British American Tobacco Debt Investor Update. London, 7 March 2013

Transcription

1 British American Tobacco Debt Investor Update London, 7 March

2 Disclaimer The information contained in this presentation has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the information or opinions contained herein. The information set out herein may be subject to revision and may change materially before any issue of securities. British American Tobacco is under no obligation to keep current the information contained in this presentation. Prospective investors are solely responsible for making their own independent appraisal of, and investigations into, the products, investments and transactions referred to in this presentation and should not rely on any information in this presentation as constituting investment advice. Neither British American Tobacco nor any of its affiliates are responsible for providing prospective investors with legal, tax or other specialist advice and prospective investors should make their own arrangements in this respect accordingly. This presentation does not constitute or form part of and should not be construed as an offer to sell or issue or the solicitation of an offer to buy or acquire securities in any jurisdiction or an inducement to enter into investment activity and prospective investors should not rely upon this presentation in making any investment decision. 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3 BAT overview Second largest listed company by global market share One of the largest consumer brand companies globally Market cap of 67.1bn as of 1 March 2013 Clear and consistent business strategy Excellent geographic diversification Leader in innovations Strong cash flow and credit metrics Powerful portfolio of leading brands 3

4 A proven strategy which continues to deliver! 4

5 Operating in a highly consolidated market World Market Share 2012 % Cumulative PMI BAT Subs JT Imperial % of the world market excluding China CNTC Others Note: BAT s figures exclude associates volumes. Others include Altria, KT&G, Eastern, Gudang Garam and Djarum, amongst others. Source: Internal company analysis and public company disclosure filings duty paid market only. 5

6 Our strengths A powerful brand portfolio World leading innovations GDBs Source: Internal company analysis. VFM = Value for money 6

7 Growth Global Drive Brands Global drive brands Volume: 49 billion, up 2% Share +0.1 ppt in T40 Strong growth in Indonesia, South Africa, Malaysia Innovations account for 73% GDB volumes Volume: 67 billion, up 1% Share is flat Strong performance in Russia, Ukraine and Azerbaijan Innovations driving growth GDB volume: 232 billion +3% Total international brands: 377 billion +2% Organic premium volume -1% Organic below-premium volume -2% 7

8 Growth Global Drive Brands Global drive brands Volume: 33 billion, up 11% Share +0.2 ppt in T40 Growth in Western Europe and Americas Capsule markets driving growth GDB volumes Volume: 83 billion, up 3% Share +0.1 ppt in T40 Strong performance in Pakistan Southern Europe impacting volume GDB volume: 232 billion +3% Total international brands: 377 billion +2% Organic premium volume -1% Organic below-premium volume -2% 8

9 Our strengths A powerful brand portfolio World leading innovations Geographic diversity 25% Fully integrated supply chain - Leaf sourcing - Distribution Science-based R&D Source: Internal company analysis 9

10 Improving operating margin Significant driver of profit growth Savings from supply chain, overheads & indirects Targeting 50 to 100 basis points improvement a year Margin improvements across all regions Source: BAT 10

11 External landscape: Regulation WHO s Framework Convention on Tobacco Control (FCTC) in force, ratified by over 170 governments Further tobacco control and tobacco-related regulation has happened, driven by the FCTC and domestic regulation, such as: - Product e.g. product design, ingredients & reporting requirements - Packaging larger warnings, plain packaging & restrictions on pack design - Promotion consumer communication restrictions - Purchase product display restrictions - Place indoor and outdoor public place smoking bans - Price excise increases May impact overall legal sales volume and the cost of doing business May impact our ability to compete with both legitimate and illicit competitors 11

12 External landscape: Strategic Litigation Litigation threat originated in USA - Minority shareholding in Reynolds American - Indemnification provided in respect of B&W cases Limited litigation outside USA Today most active jurisdiction is Canada Types of cases: - Healthcare recoupment cases - Class actions - Individual cases - Other 12

13 Financial Highlights mn FY2012 FY2011 % Change Volume (bns) GDB volume (bns) External NTO 15,190 15,399-1 External NTO (constant rates) 15,999 15, Adjusted Operating Profit 5,681 5, Adjusted Operating Profit Margin 37.4% 35.8% Adjusted Operating Profit (constant rates) 5,970 5, EBITDA* 6,066 5, EBITDA Margin 39.9% 38.7% Net Debt 8,473 7, Net Debt/EBITDA* 1.4x 1.3x Source: BAT 2012 Preliminary Announcement. * EBITDA is on an adjusted basis 13

14 Profit from Operations Region mn mn % Change Asia-Pacific 1,666 1, Americas 1,415 1,441-2 Western Europe 1,186 1,228-3 Eastern Europe, Middle East and Africa 1,414 1, Adjusted profit from operations 5,681 5, Adjusting Items Profit from operations 5,412 4, Source: BAT 2012 Preliminary Announcement. 14

15 Cash Flow mn FY2012 FY2012 Adjusted profit from operations 5,681 5,519 Non cash items Increase in working capital Net capital expenditure Operating cash flow 5,087 5,327 Pension funds shortfall funding Net interest paid Tax paid -1,496-1,447 Dividends paid to non-controlling interests Restructuring costs Dividends from associates Free cash flow 3,259 3,326 Dividends paid to shareholders -2,538-2,358 Share buy-back -1, Net investment activities Other net flows Net cash flow Source: BAT 2012 Preliminary Announcement. 15

16 Ratings Update & Financial Policies Ratings strategy: Target Net Debt/Adj. EBITDA of 1.5x-2.5x S&P Moody s Fitch LT Rating A- A3* A- ST Rating A-2 P-2 F-2 Outlook Stable Stable Stable Financing principles: - Strong centre liquidity - Average debt maturity of at least 5 years - 20% of total debt maturing on a rolling 12-month basis - Distribute 65% of long term sustainable earnings Share buyback programme of 1.5bn for 2013 * Upgraded from Baa1 on 12 th March

17 Maturity profile As at 1 March 2013 Source: Internal company analysis Access to undrawn 2bn Group RCF matures Dec-15 17

18 Q&A Thank you! 18