Imperial Brands PLC · LSE:IMB
Imperial Brands — Imperial Tobacco Group — SG Conference "The Premium Review" 2006
24 slides from Imperial Brands's conference presentation, Dec 7, 2006
Slide 1: SG Conference "The Premium Review"
SG Conference “The Premium Review” Paris 7 December 2006
Slide 2: Gareth Davis, Chief Executive
Gareth Davis Chief Executive 2
Slide 3: Global Industry Dynamics
Global Industry Dynamics Broadly stable global volumes c5.4 trillion - moderate declines in mature markets - volume growth in developing markets Highly competitive - six major international players Litigation landscape improving Regulatory activity increasing Note: Imperial estimates 3
Slide 4: Our Strategy
Our Strategy consistently applied “To create sustainable shareholder value by growing both organically and through acquisitions.” 4
Slide 5: Investing in Sustainable Growth
Investing in Sustainable Growth broadening geographic profile Revenue less duty FY96: £780m UK International 20% 80% FY06: £3,162m 26% 35% 20% 19% Germany Rest of Western Europe Rest of the World Note: 1996 stated under UK GAAP; 2006 stated under IFRS 5
Slide 6: Year Track Record: profit, EPS & DPS growth
10 Year Track Record profit, EPS & DPS growth OP CAGR +15% 1600 120 EPS CAGR +15% adjusted profit from operations (£m) 1400 DPS CAGR +15% 100 1200 adjusted EPS & DPS (pence per share) 80 1000 60 800 600 40 400 20 200 0 0 97 98 99 00 01 02 03 04 05 06 EPS Dividend Per Share Profit from Operations Not
Slide 7: Where We Are Now: FY06 results summary
Where We Are Now….. FY06 results summary Cigarette volumes up 7% Revenue less duty up 1% to £3,162m Profit from operations up 5% to £1,356m Operating margin up to 42.9% EPS up 9% to 122.2p DPS up 11% to 62p Note: results are adjusted and are reported before restructuring costs, retiremen
Slide 8: FY06 Segmental Analysis
FY06 Segmental Analysis operating margin up at 42.9% Profit from operations FY06: £1,356m Rest of the World UK £252m £506m £324m £274m Rest of W Europe Germany 8
Slide 9: The Future: building on our successes
The Future….. building on our successes Sales development Supported by cost efficiency Enhanced by effective cash management - acquisitions; investments - dividends; buybacks Delivering sustainable shareholder value 9
Slide 10: Sales Development: brand and product portfolio
Sales Development brand and product portfolio World’s No. 1 rolling paper International premium cigarette brand World’s No.1 fine-cut tobacco brand Multi-product Our biggest tobacco portfolio brand and A key value brand World’s No.2 UK’s No.1 brand 10
Slide 11: Sales Development: brand strategy
Sales Development brand strategy Portfolio approach - market segmentation - cigarette and other tobacco products International brands - complemented by strong regional brands Price competition - value for money solutions - managing cost infrastructure Leveraging and building brands 11
Slide 12: Sales Development: trade marketing excellence
Sales Development trade marketing excellence Effectiveness at point of sale is vital Our brands must be: - available, impactful and appealing to consumers Business analysis - efficient & effective targeting Core selling skills - trade relations (selling IN) - in-store marketing (selling OUT)
Slide 13: Rest of the World: our position
Rest of the World our position 35% of revenue; 19% of profit - operating margin of 22.8% " 66% of cigarette volumes " Asia: Taiwan premium strength " Australasia: profitable, developed markets " Middle East: growing Davidoff shares " Africa: volume gains; adjacent market expansion " Central Europe:
Slide 14: Rest of the World: opportunities
Rest of the World opportunities Key growth opportunities: Asia/E Europe/Africa/M East In-fill opportunities Ongoing investment USA: MSA application; organic approach % Volume Relative Profitability Index 12% 4% 12% Duty Free 4% 3% Asia 80-100 Australasia Africa 18% 60-80 Middle East Central
Slide 15: Rest of Western Europe: our position
Rest of Western Europe our position 20% of revenue; 24% of profit - operating margin of 50.9% = 11% of cigt vols; 59% of fine cut volumes 26.2 = Regional leadership in fine cut tobacco - strong domestic franchise 2 = Growing cigarette presence 2 - recent strong share gains 10.2 3 - good brand perfor
Slide 16: Rest of Western Europe: opportunities
Rest of Western Europe opportunities Further cigarette progress = Ongoing development of fine cut portfolio = Portfolio management - changing market dynamics - price segmentation - multi-product:advantage Pricing environment
Slide 17: Germany: important core market
Germany important core market 19% of revenue; 20% of profit - operating-margin of 46.9% = 11%.of cigarette vols; 25% of fine cut vols «= Market conditions challenging - cigarette declines « Cigarette shareup to 20.7% » Other Tobacco Product strength «= Managing migration of Singles’ consumers Well p
Slide 18: UK: significant profit contributor
UK significant profit contributor 26% of revenue; 37% of profit - operating margin at 60.6% = 12% of cigarette vols; 8% of fine cut vols «= Market environment - moderate cigarette market decline - growth in fine cut tobacco - smoking restrictions = Clear market leadership - cigarette share @ 45.5%;
Slide 19: Supported by Cost Efficiency
Supported by Cost Efficiency ongoing focus Capacity optimisation - Treforest, Lahr, Liverpool Continuing simplification and standardisation Further productivity improvements - FY06: up 6% Unit cost reductions - FY06: cigarette down 6%; fine cut down 4% Ongoing cost opportunities 19
Slide 20: Effective Cash Management
Effective Cash Management strong cash generation Annual cash conversion c100% 1000 900 Disciplined capital allocation 800 - acquisitions v buybacks 700 £million 600 - investments 500 - dividends 400 300 200 100 0 97 98 99 00 01 02 03 04 05 06 Dividends Share Buybacks >£2.8 billion returned to sh
Slide 21: Our Acquisitions
Our Acquisitions successful track record (2006) (2006) (1997) (2005) £5.2bn invested (2004) (1998) (2002) (1999) (2001) (2000) (2000) (2000) 21
Slide 22: Building on our Successes
Building on our Successes Sales development - brands and products - trade marketing excellence - market opportunities Supported by cost efficiency Enhanced by effective cash management - acquisitions; investments - dividends; buybacks Delivering sustainable shareholder value 22
Slide 23: Value Creation So Far: TSR Index
Value Creation So Far… 6 times the FTSE All-Share return 800 No.2 in TSR 700 FTSE 100 Oct96–Sep06 600 TSR Index 500 400 300 200 100 0 Oct 1998 2000 2002 2004 Sep 1996 2006 FTSE All-Share Index Imperial Tobacco Group PLC Note: total investment gain to shareholders resulting from the movement in share
Slide 24: Investor Relations Department
Investor Relations Department John Nelson-Smith Investor Relations Manager [email protected] Tel: +44 (0) 117 933 7032 www.imperial-tobacco.com 24
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