23 rd February 2012
Nicandro Durante Chief Executive
Proven strategy continues to deliver
Superior shareholder returns Daily Relative performance to FTSE100 Price GBp 2,800 2,600 2,400 2,200 2,000 1,800 1,600 31/12/2001-09/02/2012 (GMT) Value GBp 4.5 4.2 3.9 3.6 3.3 3 2.7 1,400 1,200 1,000 800.12 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2000 2010 2.4 2.1 1.8 1.5 1.2.123 BAT share price Relative performance to FTSE 100 Source: Reuters
Delivering the strategy Volume (rep) Volume (org) -0.4% -0.4% GDB volume 9% Revenue (rep) 3% Revenue (org, const) 7% Adjusted Profit (rep) Adjusted Profit (org, const) 11% 10% Operating margin (rep) Operating margin (org) +1.4 ppt +2.3 ppt Adj EPS DPS 11% 11%
Global drive brands GDB volumes 2001-2011 250 Volume: 48 billion Share flat in T40 Strong growth in Brazil, Romania and GCC Innovations account for over 50% of volume S. Korea impacted by price increase 200 150 100 50 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Volume: 67 billion, up 10% Share +0.3 ppt in T40 Strong performance in Japan, Romania and eastern Europe Innovations driving growth GDB volume: 226 billion +9% International brands: 371 billion +4% Organic premium volume -0.1% Organic below-premium volume -0.5%
Global drive brands GDB volumes 2001-2011 250 Volume: 30 billion, up 14% Share +0.2 ppt in T40 Growth in WE, South America Capsule markets driving growth 200 150 100 50 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Volume: 81 billion, up 11% Share +0.3 ppt in T40 Strong performance in Pakistan, Turkey and Russia Declines in Mexico and Spain GDB volume: 226 billion +9% International brands: 371 billion +4% Organic premium volume -0.1% Organic below-premium volume -0.5%
Volumes and revenues 20% 15% 10% 5% 0% 2% 10% 13% 7% 7% 6% 3% 3% 2% 2% 1% 0% 0% -5% -5% -3% -10% Asia Pacific Americas W. Europe EEMEA Group Volume (organic) 2% -5% 0% 1% 0% Revenue (organic @ const) 10% 6% 3% 7% 7% Revenue (@ curr) 13% 2% -3% 2% 3%
Volumes and profit 20% 16% 17% 15% 10% 11% 11% 10% 12% 11% 10% 5% 0% 2% 4% 4% 0% 1% 0% -5% -5% -10% Asia Pacific Americas W. Europe EEMEA Group Volume (organic) 2% -5% 0% 1% 0% Profit (org @ const) 11% 4% 10% 17% 10% Profit (@ curr) 16% 4% 11% 12% 11%
Asia Pacific Strong profit growth due to Japan, South Asia and FX Industry volumes impacted in Australia Volume GDBs 2% 12% Japan: share and profit growth post earthquake Revenue 13% South Korea volumes and market share impacted following price increase Profit 16% Operating margin +0.8 ppt
Americas Revenue and profit driven by pricing, improved mix Volumes impacted by industry declines across the region Higher profit in Brazil, Mexico and Venezuela Protabaco acquisition completed Volume GDBs Revenue Profit -4% 2% 4% 9% Operating margin +1.0 ppt
Western Europe Profit improvement across the region Volume -1% Good Global Drive Brand performance GDBs 6% Spain affected by price war and economy Romania: reduced illicit trade and higher market share Revenue Profit -3% 11% Operating margin +4.2 ppt
Eastern Europe, Middle East and Africa Strong profit growth despite FX Volume 1% Strong performances in Russia, Nigeria and the Middle East Turkey impacted by excise and competitor pricing S. Africa: Strong performances by Peter Stuyvesant and Dunhill GDBs Revenue 2% 8% Good growth of Dunhill in the GCC region Profit 12% Operating margin +3.2 ppt
Ben Stevens Finance Director and Chief Information Officer
Operating margin 39.5% 40.5% 35.4% 36.2% 34.1% 32.9% 33.5% 35.8% 29.9% 29.7% 2010 2011 Asia Pacific Americas W. Europe EEMEA Group * Based on adjusted profit
Productivity programme 35% margin target achieved 1 year early Targeting 50 to 100 basis points improvement a year Group operating margin 2007-2011 30.0% 30.7% 31.4% 33.5% 35.8% 2007 2008 2009 2010 2011
Profit from operations adjusting items m 2011. 2010. % change Adjusted profit 5,519. 4,984. +11% Restructuring & integration costs Amortisation of trademarks Impairment of trademarks (193) (58) -) (311) (62) (44) Goodwill impairment (273) (249) Fox River (274) -) Profit from operations 4,721. 4,318. +9%
Profit before tax m 2011. 2010. % change Profit from operations 4,721. 4,318. +9% Net finance costs (460) (480) +4% Associates 670. 550. +22% Profit before tax 4,931. 4,388. +12%
Taxation and profit for the period m 2011. 2010. % change Profit before tax 4,931. 4,388. +12% Taxation (1,556) (1,248) -25% Profit for the period 3,375. 3,140. +7% Underlying tax rate was 31.2% (2010: 30.2%)
Non-controlling interests and adjusted EPS Profit attributable to m 2011. 2010. % change Owners of the parent 3,095. 2,879. +8% Non-controlling interests 280. 261. +7% Profit for the period 3,375. 3,140. +7% Adjusted profit after tax 3,857. 3,504. Number of shares 1,982m. 1,994 m. Adjusted EPS 194.6p. 175.7p. +11%
Drivers of adjusted EPS growth EPS 2010 (p) 175.7. Pence % Profit performance 18.1. 10% Acquisitions / disposals Net finance costs (0.4) 1.2. 0% 1% Associates 3.3. 2% Taxation (3.0) -2% Non-controlling interests (1.1) -1% Share buy-back 0.8. 1% Exchange 0.0. 0% EPS 2011 (p) 194.6. 11%
Cash flow 2011. 2010. m. m. Adjusted profit from operations 5,519. 4,984. Non cash items 515. 501. Increase in working capital (281) (61) Net capital expenditure (566) (523) Operating cash flow 5,187. 4,901. Net interest paid (469) (491) Tax paid (1,447) (1,178) Dividends paid to non-controlling interests (275) (234) Restructuring costs (217) (219) Dividends from associates 547. 461. Free cash flow 3,326. 3,240. Operating cash flow % of operating profit 94% 98% Free cash flow % of adjusted earnings 86% 92%
Cash flow 2011. 2010. m. m. Free cash flow 3,326. 3,240. Dividends paid to shareholders (2,358) (2,093) Share buy-back (755) -. Net investment activities (311) -. Other net flows (93) (77) Net cash flow (191) 1,070.
Net debt 2011 2010 m m Opening net debt at 1 January (7,841) (8,842) Net cash flow for the period (191) 1,070) Exchange rate effects 123. (41) Net debt disposed -. 11. Other (including change in accrued interest) (19) (39) Closing net debt at 31 December (7,928) (7,841)
Strategic targets exceeded or met Adjusted EPS 11% higher at 194.6p Proposed dividend per share 11% higher at 126.5 pence Annual share buy-back programme increased to 1.25 bn Pricing, share and margin momentum continues into 2012
23 rd February 2012
SUPPLEMENTARY SLIDES Preliminary results 2011
Volumes by region FY 2011 Region Billions 2011 2010 % change Asia Pacific 191 188 +2% Americas 143 149-4% Western Europe 135 136-1% Eastern Europe, Middle East and Africa 236 235 +1% Group 705 708 0%
Volumes by region H2 2011 Region Billions 2011 2010 % change Asia Pacific 96 93 3% Americas 73 76-3% Western Europe 70 70 0% Eastern Europe, Middle East and Africa 122 121 +1% Group 361 360 0%
Volumes by region Q4 2011 Region Billions 2011 2010 % change Asia Pacific 50 47 +5% Americas 38 39-3% Western Europe 35 35 0% Eastern Europe, Middle East and Africa 59 61-2% Group 182 182 0%
Revenue by region FY 2011 Region m 2011 2010 % change Asia Pacific 4,251 3,759 13% Americas 3,558 3,498 2% Western Europe 3,600 3,695-3% Eastern Europe, Middle East and Africa 3,990 3,931 2% Group 15,399 14,883 3%
Revenue by region H2 2011 Region m 2011 2010 % change Asia Pacific 2,226 1,948 14% Americas 1,814 1,852-2% Western Europe 1,881 1,746 8% Eastern Europe, Middle East and Africa 2,040 2,039 0% Group 7,961 7,585 5%
Adjusted profit from operations FY 2011 Region m 2011 2010 % change Asia Pacific 1,539 1,332 16% Americas 1,441 1,382 4% Western Europe 1,228 1,103 11% Eastern Europe, Middle East and Africa 1,311 1,167 12% Group 5,519 4,984 11%
Adjusted profit from operations H2 2011 Region m 2011 2010 % change Asia Pacific 773 681 14% Americas 673 688-2% Western Europe 656 539 22% Eastern Europe, Middle East and Africa 657 616 7% Group 2,759 2,524 9%
Top 40 market share movements (1) Market SOM FY11 (%) Movement (ppt) Market SOM FY11 (%) Movement (ppt) Argentina 26.8-0.5 France 15.8 +0.5 Australiaº 45.5-0.3 GCC 34.5 +1.1 Bangladesh 42.2 +1.2 Germany 19.3 +0.4 Belgium 32.8 +0.2 Greece 18.6 +0.9 Brazil 73.7-1.0 Indonesia 8.2-0.5 Canada 50.4-1.3 Italy 23.4-0.2 Chile 93.2-1.4 Japan³ 12.9 +2.3 Colombia¹ 18.4 +0.2 Kazakhstan 9.4 +0.4 Denmark 81.3-1.2 Malaysia 61.1 +1.3 Egypt² 13.7 +2.6 Mexico 33.4-0.6 Based on retail audit ºAustralia Nov YTD ¹ Colombia excludes Protabaco acquisition (Octt2011) ² Egypt retail audit excludes the period of civil unrest Feb-Apr 2011, YTD Nov ³ Japan based on shipment share
Top 40 market share movements (2) Market SOM FY11 (%) Movement (ppt) Market SOM FY11 (%) Movement (ppt) Spain 12.6 +1.4 Netherlands 26.9-1.0 Sweden 27.9 +0.2 New Zealand 70.9-0.5 Switzerland 41.3 +0.1 Nigeria 85.2 +1.9 Taiwan 8.2 +0.4 Pakistan 60.1 +2.0 Turkey 25.2-2.7 Poland 28.6 +0.5 UK 7.5 +0.6 Romania 50.5 +2.9 Ukraine 15.1 +1.6 Russia 20.7 +0.7 Uzbekistan 91.9-0.3 South Africa 86.0 +0.3 Venezuela 92.0 +1.5 South Korea 15.4-2.8 Vietnam 27.8 +0.7 Based on retail audit
Foreign currencies Average Closing 2011 2010 2011 2010 US dollar 1.604 1.546 1.554 1.566 Canadian dollar 1.586 1.592 1.583 1.556 Euro 1.153 1.166 1.197 1.167 South African rand 11.632 11.300 12.547 10.358 Brazilian real 2.683 2.719 2.899 2.599 Australian dollar 1.554 1.682 1.516 1.527 Russian rouble 47.116 46.945 49.922 47.795 Japanese yen 127.826 135.518 119.572 126.982