Embed Size (px)
Citation preview
Half Year Results 2014 Imperial Tobacco Group PLC
7 May 2014
Alison Cooper Chief Executive
3
Disclaimer Certain statements in this announcement constitute or may constitute forward-looking statements. Any statement in
this announcement 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 or may be a
forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may cause
actual results to differ materially from those projected or implied in any forward-looking statement. 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
announcement. 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 this announcement 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 announcement should be construed as a profit forecast or profit estimate
and no statement in this announcement should be interpreted to mean that the future earnings per share of the
Company for current or future financial years will necessarily match or exceed the historical or published earnings per
share of the Company.
This announcement has been prepared for, and only for the members of the Company, as a body, and no other
persons. The Company, its directors, employees, agents or advisers do not accept or assume responsibility to any
other person to whom this announcement is shown or into whose hands it may come and any such responsibility or
liability is expressly disclaimed.
4
Our Priorities for 2014
Strengthening our portfolio
Backing growth with increased investment in Growth Brands
Growth Markets
Returns Markets
Fontem Ventures
Building resilience cost optimisation
stock optimisation programme
a reminder of what we said in November
5
So how are we doing?
Growth Brands growing volume +4%
Growth Markets tobacco net
revenue +7%
Returns Markets: profits maintained
Market share: growing in half our
markets
Fontem Ventures – launched first
product
Stock optimisation: significant
progress
Cost optimisation: on track
£60m this year
£300m p.a. by 2018
Cash conversion 78% (MAT)
Sales Growth Business Optimisation and Cash
All volume is underlying (excluding stock optimisation). Net revenue is at constant currency and underlying (excluding stock
optimisation)
Oliver Tant Chief Financial Officer
7
Stock Optimisation
A number of benefits
Clearer view of market dynamics
Route to market improved
Quicker launch for new initiatives
Fresher product in the market
Improved working capital management
reducing trade inventories
8
Stock Optimisation an enabler of better in-market performance
Then
Manufactured France
Shipping time 2 months +
Buffer stock 3 months +
Now
Turkey
2 weeks
< 1 month
Market conditions
Volume decline -7%
Channels Kiosk ban, modern trade growing
Distributor Efficiency drive, destocking
Iraq Russia
Stock reduced c. 3 months Stock reduced c. 2 months
9
Underlying Trends
Q1 2014 ∆ HY 2014 ∆
Volume (bn SE) -5% -4%
Tobacco net revenue (£m) +1% +2%
Growth Brand volume (bn SE) +2% +4%
Growth Brand tobacco net revenue +2% +6%
Specialist Brand tobacco net revenue +1% +6%
Growth Market tobacco net revenue +3% +7%
Returns Market tobacco net revenue +1% +0%
bn SE is billion stick equivalent; all volume is underlying (excluding stock optimisation). Net revenue is at constant currency and underlying
(excluding stock optimisation)
10
Growth Brands quality growth
HY
2014
HY
2013 Actual ∆
Constant
FX ∆
Underlying
∆
Volume (bn SE) 60.2 62.2 -3% +4%
Market share (%) 5.4 5.3 +10 bps
Tobacco net revenue (£m) 1,252 1,273 -2% 0% +6%
Growth Brands % of Group volume 43 41 +210 bps
Growth Brands % of tobacco net revenue 40 39 +120 bps
Growth Brands growing volume +4% and tobacco net revenue +6%
Growth Brands market share increasing
6 out of 10 Growth Brands increasing volume
bn SE is billion stick equivalent
11
Specialist Brands total tobacco focus
HY
2014
HY
2013 Actual ∆
Constant
FX ∆
Underlying
∆
Tobacco net revenue (£m) 397 395 +1% +2% +6%
Specialist Brands % of tobacco net revenue 13 12 +70 bps
Strong performance by
Specialist FMC (Gitanes and Style)
Mass Market Cigars (Backwoods)
Premium Cigars
Skruf
12
Growth Markets
HY
2014
HY
2013 Actual ∆
Constant
FX ∆
Underlying
∆
Market share (%) 5.7 5.8 -10 bps
Tobacco net revenue (£m) 914 988 -7% -4% +7%
Adjusted operating profit (£m) 207 247 -16% -11%
Growth Brands % tobacco net revenue 37 38 -80 bps +150 bps
Growth Brands volume (bn SE)* 25 26 -5% +11%
Profit impacted by stock optimisation and investment
Market share ahead excluding Russia
Strong underlying growth in Asia and Middle East
Offset by Russia (market size decline) although profits have been resilient
USA: USA Gold gaining share in target states and profits strongly ahead
Quality of growth improving – Growth Brands volume +11%, % of net revenue +150 bps underlying
* bn SE is billion stick equivalent
13
Returns Markets
HY
2014
HY
2013 Actual ∆
Constant
FX ∆
Underlying
∆
Market share (%) 26.8 27.7 -90 bps
Tobacco net revenue per ‘000 SE (£) 23.82 23.03 +3% +5% +7%
Adjusted operating profit (£m) 1,089 1,112 -2% +0%
Growth Brands % tobacco net revenue 41 39 +200 bps +170 bps
Operating profit maintained
Quality of growth improving – Growth Brands account for 41% of tobacco net revenue
Resilience in Returns North
Australia and Germany ahead
UK – Q2 share up
Returns South still affected by France, Spain and Morocco market size
Market share impacted by mix of markets – high share in large declining markets SE is stick equivalent
14
Logistics
∆
HY
2014
HY
2013 Actual ∆
Constant
FX ∆
Distribution fees (£m) 430 413 +4% +3%
Adjusted operating profit (£m) 73 74 -1% -1%
Margin (%) 17.0 17.9 -90 bps
robust performance
Strong performance in tough environment
Tobacco: lower volumes offset by higher distribution fees and cost savings
Non tobacco: transport services and wholesale good results
Group continuing to review its options in relation to a potential IPO
15
Cost Optimisation Programme to fund investment in growth
Progress in HY 2014
Restructuring projects announced
Global procurement function up and running
Migrations and de-listings continue to simplify portfolio of brands
On track to deliver £60m saving in FY 2014
£300m p.a. by 2018
16
£0.6bn
HY 2014 Adjusted Net Debt
Openingnet debt
EBITDA Workingcapital
Netcapex
Tax andinterest
Restructuring Dividendsand sharebuy-back
FX andother
Closingnet debt
£1.5bn
£9.1bn £11.1bn
£1.5bn £0.1bn £0.1bn
£1.0bn £0.2bn
17
Cash Conversion my focus for financial improvement
Working capital Room for improvement versus best in class
Programme to improve parameters
Cash conversion HY 2014 78% (MAT)
improved on HY 2013 63%
Opportunity to get closer to best in class
Project team in place
18
Foreign Exchange
HY 2013 HY 2014 Spot ∆ YTD ∆ Spot
US $ 1.579 1.637 1.69 -4% -6%
EURO € 1.207 1.199 1.21 +1% -0%
AUD $ 1.520 1.796 1.80 -15% -16%
Russia Rouble 48.54 55.39 60.00 -12% -24%
HY impact negative 3% on adjusted operating profit, 4% on adjusted earnings per share
All translation (i.e. non cash)
impact in Returns Markets relatively limited (-200bps)
most of the impact in Growth Markets (-400bps)
H2: sterling continuing to strengthen
19
Quarterly Dividend
Moving to quarterly dividend payments in FY 2015
shareholders get more regular cash return; same cash but paid earlier
better match to company’s cash flows
no change in schedule in FY 2014
FY 2015
1 announced May, paid June
2 announced May, paid September
3 announced November, paid December
4 announced November, paid March
Alison Cooper Chief Executive
21
Brand Portfolio
22
Clear Brand Portfolio Strategy
Specialist Growth
Migrations
De-listings
Cash
Portfolio
FMC Unique
Propositions
Fine Cut
Specialist
Premium
Cigar
Mass Market
Cigar
Snus
Papers
23
JPF Chassis continued growth in volume and share
Glide Tec
10 markets
Volume +13%
Additive Free
+3 markets
Duo (Crushball)
7 markets
Volume doubled
RYO / MYO
17 markets
Volume +13%
Fine
Cambodia
Share Strong
P&S launches
20 markets
24
West Chassis
West Crushball
Volume doubled
News MYO
Volume
+20%
Bastos Vietnam
Volume +15%
rapid growth in Asia
West Slimmer Formats
Central Asia volume
+14%
25
Gauloises queen size success
Gauloises FCT
Growing share in
France
Gauloises Generation QS
Doubled share where
launched
Gauloises Connecting
Range France
Gauloises Elements
Morocco
26
Davidoff expanded range
Davidoff GPC Davidoff
Recessed Filter
Davidoff B&W QS volume
+19% in launched markets
27
12 Migrations in FY 2014
So far migrating with 100% volume retained
Iraq example: Royale Club to P&S
Brand Migrations
28
So how are we delivering in market?
The Sales Growth Drivers
29
growing market share Turkey
2.0%
3.3%
1.7%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
Apr 13 Feb 14
Total JPS
Growth Markets
4.7%
5.5%
4.2%
4.4%
4.6%
4.8%
5.0%
5.2%
5.4%
5.6%
Apr 13 Feb 14
Italy
30
Growth Markets continued growing market share
12%
13%
11.5%
12.0%
12.5%
13.0%
13.5%
Apr 13 Feb 14
6%
8%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Apr 13 Feb 14
Taiwan Kazakhstan
31
Growth Markets continued growing market share
27%
36%
25%
30%
35%
40%
Apr 13 Feb 14
Cambodia
33%
35%
30%
32%
34%
36%
38%
Apr 13 Feb 14
Norway - Snus
32
Australia
succeeding in a plain packaging environment
+3% share +10% volume +12% net revenue +20% profit
Leadership of value segment
Consumer offers to build equity
Equity investment ahead of pack changes
Focused coverage builds engagement
Net revenue and adjusted operating profit growth at constant currency
33
UK strengthening our market share
Portfolio – focus on JPS and Lambert & Butler
Lambert & Butler Blue
Players 19s and Players Gold Leaf from JPS
Customer Engagement
“tobacco supplier of the year” The Grocer
34
Returns Markets South
Bringing the trade to us to build advocacy
Developing our portfolio through innovation
Spain
Morocco
35
Fontem Ventures
Puritane Launched February 2014
healthcare channel brand
launched at 2400 Boots stores
marketing campaign starts late April
opportunities to expand in UK and
internationally
One more launch before year end
Our strategy remains measured:
regulation is developing
working on patented technology
36
Full Year Outlook
Strengthening our portfolio
Backing growth with increased investment in
Growth Brands
Growth Markets
Returns Markets
Fontem Ventures
Building resilience
cost optimisation
stock optimisation programme
Stronger portfolio, stronger footprint, stronger platform for growth
a reminder of what we said in November
Half Year Results 2014 Imperial Tobacco Group PLC
7 May 2014
Appendices
39
Group Results
£m HY 2013
Foreign
Exchange
Constant
Currency
Growth HY 2014 ∆
Constant
Currency
∆
Tobacco net revenue 3,284 (74) (76) 3,134 -5% -2%
Tobacco operating profit 1,359 (42) (21) 1,296 -5% -2%
Operating margin (%) 41.4 0.3 (0.3) 41.4
Logistics operating profit 74 73 -1% -1%
Operating profit 1,425 (42) (16) 1,367 -4% -1%
Interest (263) 8 (255)
Tax rate (%) 23.0 21.6
EPS (p) 90.2 (3.2) 2.6 89.6 -1% +3%
All numbers on an adjusted basis.
40
Returns Markets North
HY 2014 HY 2013 Actual ∆
Constant
FX ∆
Market share (%) 25.0 25.8 -80 bps
Net revenue per ‘000 SE (£) 28.21 26.99 +5% +7%
Adjusted operating profit (£m) 728 731 -0% +3%
Growth brands % tobacco net revenue 45 43 +190 bps +130 bps
UK, Germany, Australia, Netherlands, Poland, Ukraine etc
SE is billion stick equivalent
41
Returns Markets South
HY 2014 HY 2013 Actual ∆
Constant
FX ∆
Market share (%) 29.4 30.5 -110 bps
Net revenue per ‘000 SE (£) 19.06 18.70 +2% +2%
Adjusted operating profit (£m) 361 381 -5% -4%
Growth brands % tobacco net revenue 35 33 +210 bps +190 bps
France, Spain, Morocco, Algeria, Central Europe, C. Africa etc
SE is billion stick equivalent
Financials
43
Group Adjusted Results
£m HY 2014 HY 2013
Tobacco net revenue 3,134 3,284
Logistics distribution fees 430 413
Tobacco operating profit 1,296 1,359
Operating margin % 41.4 41.4
Logistics operating profit 73 74
Distribution margin % 17.0 17.9
Eliminations (2) (8)
Operating profit 1,367 1,425
Interest (255) (263)
Tax rate % 21.6 23.0
Adjusted EPS (p) 89.6 90.2
DPS (p) 38.8 35.2
Results are adjusted and presented on our usual basis
44
Income Statement
£m HY 2014 HY 2013
Revenue 12,717 13,376
Adjusted operating profit 1,367 1,425
Amortisation of acquired intangibles (326) (184)
Restructuring costs (42) (40)
Net finance costs* (351) (371)R
Profit before tax 648 830
Tax (271) (208)
Profit after tax 377 622
Minority interests (11) (11)
Basic EPS (p) 38.1 62.4
Adjusted EPS (p) 89.6 90.2
*Including net fair value and exchange losses on financial instruments and post-employment benefits net financing costs
R – Restated for IAS 19 (Revised)
45
Reconciliation: Reported to Adjusted
£m
Reported
HY 2014
Amortisation
of acquired
intangibles
Fair value
gains / losses
on financial
instruments
Post
employment
net financing
Restructuring
costs
Adjusted
HY 2014
Operating profit 999 326 - - 42 1,367
Finance costs (351) - 75 21 - (255)
Profit before tax 648 326 75 21 42 1,112
Tax (271) 67 (17) (6) (13) (240)
Profit after tax 377 393 58 15 29 872
Minority interest (11) - - - - (11)
Earnings attributable 366 393 58 15 29 861
Basic EPS (p) 38.1 40.9 6.0 1.6 3.0 89.6
46
Tobacco Net Revenue
£m Actual1
HY 2014
Foreign
Exchange
Constant
Currency2 HY 2013
% Change
Constant
Currency
Growth Markets 914 (35) 949 988 (3.9)
Returns Markets North 1,368 (36) 1,404 1,406 (0.1)
Returns Markets South 852 (3) 855 890 (3.9)
Total Returns Markets 2,220 (39) 2,259 2,296 (1.6)
Total Tobacco 3,134 (74) 3,208 3,284 (2.3)
1Based on average exchange rates for six months ended 31 March 2014 2Assumes that average exchange rates in H1 2014 were the same as in H1 2013
47
Tobacco Operating Profit
£m Actual1
HY 2014
Foreign
Exchange
Constant
Currency2 HY 2013
% Change
Constant
Currency
Growth Markets 207 (14) 221 247 (10.5)
Returns Markets North 728 (24) 752 731 2.9
Returns Markets South 361 (4) 365 381 (4.2)
Total Returns Markets 1,089 (28) 1,117 1,112 0.4
Total Tobacco 1,296 (42) 1,338 1,359 (1.5)
1Based on average exchange rates for six months ended 31 March 2014; 2Assumes that average exchange rates in H1 2014 were the same
as in H1 2013; Results are adjusted and presented on our usual basis
48
Foreign Currencies
Average Closing
£1 = HY 2014 HY 2013 HY 2014 HY 2013
Euro 1.199 1.207 1.207 1.183
US dollar 1.637 1.579 1.665 1.514
49
Balance Sheet
£m HY 2014 HY 2013
Non-current assets: tangible 2,591 2,919
intangible 16,877 18,508
Current assets: inventories 4,003 3,844
other 4,067 4,431
Current liabilities (9,473) (10,438)
Non-current liabilities (13,262) (13,010)R
Net assets 4,803 6,254
R – Restated for IAS 19 (Revised)
50
Cash Flow £m HY 2014 HY 2013
Cash flows from operating activities pre tax (240) 140
Tax paid (230) (467)
Cash flows from operating activities (470) (327)
Net capex (141) (170)
Employee Share Ownership Trust (1) (2)
Share buy backs (237) (295)
Dividends paid (inc. minority interests) (791) (727)
Net interest paid (397) (371)
Net cash flow (2,037) (1,892)
Opening net debt (9,518) (8,965)
Closing net debt before non-cash movements (11,555) (10,857)
Non-cash movements
Exchange movement 2 (375)
Interest accretion and derivative fair value adjustments 144 3
Closing net debt after non-cash adjustments (11,409) (11,229)
51
12 Month Cash Conversion
£m 12 months to March 2014
12 months to March 2013
Net cash flow from operating activities 2,209 1,538
Tax 449 715
Net capex (216) (321)
Cash flow post capex pre interest and tax 2,442 1,932
Adjusted operating profit 3,122 3,062
Cash conversion (%) 78 63
Working capital (outflow) (356) (743)
52
Net Finance Costs
£m HY 2014 HY 2013
Net finance costs 351 371R
Adjusted for:
- interest income on net defined benefit assets 69 64R
- interest cost on net defined benefit liabilities (88) (84)
- unwind of discount on redundancy and long term provisions (2) (1)
- net fair value and exchange losses on financing activities (75) (87)
Adjusted net finance costs 255 263
R = Restated for IAS 19 (Revised)
53
Net Debt Reconciliation
£m Reported HY 2014
Accrued interest
Fair value of derivatives
Adjusted HY 2014
Opening net debt (9,518) 321 99 (9,098)
Free cash flow (1,009) - - (1,009)
Share buy backs (237) - - (237)
Dividends (791) - - (791)
Accretion of interest 146 (146) - -
Change in fair values (2) - 77 75
Exchange movements 2 - - 2
Closing net debt (11,409) 175 176 (11,058)
Volume
55
Total Tobacco SE Volume
bn SE* H1 2014 H1 2013
Growth Markets 46.9 52.5
Returns Markets North 48.5 52.1
Returns Markets South 44.7 47.6
Total Returns Markets 93.2 99.7
Total Group 140.1 152.2
* bn SE is billion stick equivalent; Total Tobacco includes cigarettes, fine cut tobacco, cigar, snus and other tobacco products
56
Financing
57
Committed Bank Facilities 31 March 2014
Description Maturity date Amount £m equiv. Margin
GBP Committed 1.5 Year Revolving Credit Facility Apr-15 £200m £200m 0.700%
GBP Committed 1.5 Year Term Loan Facility Jun-15 £150m £150m 0.800%
EUR Committed 2 Year Revolving Credit Facility Nov-15 €300m1 £248m 0.700%
Committed 5 Year Revolving Credit Facility Dec-15 £2,458m 1.000%
USD tranche $632m £380m
GBP tranche £600m £600m
EUR tranche €1,785m £1,478m
Total Facilities £3,056m
1 Facility amount reduces to €257m from 16 November 2014
58
Bond Issues
Amount Issuer Coupon Issue Date Maturity Date £m equiv. Margin
€750m Imperial Tobacco Finance PLC 7.250% Sep-08 Sep-14 £621m 2.7%
€500m Altadis Emisiones Financieras SAU 4.000% Dec-05 Dec-15 £414m 1.1%
€1,500m Imperial Tobacco Finance PLC 8.375% Feb-09 Feb-16 £1,242m 5.0%
£450m Imperial Tobacco Finance PLC 5.500% Nov-06 Nov-16 £555m* 0.6%*
$1,250m Imperial Tobacco Finance PLC 2.050% Feb-13 Feb-18 £751m 1.1%
€850m Imperial Tobacco Finance PLC 4.500% Jul-11 Jul-18 £704m 1.7%
£200m Imperial Tobacco Finance PLC 6.250% Dec-03 Dec-18 £242m* 1.1%*
£500m Imperial Tobacco Finance PLC 7.750% Jun-09 Jun-19 £500m 3.7%
€750m Imperial Tobacco Finance PLC 5.000% Dec-11 Dec-19 £621m 2.6%
€1,000m Imperial Tobacco Finance PLC 2.250% Feb-14 Feb-21 £828m 1.1%
£1,000m Imperial Tobacco Finance PLC 9.000% Feb-09 Feb-22 £987m* 4.8%*
$1,000m Imperial Tobacco Finance PLC 3.500% Feb-13 Feb-23 £601m 1.1%
£600m Imperial Tobacco Finance PLC 8.125% Sep-08 Mar-24 £600m 3.1%
€650m Imperial Tobacco Finance PLC 3.750% Feb-14 Feb-26 £538m 1.5%
£500m Imperial Tobacco Finance PLC 5.500% Sep-11 Sep-26 £500m 2.7%
£500m Imperial Tobacco Finance PLC 4.875% Feb-14 Jun-32 £500m - **
Total/Weighted Average Margin £10,204m* 2.4%*
31 March 2014
* Including the effect of cross currency swaps
** Bond left at fixed rate
59
Core Financing maturity profile at 31 March 2014
Facilities in place as at 31 March c.£14.7bn
70% bond issues, 21% bank facilities, 9% ECP
Headroom as at 31 March c.£3.0bn
£m
equiv
ale
nt
1 Including the effect of cross currency swaps
ECP
Bank Facilities
Bond Issues1
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
Mar'14
Mar'15
Mar'16
Mar'17
Mar'18
Mar'19
Mar'20
Mar'21
Mar'22
Mar'23
Mar'24
Mar'25
Mar'26
Mar'27
Mar'28
Mar'29
Mar'30
Mar'31
Mar'32
Mar'33
Main Market Classifications
61
Main Market Classifications Growth Markets Returns Markets North Returns Markets South
Cambodia Australia Algeria
China Azerbaijan Austria
Iraq Belux Czech Republic
Italy Germany France
Japan Ireland Hungary
Russia Netherlands Morocco
Saudi Arabia New Zealand Portugal
Taiwan Poland Slovenia
Turkey UK Spain
USA Ukraine Tunisia
Vietnam
62
Basis of Results Presentation The financial information comprises the unaudited results for the six months ended 31 March 2014 and 31 March 2013,
together with the audited results for the year ended 30 September 2013.
The information shown for the year ended 30 September 2013 does not constitute statutory accounts within the meaning of
section 434 of the Companies Act 2006, and is an abridged version of the Group's published financial statements for that
year. The Auditors' Report on those statements was unqualified and did not contain any statements under section 498 of
the Companies Act 2006. The financial statements for the year ended 30 September 2013 were approved by the Board of
Directors on 5 November 2013 and filed with the Registrar of Companies.
This condensed set of financial statements for the six months ended 31 March 2014 has been prepared in accordance with
the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34 Interim Financial Reporting as
adopted by the European Union. The condensed set of financial statements for the six months ended 31 March 2014
should be read in conjunction with the annual financial statements for the year ended 30 September 2013 which have been
prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.
The Group's principal accounting policies used in preparing this information are as stated in the financial statements for the
year ended 30 September 2013, which are available on our website www.imperial-tobacco.com
63
Contacts Investor Relations
Tom Corran Matt Sharff
Director of Investor Communications Investor Relations Manager
[email protected] [email protected]
Tel: +44 (0) 117 933 7510 Tel: +44 (0) 117 933 7396
Jo Brewin
Investor Relations Manager
Tel: +44 (0) 117 933 7549
