improved +0.6% in 1 st Half compared to SPLY. BAT volumes increased 1.6%

5 SOM Market remains Premium skewed Source: Jun2012 Malaysia Retail Audit (Base: White Only) YTD 2011 YTD Premium VFM Sub VFM BAT Share of Premium YTD BAT Share of Premium YTD Share of Value for Money 41.3 Share of Value for Money 42.6 Share of Sub-VFM 0 Share of Sub-VFM 0

6 % Illicit Illicit Trade Source: Illicit Cigarette Study, ppt ppt ppt ppt -1.5ppt -0.1ppt ppt Wave Wave Wave 3 *Survey methodology does not capture (Mar-May) (Jun - Aug) (Oct-Dec) sub-vfm brands selling at below Smuggled Kretek Smuggled Whites Counterfeit minimum price Wave 1 (Mar-May) Illicit incidence registered a decline in the latest wave, a function of zero excise and intensified enforcement by local authorities. Vs. Wave , decline was driven by Illicit Kretek (-1.5%) as Illicit White grew +1.4%

7 BAT Share of Market Source: Jun2012 Malaysia Retail Audit (Base: White Only) % 2012: 62.3% (YTD June) 2011: 61.0 (Full Year) : 60.1% (YTD June) Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec BAT continues to grow share for the 3rd consecutive year (after 9 years of share decline). YTD 2012 vs. FY2011 growth is +1.3ppt, resulting in corporate share of 62.3% SOM. Dunhill s strengthened performance is the main driver behind growth

8 BAT & GDB Share Source: Jun2012 Malaysia Retail Audit (Base: White Only) +1.3ppt BATM Source: Malaysia Retail Audit (Base: Total Whites, YTD JUN12) Strong GDB performance, predominantly Dunhill. BAT YTD June 2012 SOM is 62.3%, up +1.3ppt vs. FY 2011

9 Dunhill Source: Jun2012 Malaysia Retail Audit (Base: White Only) J&J - Oil 3 Period Ended JUN12 Hide NA's Colour % Chg Share of White +2.1ppt April 2012 Dunhill SWITCH New and improved pack April 2012 Year-long equity building campaign Dunhill continue to stretch its leadership, with record breaking share of 47.6% SOM in June. Source: Retail Index (Malaysia) YTD2012 vs. FY 2011 SOM, Dunhill grew +2.1ppt Produk ini mengandungi lebih 4,000 bahan kimia termasuk tar, nikotina dan karbon monoksida yang membahayakan kesihatan.

10 DH Switch: 0.6% SOM nationally post 3 nd month of re-launch. Source: Jun2012 Malaysia Retail Audit (Base: White Only) JAN12 FEB12 MAR12 APR12 MAY12 JUN Apr 2012: New & Improved Dunhill Switch Convenience Phase 1 - Key Urban Centre Phase 2 - Others Switch SOM A clear indication that we now have a winning combination (DH Switch + DH Lights Regular) to win in Premium Lights Produk ini mengandungi lebih 4,000 bahan kimia termasuk tar, nikotina dan karbon monoksida yang membahayakan kesihatan.

11 BAT VFM segment share Source: Jun2012 Malaysia Retail Audit (Base: White Only) BAT Period Ended JUN12 Hide NA's Colour % Chg Share of Vfm -1.3ppt Decline in 2012 mainly attributed to Pall Mall s softening performance. Growth in 2011 vs driven by launch of Peter Stuyvesant.

12 Pall Mall Source: Jun2012 Malaysia Retail Audit (Base: White Only) J&J - Oil 3 Period Ended JUN12 Hide NA's Colour % Chg Share of White -0.4ppt Pall Mall Family of SKUs Feb 2012: Launch of Pall Mall Mint Jul 2012: Pall Mall Pack Upgrade Pall Mall s pack upgrade in July 2012 expected to strengthen the brand s equity, ultimately halting month-on-month decline and grow share in 2013 ource: Retail Index (Malaysia) Produk ini mengandungi lebih 4,000 bahan kimia termasuk tar, nikotina dan karbon monoksida yang membahayakan kesihatan.

13 Pall Mall Mint Source: Jun2012 Malaysia Retail Audit (Base: White Only) J&J - Oil 3 Period Ended JUN12 Hide NA's Colour % Chg Share of White Pall Mall Menthol Range Pall Mall Menthol : Share of Market (%) - Malaysia Pall Mall Mint stabilized at 0.3% SOM, post 5 months of launch. This SKU has assisted in strengthening Pall Mall s VFM Menthol leadership Source: Retail Index (Malaysia) Produk ini mengandungi lebih 4,000 bahan kimia termasuk tar, nikotina dan karbon monoksida yang membahayakan kesihatan.

14 Peter Stuyvesant Source: Jun2012 Malaysia Retail Audit (Base: White Only) J&J - Oil 3 Period Ended JUN12 Hide NA's Colour % Chg Share of White -0.1ppt Peter Stuyvesant Family of SKUs Peter Stuyvesant declined marginally, 3.2% SOM YTD June 2012 rce: Retail Index (Malaysia) Produk ini mengandungi lebih 4,000 bahan kimia termasuk tar, nikotina dan karbon monoksida yang membahayakan kesihatan.

15 FINANCIAL HIGHLIGHTS

16 RM million Productivity Savings H, 2012 FY 2012 Supply Chain Indirects Overheads Mfg Synergy & Logistic

17 Quarter 2, 2012 vs Quarter 2, 2011 Mn Stks 2,500 2,000 Volumes - 1.2% 2,195 2,169 RM'mns 1,100 1,050 1,043 Revenue + 2.4% 1,068 RM'mns Net Turnover % 542 1,500 1, , Q Q Q Q Q Q RM'mns Operating expenses % RM'mns Profit from operations % Sen / share Earnings per share % Q Q Q Q Q Q Better EPS as result of higher contract manufacturing margin from conversion of toll to contract manufacturing and lower operating expenses

18 YTD 2012 vs YTD 2011 Mn Stks 5,000 4,500 4,000 3,500 3,000 2,500 Volumes +1.6% 4,276 4,343 RM'mns 2,200 2,000 1,800 2,035 Revenue +3.7% 2,111 RM'mns 1,100 1,050 1, Net Turnover % 1,055 2,000 1, ,500 1, , YTD 2011 YTD ,200 YTD 2011 YTD YTD 2011 YTD 2012 RM'mns Operating expenses % RM'mns Profit from operations % 572 Sen / share Earnings per share +14.6% YTD 2011 YTD YTD 2011 YTD YTD 2011 YTD 2012 Higher volume and revenue from contract manufacturing and lower operating expenses result in higher EPS

19 Q2 Dividends 2011: 98% Payout (110% inc. Special) Q Q Q Q Q Q Dividends for Q at 65 cents per share

20 OTHER HIGHLIGHTS

21 Recent CR Highlights BAT Malaysia Family Day Big Day Out at Putrajaya Wetlands More than 1,300 employees and their family members joined in the Big Day Out which was organised as part of the 100 years celebration.

22 Recent CR Highlights (cont d) BAT Malaysia Safety & Health Week Held from 23 rd 27 th April, employees and contractors were educated on road and industrial safety through various games and information booths. Seat Belt Convincer Handphone Impairment Alcohol Impairment Safety Helmet Demo

23 FUTURE PROSPECTS

24 Future Prospects The unprecedented zero excise increase in 2011 coupled with robust enforcement has allowed the legal market to register marginal increase in volume. Given this environment and the weakening of the sub-vfm, BAT has continued to grow market share by 1.3ppt vs FY profit from operations expected to grow due to better domestic volume, contribution from higher margin from contract manufacturing and lower spend. Group relatively optimistic on 2012 outlook. However, illicit trade and continuous illegal pricing below Minimum Price by certain local brands continue to be of concern.

25 Thank You