Imperial Brands PLC · LSE:IMB

Imperial Brands — Imperial Tobacco Group — Investor Presentation (September 2010)

28 slides from Imperial Brands's investor presentation, Sep 28, 2010

  1. Slide 1: Spain: Building a Sales Driven Business

    Spain Building a Sales Driven Business Dominic Brisby General Manager Iberia 28 September 2010

  2. Slide 2: Agenda

    Agenda ƒ Market background ƒ Taking advantage of the market dynamics ƒ Addressing the competitive environment ƒ Organisational improvements 2

  3. Slide 3: Market Background

    Market Background ƒ Deep recession since 2007 Country facts* – unemployment rate up to 20% Population 46.9m Smoking incidence 32.1% – return to growth expected mid-2011 Number of smokers 12.6m – savings rate at a record high of 18% FMC market size (sticks) 75.1bn ƒ SIPP ban likely in January 2011 FC

  4. Slide 4: Taking Advantage of Market Dynamics

    Taking Advantage of Market Dynamics 4

  5. Slide 5: Market Dynamics

    Market Dynamics FMC volumes -10.7%; FCT volumes -5.8% 95 89.2 90 market volumes (bn) 3.1 85 2.1 8.0 79.9 80 1.9 FCT Travel Retail 3.0 FCT Domestic 75 7.0 Dark 70 10.5 Blond Travel Retail 65 Blond Domestic 8.4 60 65.5 55 59.6 50 MAT August ‘09 MAT August ‘10 Source: Logista 5 Fine cut tobacco volumes

  6. Slide 6: Key Cigarette Segments

    Key Cigarette Segments driven by consumers’ search for value 42 40 41.3 38 market shares (%) % 36 34 32 32.0% 30 28 26 26.7% 24 22 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 07 07 08 08 08 08 09 09 09 09 10 10 High Mid Low Source : Logista 6 Low segment includes the ultralow segment; calendar years

  7. Slide 7: Domestic FCT Volumes

    Domestic FCT Volumes consumers’ search for value 900 800 806 market volumes (tonnes) 700 600 500 400 300 200 100 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 06 07 07 07 07 08 08 08 08 09 09 09 09 10 10 Source: Logista 7 Calendar years

  8. Slide 8: Minimising Financial Effects (1)

    Minimising Financial Effects (1) price increase ƒ 25 cent cigarette price increase taken in June 2010 – 1 July VAT increase pre-empted – competitors announced own price increases – we are the market leader, acting as the market leader 8

  9. Slide 9: Minimising Financial Effects (2)

    Minimising Financial Effects (2) price drives total market NSV White Stick Volume vs. NSV evolution 160 8.5 white stick equivalent volumes (bn) 8.0 140 7.5 120 7.0 100 6.5 6.0 £m 80 5.5 60 5.0 40 4.5 4.0 20 3.5 0 3.0 Sep Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug 08 08 08 09 09 09 09 09 09 10 1

  10. Slide 10: Competitive Environment

    Imperial Tobacco Competitive Environment 10

  11. Slide 11: Our Total Tobacco Portfolio

    Our Total Tobacco Portfolio leader in each category FMC FCT CIGARS 35.05% 32.72% 32.66% Fortuna 11.83% GV 20.55% Coburn 10.41% Ducados Fortuna 3.64% Farias 7.60% 10.15% Rubio Mini Nobel 5.59% Drum 2.84% Farias 3.74% Superiores Ducados JPS 2.64% 2.50% Vegafina 2.95% Rolling Lambert 0.39% Origenes 1.2

  12. Slide 12: Competitor Repositioning

    Competitor Repositioning This space appears blank because we have removed the images that appear in the presentation. This is because we currently do not feature tobacco product brand imagery on our website. 12

  13. Slide 13: Domestic Blonde Shares

    Domestic Blonde Shares FMC Manufacturers’ Blonde Market Shares Main FMC Domestic Blonde Brands August 2010 MAT vs MAT-1 MAT-1 Sep ’08 – Aug ‘09 Total Volume (bn) 59.7 -8.95% MAT Sep ’09 – Aug ‘10 Marlboro (€ 3.85/20) 16.83% -1.03% Winston (€ 3.40/20) 13.56% 0.48% Fortuna (€ 3.40/20) 12.65% -1.39% Ch

  14. Slide 14: Response to Growth in VfM FMC (1)

    Response to Growth in VfM FMC (1) Ducados Rubio low price segment leader Product 8.3% Image 8.1% Recent Ducados Rubio activities: ƒ increased coverage of market 7.6% activities from 75% to 100% of Spain 7.1% ƒ launched soft pack to target Pall Mall FY07 FY08 FY09 YTD* FY10 Source:Logista market shar

  15. Slide 15: Response to Growth in VfM FMC (2)

    Response to Growth in VfM FMC (2) positive development of soft pack range Ducados Rubio FMC share development (March-July’10) Product 1.6% Image 0.6% 1.4% 1.1% 1.4% 1.6% 1.3% 0.6% 7.7% 7.3% 7.4% 6.2% 6.8% 6.6% 0.4% 0.2% 0.1% Mar Apr May Jun Jul Aug Ducados Winston Chesterfield Camel Marlboro ‘10 ‘10

  16. Slide 16: Dark Segment

    Dark Segment increasing segment leadership FMC Manufacturers’ Dark Market Shares Main FMC Dark Brands August 2010 MAT vs MAT-1 90 MAT-1 Sep ’08 – Aug ‘09 Total Volume (bn) 7.0 -12.7% MAT Sep ’09 – Aug ‘10 80 Ducados Negro (€ 3.45/20) 75.60% 0.35% BN (€ 3.40/20) 4.93% -0.09% 70 Bull Brand (€ 3.00/20)

  17. Slide 17: Competitor Activity in FCT

    Competitor Activity in FCT new launches and price aggression ƒ Use of cigarette brands ƒ Gained share in development phase ƒ Several new competitor brands launched in FY10 ƒ New innovations in fine cut tobacco ƒ Consumers’ insights 17

  18. Slide 18: Response in Domestic FCT (1)

    Response in Domestic FCT (1) expanded tobacco launched June 2010… Product Image ƒ Strategy – first to launch an expanded fine cut tobacco product – to build 100% national availability in 1st channel – price communication and education of consumers and trade on MYO usage – lead the knowledge of make

  19. Slide 19: Response in Domestic FCT (2)

    Response in Domestic FCT (2) …with excellent results Spot share of market evolution since launch 6.9% 7 6 5 4 4.0% Product % 3 Image 2 1 0.0% 0 Jun ’10 Jul ’10 Aug ’10 Source: Logista 19

  20. Slide 20: FMC Travel Retail

    FMC Travel Retail FMC Manufacturers’ Blond Travel Retail Market Main FMC Blond Travel Retail Brands Shares August 2010 MAT vs MAT-1 90 MAT-1 Sep ’08 – Aug ‘09 Total Volume (bn) 8.4 -19.9% MAT Sep ’09 – Aug ‘10 80 Marlboro (€ 3.85/20) 16.29% 0.46% JPS (€ 3.10/20) 10.59% -0.02% 70 Fortuna (€ 3.40/20)

  21. Slide 21: Response in Travel Retail

    Response in Travel Retail ƒ Decline in travel retail volumes offset by growth in markets of origin ƒ Focus on growing our shares ƒ Example 1 - French border – JPS family performing well; strong activation and the launch of new variants – Gauloises repositioned to low price in 2009 and performing str

  22. Slide 22: Cigar: Reinforcing Leadership

    Cigar: Reinforcing Leadership Cigar Manufacturers’ Market Shares Main Cigar Brands MAT-1 Sep ’08 – Aug ‘09 ƒ Leadership position MAT Sep ’09 – Aug ‘10 reinforced through FY11 ƒ Coburn re-launch significantly grew our market share % ƒ Now back to being undisputed leader IMT CCT JTI Swedish ST AGIO IM

  23. Slide 23: Eco-cigarillos

    Eco-cigarillos evolution of Coburn after price repositioning Coburn Evolution (Volume in millions sticks) 30,000 Price increase 25,000 Price repositioning and Product 20,000 distribution campaign Image 15,000 10,000 5,000 0 Jan Jun Dec Jun ’09 ’09 ’09 ’10 Source: Logista 23

  24. Slide 24: Addressing the Need for Organisational Improvement

    Addressing the Need for Organisational Improvement 24

  25. Slide 25: Improving the Organisation

    Improving the Organisation significant synergies achieved so far ƒ Restructuring process realising cost savings – reduced headcount by 857 people – Alicante factory closed and partial reduction in Cadiz – HQ moved to the outskirts of Madrid to a low cost location ƒ Positive synergies – Imperial bran

  26. Slide 26: Improving the Organisation

    Improving the Organisation significant management changes ƒ Move from state bureaucracy mentality to fast paced FMCG – speed to market – willingness to take risk – consumer centricity – focus on execution ƒ Significant senior management changes – new people leading almost every function – bringing e

  27. Slide 27: Strategic Focus

    Strategic Focus making the right choices Delivering sustainable shareholder returns Growth drivers Cost Sales Cash Optimisation Growth Utilisation Developing compelling Our key assets brand propositions Brand Total Leveraging TotalMarket Equity Tobacco People Footprint Tobacco portfolio Deep consume

  28. Slide 28: Spain: Building a Sales Driven Business

    Spain Building a Sales Driven Business Dominic Brisby General Manager Iberia 28 September 2010 28

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