Morgan Stanley Global Consumer Conference Ralph Edmondson, Head of Investor Relations New York - November 2011
Important information This presentation has been prepared by British American Tobacco p.l.c. ("British American Tobacco") for information purposes only and does not constitute, or form part of any offer or invitation to acquire, or any solicitation of any offer to acquire any securities of British American Tobacco. The information on which this presentation is based has been obtained from sources which we believe to be reliable as at the date hereof, but we have not independently verified such information and do not guarantee that it is accurate or complete and all information and opinions are subject to update, correction, revision or amendment without notice. No representation or warranty, express or implied, is therefore made by or on behalf of British American Tobacco, its directors or employees or any other person as to, and no reliance for any purposes whatsoever should be placed on, the accuracy, completeness or fairness of the information or opinions contained in this presentation and no responsibility or liability is accepted for any such information or opinions. This presentation includes certain forward-looking statements with respect to British American Tobacco's financial condition, results of operations and business and certain plans and objectives of the British American Tobacco's board of directors with respect thereto. By their nature, forwardlooking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance and British American Tobacco's actual results of operations, financial condition, liquidity, prospects, growth and strategies and the development of the industry in which the British American Tobacco operates may differ materially from those expressed or implied by the forward-looking statements included in this presentation. Events that may cause actual results to differ from such forward-looking statements include, but are not limited to fluctuations in the capital markets; fluctuations in interest and exchange rates; increased regulation or regulatory scrutiny; the occurrence of unforeseen disasters or catastrophes; political or economic instability in their principal markets; adverse outcomes in litigation; general local and global economic, political, business and market conditions. Except as required by its legal or regulatory obligations, British American Tobacco does not undertake any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise. Recipients of this presentation who intend to acquire any interests in securities which British American Tobacco may issue in the future are reminded that any such acquisition should only be made on the basis of the offering document prepared in connection therewith, which may be different from the information and opinions contained in this presentation.
The vision and strategy remain the same Sustainable, profitable growth Emphasis on improving execution Improved deployment of innovations Supported by productivity, winning organisation and responsibility
BAT strengths Some great brands - Based on consumer insights - Opportunities in emerging consumer segments - Opportunities in key geographies - First to world innovations
BAT strengths Some great brands World leading innovations - Brand driven - Focused on size and scale - Deployment across the Globe - A full pipeline
BAT strengths Some great brands World leading innovations Emerging 70% 30% Developed A great business mix Premium 31% 35% Low 34% VFM
BAT strengths Some great brands World leading innovations A great business mix Fully integrated supply chain - Leaf sourcing - Distribution
BAT strengths Some great brands World leading innovations A great business mix Fully integrated supply chain Harm reduction
BAT strengths Some great brands World leading innovations A great business mix Fully integrated supply chain Harm reduction Depth of management talent
The growth targets are sustainable Market share growth Revenue growth We can continue to improve margins Sustainable profit growth High single figure earnings growth is achievable Return of cash - 65% dividend payout ratio - Share buyback programme
Recent performance Organic Organic Organic Adjusted volumes revenue profit EPS Target +/- 0.5% 3 4% 6 7% HSF 2008 +0.4% +7% +10% +19% 2009-3.3% +5% +7% +19% 2010-3.0% +3% +6% +15% 2011 latest -0.4% +7% +11% +10% 9 months 9 months 6 months 6 months
Strong defensive performance Daily Relative performance to FTSE100 Price GBp 31/12/2010-07/11/2011 (GMT) Value GBp Outperformed 2,650 FTSE100 by 2,600 2,850 1.26 2,800 1.23 2,750 1.2 2,700 1.17 26% 2,550 1.08 1.14 1.11 2,500 2,450 2,400 2,350 1.05 1.02 0.99 0.96.123.123 04 17 01 16 01 16 01 18 03 16 01 16 01 18 01 16 01 16 03 17 01 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11
Consistent market outperformance Annual total shareholder return of 25% Daily BATS Relative performance to FTSE100 since 2000 Price GBp 31/12/1999-01/11/2010 (GMT) Value GBp 2,200 8.5 2,000 1,800 7 1,600 1,400 1,200 4.5 1,000 800 3 600 400 1.5 1.12.123 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2000 2010 8 7.5 6.5 6 5.5 5 4 3.5 2.5 2 BAT share price Relative performance to FTSE 100 *Source Bloomberg 31/12/99 to 01/11/10 Graph: Reuters 31/12/99 to close of business 01/11/10
2011: So far, so good Excise - Early shock in Mexico - Recent excise shock in Turkey - Generally, governments have been rational
2011: So far, so good Excise Industry pricing has been rational - despite Spain & Korea - 7% organic revenue growth
2011: So far, so good Excise Industry pricing has been rational Volume decline is moderating - Q3 volumes rose - Organic volumes down 0.4% - Japan effect was 2 billion or 0.4%
2011: So far, so good Excise Industry pricing has been rational Volume decline is moderating Margins improving - 35% target will be achieved ahead of schedule
2011: So far, so good Excise Industry pricing has been rational Volume decline is moderating Margins improving Strategy delivering growth
Opportunities to come 13% WORLD MARKET SHARE EXISTING PROFIT POOLS TACKLING ILLICIT TRADE PRODUCTIVITY
Morgan Stanley Global Consumer Conference Ralph Edmondson, Head of Investor Relations New York - November 2011