Reynolds American — Deutsche Bank Conference, June 2017
18 slides from Reynolds American's conference presentation, Jun 14, 2017
Slide 1: Deutsche Bank Conference, June 2017 – British American Tobacco
Deutsche Bank Conference, June 2017 BRITISH AMERICAN TOBACCONicandro Durante – CEO CONFIDENTIAL
Slide 2: Important notice
Important notice This presentation in relation to British American Tobacco p.l.c. (“BAT”) and its subsidiaries (collectively, the “BAT Group”) and Reynolds American Inc. (“Reynolds”) and its subsidiaries has been prepared solely for use at this presentation. The presentation is not directed to, or i
Slide 3: Important notice
Important notice Additional information concerning these and other factors can be found in Reynolds’s filings with the U.S. Securities and Exchange Commission (“SEC”), including Reynolds’s most recent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which
Slide 4: Consistent growth in earnings and dividend
Consistent growth in earnings and dividend Dividends per shareCAGR:12% * Growth @ constant currency Earnings per share growth Average growth 2005 - 2016: 11% p. a.*
Slide 5: Our strategy continues to deliver
Our strategy continues to deliver Augmented by strategic M&A in combustibles and NGP Strong organic growth powered by GDBs and innovations Further growth driven by NGP Portfolio & Geographic Expansion RAI - on track for a transformational deal
Slide 6: BAT Share: excellent market share growth powered by GDBs
BAT Share Excellent market share growth powered by GDBs GDB Share Note: Reported Year-End Figures/ Independent Nielsen retail audit data / FMC Only/YTD April’17
Slide 7: Continuing to deploy innovations with speed & scale
CONTINUING TO DEPLOY INNOVATIONS WITH SPEED & SCALE Driven by an innovation pipeline that is rich and growing Innovation volume tripled 2016 vs 2010 Innovations | 1 in every 3 cigarettes sold 54% of GDB volume carries an innovation CIGARETTE VOLUME 45bn All Formats 130 28% 2016 Markets baseline 2015
Slide 8: Differentiated strategy to win in NGPs
TOBACCO TASTE AND SENSORIALS NICOTINE SATISFACTION SOCIAL CONSIDERATION AND HYGIENE FLAVOUR EXPERIENCES Differentiated strategy to win in NGPs VAPOUR by 2020*£10bn+ industry value53m+ consumers * Internal estimates; T25 markets, excluding US**12 markets (incl. US) annual online consumer tracker Sour
Slide 9: Vapour – BAT a market leader
Vapour – BAT a market leader BAT VOLUME SALES GROWTH Q1 ’17 VS SPLY 56.1% 37.6% VAPOUR SHARE IN RETAIL 27% 50% Strong volume and share growth across key vapour markets Vype is present in 10 markets globally Market leader in UK & Poland 1 1 +20% +310% -23% +100% +310% Source: BAT volume pack sales se
Slide 10: Tobacco Heating Products - Glo is exceeding expectations
SOLE USAGE Source: CCC T-Point Purchaser Data N=60,000 Source: BLM Sendai Week 8 Tobacco Heating Products - Glo is exceeding expectations OFFTAKE SHARE - SENDAI Dec ’16 Jan ’17 Feb’ 17 Mar ’17 Apr ’17 Glo sole consumers(% of total Sendai smokers) 1.0% 2.0% 3.4% 4.0% 4.3% Conversion rate(cigarettes t
Slide 11: THP – Glo roll-out on track
THP – Glo roll-out on track SOUTH KOREA (H2 2017) July 3rd: Expansion to Tokyo / Osaka / Miyagi covering 25% of tobacco consumersBy end of 2017: National ExpansionNational awareness already at 25% JAPAN (July 2017) Launched in one of the biggest retailers nationwide SWITZERLAND (April 2017) CANADA (
Slide 12: Strategic M&A augmenting growth in NGP & tobacco
Strategic M&A augmenting growth in NGP & tobacco NGPs TOBACCO UK - VIP acquisition Accelerated retail network expansion UK - 10 Motives acquisition Strengthened market position, together with Vype, BAT is now the market leader Poland - CHIC acquisitionAccelerated retail network expansion and leading
Slide 13: RAI - A transformational transaction
RAI - A transformational transaction Creates stronger, truly global tobacco & NGP company Direct access to the attractive US market Balanced presencein high growth emerging markets and high profitability developed markets Portfolio of strong, growing global brands A truly global company in the fast-
Slide 14: Highly attractive US market
Highly attractive US market *Income defined as GDP per capita (‘000) / average pack price (US$)Source: Euromonitor, Global Insights, Company internal data ONE OF THE BIGGEST TOBACCO MARKETS BY VOLUME… …AND LARGEST OPEN MARKET BY VALUE… …WITH LOW CIGARETTE PRICES RELATIVE TO INCOME* Billion sticks 20
Slide 15: RAI – On track for completion early Q3
RAI – On track for completion early Q3 SEC registration process expected to be completed shortlyShareholder documents expected to be published shortly Shareholder vote mid-JulyCompletion expected shortly thereafter
Slide 16: Current trading
Current trading Trading in line with expectationsMarket share growth momentum continues: +10bps* YTD, on top of +50bps in 2016Profit growth expected to be weighted to the second half, due to:Phasing of volume shipmentsNGP investmentsMarketing spendAt current rates FX a 7% tailwind for translation on
Slide 17: One of the largest NGP businesses in the world
One of the largest NGP businesses in the world Last 5 years – consistent delivery for shareholders whilst also investing for the future Corporate share up170 bps GDB share up 530 bps EPS +10%* average growth p.a. last 5 years Portfolio Transformation …While also investing in our future DPS +6% CAGR
Slide 18: Deutsche Bank Conference, June 2017 – British American Tobacco
Deutsche Bank Conference, June 2017 BRITISH AMERICAN TOBACCO CONFIDENTIAL
Reynolds American — Deutsche Bank Conference, June 2017 on 6ix