Imperial Brands PLC · LSE:IMB
Imperial Brands — Imperial Tobacco Group — JPMorgan Global Tobacco Conference 2007
27 slides from Imperial Brands's conference presentation, Jun 29, 2007
Slide 1: Creating Long-Term Sustainable Growth
JPMorgan Global Tobacco Conference Creating Long-Term Sustainable Growth London 29 June 2007
Slide 2: Bob Dyrbus, Finance Director
Bob Dyrbus Finance Director
Slide 3: Our Strategy consistently applied
Our Strategy consistently applied “To create sustainable shareholder value by growing our operations both organically and through acquisitions.” 3
Slide 4: Our Growth Record
Our Growth Record HY07 EPS+13% PFO 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 DPS PFO Note: 1997-2004 stated under UK GAAP and adjusted f
Slide 5: Building on our Successes
Building on our Successes cigarette volume development FY96: 39bn sticks FY06: pro forma 201bn sticks* 7% 12% 21% 10% 79% 10% 2% 8% 3% 7% 9% 6% 4% 11% 11% UK International UK Germany Spain Other RoWE Poland Russia Ukraine Caucasus Africa/ME Asia Pacific Aus/NZ Other RoW Americas Note: *including Com
Slide 6: Our Company
Our Company Diversified products with strong brands - world leader in fine cut tobaccos, papers and tubes Benefiting from organic and acquisition led growth Driven by effective cost and cash management Delivering superior returns to shareholders Group Results HY07 v HY06 Cigarette volumes 90
Slide 7: Sales Development: brand strategy
Sales Development brand strategy Portfolio approach - cigarette and other tobacco product trends - presence in all market price segments International brands - complemented by strong regional brands Price competition - value for money solutions - managing cost infrastructure Leveraging and b
Slide 8: Sales Development: multi-product portfolio
Sales Development multi-product portfolio World’s No. 1 rolling paper International premium cigarette brand World’s No. 1 International fine-cut tobacco brand Our biggest tobacco brands brand and A key value brand snus - a smokless tobacco World’s No. 2 8
Slide 9: Sales Development: strong regional & local brands
Sales Development strong regional & local brands 9
Slide 10: UK
UK 29% of HY07 revenue No. 1 cigarette share at 46.4% - Lambert & Butler – No. 1 at 16.7% - Richmond – No. 2 at 15.5% - Windsor Blue – launched Jan ’06; up at 2.4% Fine cut tobacco share at 64.0% - Golden Virginia 48.4%; Drum 15.6% Rizla No. 1 in papers Note: Imperial estimates; half year ende
Slide 11: Lambert & Butler - UK pack designs
Lambert & Butler - UK pack designs 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. 11
Slide 12: Lambert & Butler - UK share gain
Lambert & Butler - UK share gain 16.0 % cigarette market share 15.9 15.8 15.7 15.6 15.5 15.4 15.3 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 Apr-05 Source: RAL 12
Slide 13: Lambert & Butler - UK 2006 permanent design
Lambert & Butler - UK 2006 permanent design 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. 13
Slide 14: Lambert & Butler - UK new additions to range
Lambert & Butler - UK new additions to range 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. 14
Slide 15: Germany
Germany 17% of HY07 revenue No. 2 cigarette share at 21.2% - West – No. 2 at 7.4% - JPS – 6.0% share since launch in March ‘04 MPI in October ‘06 German operating margin - Reemtsma pre-acquisition: c.29% - HY07: 45.9% Note: Imperial estimates; half year ended 31 March 2007 15
Slide 16: Germany: Singles migration
Germany Singles migration Duty Paid Duty Paid OTP Cigarette 55% 20% Low Price Make Your Own Branded Traditional Single Tobacco Private Label Roll Your Own Non-Duty Traditional Paid Eco Cigarillos Cigarette Quickies XL 25% Note: Imperial estimates and definitions 16
Slide 17: Germany – New Products
Germany – New Products Single Tobacco & Quickies XL 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. 17
Slide 18: Rest of Western Europe
Rest of Western Europe 19% of HY07 revenue Mature, dark markets with high duty rates Fine cut tobacco leader Established cigarette market presence 26.6 Brands in all price segments % market share Cigarette share gains in most markets 10.1 10.5 8.2 5.4 3.9 4.0 France Portugal Spain Greece B
Slide 19: Product Positioning: Davidoff Greece price v Marlboro
Product Positioning Davidoff Greece – price v Marlboro +7% +7% +5% 3.20 +8% 3.00 2.90 2.95 € price per pack of 20 +11% 2.80 +18% +14% 2.70 2.70 2.44 2.50 +21% 2.35 2.35 2.20 2.05 2.00 2.05 1.70 Jan-97 Jan-99 Sep-99 Sep-00 Mar-02 Aug-03 May-05 ' Sep-06 Davidoff MPPC (Marlboro) 19
Slide 20: Product Positioning: Davidoff Greece share gain
Product Positioning Davidoff Greece share gain 9 March ’07 10 Market share 1997 vs 2006 4.0% 12 volumes 13 16 3.7% 10 times up! 17 3.2% 2.7% 22 2.4% 24 1.7% +18% 1.2% 1134 +18% 34 1.0% +13% 961 36 0.6% +24% Market 40 0.5% 816 +41% Ranking 0.3% 720 0.2% 0.3% +32% 585 % +56% Μarket Share 416 +33% +56%
Slide 21: Rest of the World
Rest of the World 35% of HY07 revenue Expanding geographic footprint Potential growth regions – Central & Eastern Europe, Asia, Africa & Americas Organic – Davidoff & West into new markets Acquisitions - Horizon brand: Australia; Tobaccor: sub- Saharan Africa; Reemtsma: C & E Europe and Asia
Slide 22: US Strategy
US Strategy Commonwealth Brands acquired for US$1.9bn - leverage off sales force and manufacturing base - 13.2% share of discount sector; USA Gold & Sonoma FY06 EBITDA $174m*; HY07 EBITDA up 11%* MSA approval expected shortly - additional £50m profit by FY09 from “own” products Access to NAF
Slide 23: Manufacturing
Manufacturing ongoing focus on costs Capacity optimisation but retain flexibility Continuing simplification and standardisation Further productivity improvements – up 7% Unit cost reductions - cigarette 4%; fine cut tobacco 11% Overhead efficiencies across all functions c.£30m annual sav
Slide 24: Effective Cash Management
Effective Cash Management optimising our options Annual cash conversion normally 90-100% - working capital focus - adjusted tax rate falling to 25% from FY07 £m 600 - interest management 500 Efficient cash allocation 400 - acquisitions v buybacks 300 - investments 200 - dividends 100 0 2001 2002
Slide 25: Acquisition History
Acquisition History (2006) (2007) (2006) (2005) £6.2bn invested (2007) (2004) (1997) (2002) (1998) (2001) (2000) (2000) (2000) (1999) 25
Slide 26: Conclusion
Conclusion continued focus on business model Strength in developing our broad multi-product portfolio Further geographical expansion Continue to grow cigarette market shares Delivering shareholder value - drive top-line growth - focus on costs - effective cash management Creation of long-t
Slide 27: Imperial Tobacco Group PLC
Imperial Tobacco Group PLC www.imperial-tobacco.com
Imperial Tobacco Group — JPMorgan Global Tobacco Conference 2007 on 6ix