JT International Business Results for 2011

Transcription

1 JT International Business Results for Tokyo, Japan February 07, 2012 Forward-Looking and Cautionary Statements This presentation contains forward-looking statements about our industry, business, plans and objectives, financial conditions and results of operations based on current expectations, assumptions, estimates and projections. These statements reflect future expectations, identify strategies, discuss market trends, contain projections of operational results and financial condition and state other forward-looking information. These forward-looking statements are subject to various known and unknown risks, uncertainties and other factors that could cause our actual results to differ from those suggested by any forward-looking statement. We assume no duty or obligation to update any forwardlooking statement or to advise of any change in the assumptions and factors on which they are based. Risks, uncertainties or other factors that could cause actual results to differ materially from those expressed in any forward-looking statement include, without limitation: 1.health concerns relating to the use of tobacco products; 2.legal or regulatory developments and changes; including, without limitation, tax increases and restrictions on the sale, marketing and usage of tobacco products, governmental investigations and privately imposed smoking restrictions; 3.litigation in Japan and elsewhere; 4.our ability to further diversify our business beyond the tobacco industry; 5.our ability to successfully expand internationally and make investments outside of Japan; 6.competition and changing consumer preferences; 7.the impact of any acquisitions or similar transactions; 8.local and global economic conditions; and 9.fluctuations in foreign exchange rates and the costs of raw materials This presentation contains packages of our brands in some slides. Those slides have been developed to explain JTI s performance to our investors. And they are not intended to promote the purchase of our products.. JT International Business Results for 2

2 Pierre de Labouchere President & Chief Executive Officer Business Results JT International Business Results for 3 Strong results driven by top-line growth Highlights Strong EBITDA growth of 17.3%, or 15.6% at constant rates of exchange, exceeding our forecast of 14.0% Key drivers: Robust pricing Market share gains in most key markets Resilient total shipment volumes with continued GFB growth, despite declining industry size Continued focus on top-line growth and broadening the earnings base Key Performance Indicators Year-over-Year Growth (%) Total shipment volume GFB shipment volume Core Net Sales EBITDA Constant currency Reported Note: Core Net Sales excludes revenue from distribution, private label, contract manufacturing and other peripheral businesses JT International Business Results for 4

3 Share of market continued to grow across most key markets Share Of Market (12-month moving avg.) ppt change vs. last year Russia 36.9% 0.0 France 16.4% +0.4 Italy 20.7% +1.0 Spain 21.2% +0.4 UK 38.8% -0.1 Key drivers: Investment in strengthening brand equity Well-balanced brand portfolio capturing both up-trading and downtrading trends Strong trade marketing capabilities Turkey 24.1% +1.5 Taiwan 38.2% 0.0 Note: Market shares do not include Roll-Your-Own / Make-Your-Own JT International Business Results for 5 GFB shipment volume continued to grow, driving mix improvement GFB shipment volume Year-on-Year variation (BnU) % Total Shipment Volume YoY Change % 2.7% Engine % 2.4% Stronghold % 4.6% Future Potential % -5.8% % 2.6% JT International Business Results for 6

4 Winston consolidated its global #2 ranking through rejuvenation and innovation GFB performance Shipment volume growth in almost all clusters, reaching a historical record Improved and expanded the portfolio with: successful rejuvenation of the base family expansion of the innovative XS family Winston shipment volume (BnU) % JT International Business Results for 7 Camel s performance was resilient, despite downtrading pressures GFB performance Leveraged strong iconic brand with: innovative product launches market entry in South Korea and Lebanon on-going deployment of the modern Black & White family Camel shipment volume (BnU) % 40.5 Base family rejuvenation with innovative Curve packaging starting Q JT International Business Results for 8

5 Mild Seven performed well, despite pressure on the premium segment GFB performance Shipment volume decreased due to temporary price disadvantage in Taiwan and South Korea Innovative new Revo offering in Russia, in Q Mild Seven shipment volume (BnU) % 18.9 JT International Business Results for 9 LD strengthening its position as an international value brand GFB performance Strong shipment volume growth as a result of stronger brand equity and capturing down-trading SOM grew in almost all markets and reached #2 position in Russia LD shipment volume (BnU) % 40.5 JT International Business Results for 10

6 Strong pricing and cost containment drove EBITDA growth Price increases in all key markets, with price/mix contributing US$ 812MM to EBITDA growth followed our pricing principle by passing excise increases to consumers seized margin improvement opportunities to compensate for volume declines Overcame disruptive events in Spain and Turkey Governments increasingly under pressure to raise taxes but understand disruptive tax increases can reduce their revenues Continued cost discipline JT International Business Results for 11 Well positioned for future growth, with emerging markets driving performance Balanced geographic footprint with growing presence in emerging markets Emerging / Mature markets performance vs. at constant currency (%) Strong top-line growth in emerging markets Solid EBITA growth from mature markets Total shipment volume Emerging Mature Emerging markets to continue driving our top- and bottom-line growth GFB shipment volume Core Net Sales EBITA Notes: Core Net Sales excludes revenue from distribution, private label, contract manufacturing and other peripheral businesses Definition of mature and emerging market as per World Bank classification JT International Business Results for 12

7 Sudan 100-day Business Integration Plan is on track Broadening the base Development to focus on: strengthening the brand portfolio enhancing the route-to-market model modernizing the factory and improving product quality training and developing the local employees Illustrates our commitment to pursue growth opportunities in emerging markets JT International Business Results for 13 Partnership with Ploom marks JTI s first venture into Emerging Products Broadening the base Deal overview: exclusive commercial license outside of the USA acquired a minority stake in Ploom, Inc Bringing together our global resources and Ploom s creative product design Unique selling proposition utilizing heated tobacco - not burnt Variety of pods providing enhanced pleasure and experience JT International Business Results for 14

8 Roland Kostantos Chief Financial Officer Financial and Operational Overview JT International Business Results for 15 Strong results in BnU, US$ MM % Change Reported Constant currency Total shipment volume % GFB shipment volume % Core Net Sales 10,113 11, % +8.0% EBITDA 3,338 3, % +15.6% Note: Core Net Sales excludes revenue from distribution, private label, contract manufacturing and other peripheral businesses JT International Business Results for 16

9 Growth continued in the second half of BnU, US$ MM H1 11 Change H2 11 Change Abs. % Abs. % Shipment Volume Total % % GFB % % Reported Core Net Sales 5, % 5, % EBITDA 1, % 1, % Constant currency Core Net Sales 5, % 5, % EBITDA 1, % 1, % Note: Core Net Sales excludes revenue from distribution, private label, contract manufacturing and other peripheral businesses JT International Business Results for 17 Pricing and improved GFB mix drove Core Net Sales growth Core Net Sales drivers (US$ MM) +8.0% +10.9% 11,211 10, , Volume Price/Mix at constant currency FX reported Note: Core Net Sales excludes revenue from distribution, private label, contract manufacturing and other peripheral businesses JT International Business Results for 18

10 EBITDA grew 17.3% driven by top-line gains EBITDA drivers (US$ MM) +15.6% +17.3% , , , Volume Price/Mix Other at constant currency FX reported JT International Business Results for 19 Maintained focus on productivity and efficiency Productivity and Number of Factories Closed 7 factories since Productivity Index ( = 100) Number of Factories Announced Hainburg factory closure and Vienna regional office rationalization Improved total factory productivity by 15% since Cash conversion ratio at competitive level Notes: Productivity based on cigarettes produced per man-hour Number of factories in includes Hainburg factory but excludes two factories in Sudan JT International Business Results for 20

11 Profitability improved driven by CIS+ and Rest-of-the-World EBITA margin by cluster vs. at constant currency (%) -1.2ppt ppt ppt ppt ppt South & West Europe North & Central Europe CIS+ Rest-of-the-World JTI Total Note: JTI Total EBITA margin includes earnings from distribution, private label, contract manufacturing and other peripheral businesses. JT International Business Results for 21 CIS+ drove overall JTI growth Key Performance Indicators (BnU, US$ MM) Change Challenging business environment in Ukraine and Belarus Total shipment volume GFB shipment volume % % Pricing gains in Russia, Romania and Kazakhstan Continue to focus on top-line growth to consolidate our leading positions Core Net Sales 3, % EBITA 1, % EBITA margin 32.6% +4.6ppt Note: Core Net Sales excludes revenue from distribution, private label, contract manufacturing and other peripheral businesses Core Net Sales and EBITA at constant rates of exchange JT International Business Results for 22

12 Russia: GFB growth and robust pricing Industry size decline stabilized and uptrading continued Price increase to pass excise tax and improve margin Enhanced SOV leadership position, with stable SOM, through strong brand equity Winston solidified #1 position, with continued SOM growth LD attained #2 position Challenging but manageable regulatory and taxation environment Winston Pricing and SOM RSP (RUB) % 2 0 Jun Dec % Notes: RSP Retail Selling Price ; SOM Share of Market ; SOV Share of Value Core Net Sales excl. revenue from distribution, private label, contract manufacturing and other peripheral businesses Data source: A.C.Nielsen % Jun 11 RSP 12.2% Monthly SOM (%) Dec 11 Monthly SOM JT International Business Results for 23 South & West Europe achieved solid performance, despite challenging environment in Spain Key Performance Indicators (BnU, US$ MM) Change Industry contraction of 16.5% and price volatility in Spain Total shipment volume GFB shipment volume % % Excluding Spain: Total shipment grew 2.1% GFB volume grew 2.2% Core Net Sales 2, % EBITA % EBITA margin 36.2% -1.2ppt EBITA and EBITA margin grew Pricing and SOM gains across numerous markets Continue SOM growth through innovation Note: Core Net Sales excludes revenue from distribution, private label, contract manufacturing and other peripheral businesses Core Net Sales and EBITA at constant rates of exchange JT International Business Results for 24

13 North & Central Europe expanded volume and profit Key Performance Indicators (BnU, US$ MM) Change Total shipment volume GFB shipment volume % % Core Net Sales 1, % EBITA % Czech, Hungary and Poland delivered solid GFB growth Pricing gains in UK, Poland, Germany, Czech and Sweden Continued to grow earnings in the UK despite down-trading and industry contraction Supporting GFB growth with further investment EBITA margin 36.4% +0.5ppt Note: Core Net Sales excludes revenue from distribution, private label, contract manufacturing and other peripheral businesses Core Net Sales and EBITA at constant rates of exchange JT International Business Results for 25 Rest-of-the-World leveraged growth opportunities Key Performance Indicators (BnU, US$ MM) Change Total shipment volume GFB shipment volume % % Core Net Sales 3, % Strong shipment volume growth driven by the Middle East and Africa Profitability improved driven by favorable volume and pricing across numerous markets Top- and bottom-line growth opportunities EBITA % EBITA margin 24.9% +1.9ppt Note: Core Net Sales excludes revenue from distribution, private label, contract manufacturing and other peripheral businesses Core Net Sales and EBITA at constant rates of exchange JT International Business Results for 26

14 Turkey: SOM and SOV momentum continues Market share (%) Accelerating growth in SOV Winston #1 brand in Turkey Approaching #2 SOM position Q3 11 Q4 JTI SOM JTI SOV Winston Monte Carlo LD Camel Note: SOM Share of Market ; SOV Share of Value ; all figures on a 3-month rolling basis Data source: A.C.Nielsen JT International Business Results for 27 Summary of results Robust pricing and GFB mix improvement Market share gains in most key markets GFB growth in all clusters (excluding Spain), despite declining industry size Continued investment and cost optimization EBITDA exceeded performance guidance Expanded business base JT International Business Results for 28

15 Pierre de Labouchere 2012 Outlook JT International Business Results for outlook Strategic focus to remain on top-line growth and broadening the base Uncertainties heading into 2012 present challenges Solid track record of resilience and flexibility Confident in our proven ability to meet challenges and continue to grow JT International Business Results for 30

16 EBITDA growth of 10% in 2012, at constant rates of exchange EBITDA and EBITDA margin f US$ MM, % EBITDA (US$ MM) EBITDA margin (%) 5,000 4, % , ,000 3, , Note: EBITDA margin excludes revenues from distribution, private label, contract manufacturing and other peripheral businesses 2012 forecast 0 JT International Business Results for 31 Appendix JT International Business Results for 32

17 Cluster Split Clusters contribution to Volume, Core Net Sales and EBITA Rest-of-the-World 28% 30% 22% CIS+ 46% 34% 35% North & Central Europe 12% 17% 20% South & West Europe 14% 19% 22% Shipment Volume Core Net Sales EBITA JT International Business Results for 33 Foreign exchange rates Key local currency exchange rates vs. US$ Currency RUB GBP EUR CHF TWD JT International Business Results for 34

18 SOM GFB & Non-GFB CIS+ Market share, % Russia Ukraine Non-GFB GFB Data source: AC Nielsen Data source: AC Nielsen Kazakhstan Romania Data source: JTI estimates Data source: AC Nielsen JT International Business Results for 35 SOM GFB & Non-GFB South & West Europe Market share, % Italy Spain Non-GFB GFB Data source: AC Nielsen Data source: Logista France Greece Data source: Altadis Data source: AC Nielsen JT International Business Results for 36

19 SOM GFB & Non-GFB North & Central Europe Market share, % Austria Sweden Non-GFB GFB Data source: AC Nielsen Data source: AC Nielsen UK Ireland Data source: AC Nielsen Data source: AC Nielsen JT International Business Results for 37 SOM GFB & Non-GFB Rest-of-the-World Market share, % Turkey Taiwan Non-GFB GFB Data source: AC Nielsen Data source: AC Nielsen Canada Malaysia Data source: JTI estimates and AC Nielsen Data source: AC Nielsen JT International Business Results for 38

20 Russia industry size and price segment evolution Total Industry Size (BnU) RMC Price Segment Evolution (%) % % 369 Prestige Premium Sub-Premium Mid-Price Value/Base Q3 11 Q4 Data source: JTI estimates and A.C.Nielsen JT International Business Results for 39 Russia market shares by brand Market share (%) JTI SOM JTI SOV Winston LD Peter I Premium and above brands Q3 11 Q4 Note: SOM Share of Market ; SOV Share of Value Data source: A.C. Nielsen JT International Business Results for 40

21 UK industry size and price segment evolution Total Industry Size (BnU) RMC price segment evolution (%) +0.5% -1.0% RYO Premium Sub-Premium RMC Mid-Price % -4.9% Value Q3 11 Q4 Data source: JTI estimates and A.C.Nielsen JT International Business Results for 41 UK market shares by brand Market share (%) JTI SOM JTI SOV B&H Mayfair Silk Cut Sterling Amber Leaf (RYO) Q3 11 Q4 Note: SOM Share of Market ; SOV Share of Value Data source: A.C. Nielsen JT International Business Results for 42

22 France industry size and price segment evolution Total Industry Size (BnU) RMC Price Segment Evolution (%) +0.3% -0.3% RYO Premium RMC % -1.3% Popular Q3 11 Q4 Data source: JTI estimates and Altadis JT International Business Results for 43 France market shares by brand Market share (%) JTI SOM JTI SOV Camel Winston Benson & Hedges Q3 11 Q4 Note: SOM Share of Market ; SOV Share of Value Data source: Altadis JT International Business Results for 44

23 Spain industry size and price segment evolution Total Industry Size (BnU) RMC Price Segment Evolution (%) -10.3% RYO/MYO % 66 7 Premium Sub-Premium RMC Popular % -16.5% Value Note: Dark tobacco segment was reclassified in from Popular to Sub-Premium segment. Data source: JTI estimates and Logista Base Q3 11 Q4 JT International Business Results for 45 Spain market shares by brand Market share (%) JTI SOM JTI SOV Winston Camel Q3 11 Q4 Note: SOM Share of Market ; SOV Share of Value Data source: Logista JT International Business Results for 46

24 Italy industry size and price segment evolution Total Industry Size (BnU) RMC Price Segment Evolution (%) RYO -1.7% -0.4% Premium RMC Sub-Premium % -1.8% Popular Q3 11 Q4 Data source: JTI estimates and A.C.Nielsen JT International Business Results for 47 Italy market shares by brand Market share (%) JTI SOM JTI SOV Winston Camel B&H Q3 11 Q4 Note: SOM Share of Market ; SOV Share of Value Data source: A.C.Nielsen JT International Business Results for 48

25 Turkey industry size and price segment evolution Total Industry Size (BnU) RMC Price Segment Evolution (%) % % 91 Premium Mid-Price Popular Value Q3 11 Q4 Data source: JTI estimates and A.C.Nielsen JT International Business Results for 49 Turkey market shares by brand Market share (%) JTI SOM JTI SOV Camel Winston Monte Carlo LD Q3 11 Q4 Note: SOM Share of Market ; SOV Share of Value Data source: A.C. Nielsen JT International Business Results for 50

26 Taiwan industry size and price segment evolution Total Industry Size (BnU) RMC Price Segment Evolution (%) +0.6% +1.1% Prestige Premium Popular Value Super-Value Q3 11 Q4 Data source: JTI estimates and A.C.Nielsen JT International Business Results for 51 Taiwan market shares by brand Market share (%) JTI SOM JTI SOV Mild Seven Winston More Mi-Ne 11 Q3 11 Q4 Note: SOM Share of Market ; SOV Share of Value Data source: A.C. Nielsen JT International Business Results for 52

27 Enterprising Open Challenging