deutsche bank global consumer conference€¦ · company’s future expectations, operations,...
TRANSCRIPT
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Deutsche BankGlobal Consumer ConferenceImperial Tobacco Group PLC
Paris14 June 2011
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Disclaimer
Certain statements in this presentation constitute forward-looking statements. Any statement in this presentation that is not a statement of historical fact including, without limitation, those regarding the Company’s future expectations, operations, financial performance, financial condition and business is a forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this presentation. As a result, you are cautioned not to place any reliance on such forward-looking statements. The forward-looking statements reflect knowledge and information available at the date of announcement of the full year results and the Company undertakes no obligation to update its view of such risks and uncertainties or to update the forward-looking statements contained herein. Nothing in this presentation should be construed as a profit forecast.
This presentation does not constitute an offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities of the Company nor should it form the basis of or be relied on in connection with any contract or commitment whatsoever.
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Bob Dyrbus Finance Director
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Delivering sustainable shareholder returns
Delivering sustainable shareholder returns
Growth driversGrowth drivers
Cost Optimisation
Cost Optimisation
Sales GrowthSales
GrowthCash
UtilisationCash
Utilisation
ExecutionExcellenceExecutionExcellence
FutureFoundations
FutureFoundations
Our key assetsOur key assets
BrandEquityBrandEquity
TotalTobacco
TotalTobacco
MarketFootprintMarket
Footprint PeoplePeople
Consumer Centric
Consumer Centric
How we leverage our assetsHow we leverage our assets
Strategic Focus
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Assets, Opportunities, Capabilities..
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This is because we currently donot feature tobacco product brand
imagery on our website.
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TaiwanUkraine
GreeceIreland
I. Coast
UK GermanyUSA Spain
France
Morocco
ItalyRussia
Saudi Arabia
Austria, Canaries, Poland, Czech, NZL
Azerbaijan FinlandBurkina Faso NorwaySlovenia MacedoniaSenegal MadagascarLaos Slovakia
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India(Indonesia)
ColombiaEgypt
Philippines
187
MalaysiaS. Africa
Low / NoProfit
Imperial Tobacco ProfitabilityHighProfit
High Profit
Low Profit
Mar
ket P
rofit
abili
ty
Australia
NLD BeLux
ChinaJapan
Canada BrazilMexico Turkey
S. Korea
VietnamSwitzerland
Denmark ThailandNigeria SwedenSerbia ArgentinaBulgaria Romania
CAR HungaryChad Hong KongCongo KosovoCyprus CambodiaGibraltar
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EU & Non-EU Market Balancesignificant opportunities
47% Volumes EU* 53% Volumes Non-EU*
*Based on HY11 stick equivalent volumes
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Affordability
Modern lifestyles
Value seeking
Authenticity
Heritage
New experiencesChanging society
Globalisation
Drivers Trends
Affordable luxury
Consumer Environmentconsumers responding to a changing world
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Trends
Consumer Environmentadditional tobacco factors
Regulation &Excise
Value seeking
Authenticity
Heritage
New experiences
Affordable luxury
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Consumer Trendsvalue and luxury opportunities
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ValueLuxury
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Unique Total Tobacco Focus
more consumers… more markets… more occasions
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1111
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Quality
Aligned with Consumer Trends
Choice
Exclusivity
Differentiation
Connoisseurship
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Brand MomentumGlobal Visibility c.100 markets
6% of cigarette volumesSustainable growth: 6% CAGR* since FY05Share growth in 13 of top 20 markets in FY10
Brand PositioningThe Ultimate Smoking ExperienceThe best cigarette you can buy, for smokers with excellent taste and style
Consumers Aspire to LuxuryDavidoff
Source: Imperial* CAGR Compound Annual Growth Rate
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Consumers Aspire to Luxurythe top cigar marks
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Aligned with Consumer Trends
Authenticity
Smartchoice
Affordable Trust
Heritage
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Consumers Demand Value
The value Brand with a Vibrant TwistSurprising Ideas –Innovative ChoiceTrustworthy; Inspiring; Vibrant; Progressive
Latin Taste for LifeCharacter EspanolPassion; Creative; Engaging; Genuine
The Smart ChoicePremium on Everything but priceCredible; Cleverness; Stylish
Connect with New PerspectivesAmerican Freedom and ConfidenceUniting; Clever; Advancing; Freedom
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Top 5 & other key FCT Markets
FY10 Market Size (bn stick
equivalents)Market size
TrendFY10
ShareImperial Position
1. Germany 35.3 #118.2%
2. UK 12.0 54.5% #1
49.3%
22.4%
32.3%
28.6%
Belgium 4.4 11.4% #2
Hungary 3.9 49.4% #1
3. Netherlands 11.1 #1
4. France 9.7 #1
5. Spain 6.2 #1
Poland 4.6 #1
Australia 2.2 59.5% #1
Imperial estimates
global leader in fine cut tobaccoConsumers Demand Value
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What Consumers & Customers Want
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HY11 Results
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DPS28.1p
EPS88.4p
Tobacco operating profit
£1,409m
Tobacco net revenue
£3,289m
Stick equivalent volumes164.9bn
HY11 Overview
Percentage changes reflect constant currency performance and are adjusted and presented on our usual basis. The definition of tobacco net revenue has been changed to exclude revenue from peripheral and non-tobacco related products with comparatives restated accordingly.
+2.7%
+15.6%
-0.7%
+3.8%
+7.0%
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Group Underlying Growthex Spain; adjusted for UK trade buying
Tobacco operating profitTobacco net revenueStick equivalent volumes
+1.0%
+4.4%
+7.2%
Percentage changes reflect underlying constant currency performance and are adjusted and presented on our usual basis. The definition of tobacco net revenue has been changed to exclude revenue from peripheral and non-tobacco related products with comparatives restated accordingly.
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Total Tobacco5% global strategic cigarette brand growth
WestGauloises Blondes
+5%
Davidoff
+5%
Global Strategic Brands
+9%
+1%
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Total TobaccoJPS: 16% cigarette volume growth
UKJPS AustraliaGermany
+16%
+33%
+14%
+151%
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Route 66WestFCT JPS
Total Tobacco5% fine cut tobacco growth; strong papers and tubes
Growth on a stick equivalent basis
+5%
+10%
+6%
+73%
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Total TobaccoHabanos: 16% sales growth outside EU
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This is because we currently donot feature tobacco product brand
imagery on our website.
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+5%
Total TobaccoSnus: 19% volume growth
KnoxSkrufSnus
Volume based on can sales
+19%
+13%
+43%
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Growth in EU and Non-EU
EUseeking value a key consumer trend
well placed to capitalise
flexibility to respond quickly
Non-EUUSA: integrating sales forces
RoW: growing in consumer growth segments
profit growth: Eastern Europe +30%; Asia-Pacfic +20%; AME +10%
significant Habanos growth
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Cost Optimisation
Constant currency tobacco margin +0.4%
Maintaining cost discipline
Investing for growth
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Cash Utilisation
Sustainable shareholder returns
Reviewed options
c.4.5% dividend yield*; c.11x PE*
Post FY11 dividends to grow ahead of earnings
Steadily increasing payout ratio
£500m annualised share buyback effective immediately
Based on 2011 sell-side forecasts
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Sales growth across market footprintunderlying growth in EU excluding Spain
+7% in non-EU markets
Driving growth through Total Tobacco
strong global strategic brand performance; +5% cigarette volume growth
excellent JPS result; +16% cigarette volume growth
+5% fine cut tobacco growth*; +8% papers; +12% tubes
+16% Habanos sales growth outside EU
+19% snus volume growth
Conclusion
* Stick equivalent basis
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Our Strategy
Delivering sustainable shareholder returns
Delivering sustainable shareholder returns
Growth driversGrowth drivers
Cost Optimisation
Cost Optimisation
Sales GrowthSales
GrowthCash
UtilisationCash
Utilisation
Consumer Centric
Consumer Centric
ExecutionExcellenceExecutionExcellence
FutureFoundations
FutureFoundations
Our key assetsOur key assets
MarketFootprintMarket
FootprintTotal
TobaccoTotal
TobaccoBrandEquityBrandEquity PeoplePeople
How we leverage our assetsHow we leverage our assets
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Deutsche BankGlobal Consumer ConferenceImperial Tobacco Group PLC
Paris14 June 2011