Imperial Brands Plc · LSE:IMB

Imperial Brands — Imperial Tobacco Group — Corporate Update (September 2005)

34 slides from Imperial Brands's corporate update, Sep 20, 2005

  1. Slide 1: Trading Update

    Trading Update 20 September 2005 Imperial Tobacco Group PLC

  2. Slide 2: Agenda

    Agenda ƒ Trading Update Gareth Davis ƒ Central Europe Richard Gretler 2

  3. Slide 3: Trading Update

    Trading Update “…overall performance for the current year remains in line with management expectations…” 3

  4. Slide 4: Trading Update: UK and Germany

    Trading Update ƒ UK - continued to perform well - cigarette share maintained - growth in RYO share ƒ Germany - good improvements in profit - increased cigarette share 4

  5. Slide 5: Trading Update: Rest of Western Europe, Rest of World

    Trading Update ƒ Rest of Western Europe - cigarette share growth ƒ Rest of World - improving volume trends ƒ Cost focus - productivity & efficiency gains 5

  6. Slide 6: Richard Gretler, Regional Director Central Europe

    Richard Gretler Regional Director Central Europe

  7. Slide 7: Our Central Europe Region

    Our Central Europe Region market dimensions TOTAL SCANDINAVIA Pop.: 187.4 m Pop.: 24.0 m FMC: 259.9 bn FMC: 22.2 bn OTP: 49.1 bn OTP: 4.3 bn Snuff: 5.1 bn GERMANY Pop.: 82.5 m BALTICS FMC: 101.0 bn Pop.: 7.1 m OTP: 39.0 bn FMC: 9.8 bn OTP: 0.0 bn AUSTRIA POLAND Pop.: 8.1 m Pop.: 38.1 m FMC: 12.7 bn

  8. Slide 8: Today's Focus

    Today’s Focus ƒ Key accession markets - Poland - Czech Republic - Slovak Republic - Hungary - Slovenia ƒ Scandinavia - Sweden 8

  9. Slide 9: Accession Markets

    Accession Markets ƒ Macro-economic trends ƒ Business environment ƒ Market dynamics ƒ Portfolio strategy 9

  10. Slide 10: Macro-Economic Trends

    Macro-Economic Trends ƒ Significant GDP growth rates ƒ Relative political stability ƒ Moderate inflation rates ƒ Stable currency rates ƒ Euro zone aspirations - Slovenia 1/2007 - Slovak Republic 1/2009 10

  11. Slide 11: Business Environment

    Business Environment ƒ Communication restrictions - mainly advertising at point of sale ƒ SIPPs - less advanced than Western Europe ƒ Litigation - generally benign environment ƒ Excise tax derogation 11

  12. Slide 12: Excise Taxes EU-25

    Excise Taxes EU-25 229 192 160 Based on MPPC July 2005 128 €/000 115 114 110 105 103 103 95 88 84 82 78 74 61 54 €64/000 46 41 38 37 33 20 13 UK IRL F D FIN DK M NL S B A I CY L GR P E SI H SK CZ PL EST LT LV 12

  13. Slide 13: Status: FMC Excise Tax Derogation

    Status: FMC Excise Tax Derogation EU-minimum tax: ƒ 57% of retail selling price of most popular price category ƒ and €64/thousand cigarettes Status at July '05 Derogation Further Price Incidence €/'000 cigs. up to … increase of MPPC Poland 51.9% 37.2 Dec '08 65% Czech Republic 48.0% 37.8 Dec '07 45%

  14. Slide 14: Market Dynamics

    Market Dynamics ƒ Cross-border flows ƒ Competition ƒ Value King Size offerings 14

  15. Slide 15: Retail Price Differentials

    Retail Price Differentials Premium RRP/20 sticks, March 2005 Sweden Finland €4.26 €4.09 EU-15 Norway Accession Countries €7.87 Neighbours Estonia €1.51 Ireland Denmark Latvia €6.35 €4.03 €0.95 Russia Lithuania U.K. Netherlands € 1.27 €0.77 €4.00 €7.22 Belarus €0.92 Belgium Germany Poland €3.85 €1.69

  16. Slide 16: FMC Market Size Progression

    FMC Market Size Progression 80 bns cigarettes 60 40 20 0 Poland C zech Slovak Hungary Slovenia Republic Republic HY02 HY05 Note: Imperial estimates – HY annualised 16

  17. Slide 17: FMC Competitive Environment

    FMC Competitive Environment market shares Others Imperial Skandinavisk 7% Tobacco Tobak 16% 10% Gallaher 5% Philip Morris BAT 46% 16% Note: Imperial estimates ex factory data HY05 17

  18. Slide 18: FMC Competitive Environment: Market Share

    FMC Competitive Environment 100 90 market share % 80 70 60 50 40 30 62.5 20 28.4 10 14.0 12.9 10.1 0 Poland Czech Republic Slovak Republic Hungary Slovenia Imperial Philip Morris BAT Gallaher Skandinavisk Tobak Others Note: Imperial estimates ex factory data HY05 18

  19. Slide 19: Our FMC Market Shares

    Our FMC Market Shares 70 market share % 62.5 60 50 40 30 28.4 20 14.0 12.9 10.1 10 0 Poland Czech Slovak Hungary Slovenia Republic Republic Local Regional International Note: Imperial estimates ex factory data HY05 19

  20. Slide 20: Fine Cut Tobacco

    Fine Cut Tobacco relevance as a % of white sticks 12 10 Hungary market share % 8 6 Czech Republic 4 Poland 2 Slovak Republic Slovenia 0 FY03 FY04 HY05 Note: Imperial estimates 20

  21. Slide 21: Portfolio Strategy

    Portfolio Strategy balancing profit and volume ƒ Focus on international brands ƒ Consistent approach with regional brands ƒ Tailored strategies for local brands ƒ Developing fine cut tobacco products ƒ Right sized cost base 21

  22. Slide 22: Poland

    Poland ƒ What has happened? - aggressive pricing of international players - competition increased with new entrant - absorption of tax increases - rapid growth of King Size value segment 22

  23. Slide 23: Poland: Price Segmentation

    Poland: Price Segmentation market share % 100 11.4 11.4 11.0 11.0 10.8 11.1 10.8 10.8 10.9 10.9 10.8 10.8 10.9 11.3 10.9 90 80 30.1 28.8 28.1 27.4 27.4 26.7 26.6 26.4 26.7 25.8 25.4 25.0 27.0 31.3 34.0 70 60 50 17.8 21.1 24.4 26.4 27.9 28.9 30.0 31.4 11.7 30.2 32.3 32.9 34.4 36.0 36.9 40 30 20 39.4

  24. Slide 24: Poland

    Poland ƒ What has happened? - aggressive pricing of international players - competition increased with new entrant - absorption of tax increases - rapid growth of King Size value segment ƒ What has changed? - minimum incidence of duty from 12/04 - general excise tax increase in 01/05 - repositioned

  25. Slide 25: Poland: Market Share Progression

    Poland: Market Share Progression 50 45 40 Philip Morris market share % 35 30 25 20 BAT Imperial Tobacco 15 Skandinavisk Tobak 10 Altadis 5 Gallaher 0 Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug 2003 2004 2005 Note: Imperial estimates ex factory data HY05 25

  26. Slide 26: Slovakia: Market Share Progression

    Slovakia: Market Share Progression 8.7% market share % 70 Philip Morris 2.4% 60 50 40 Imperial Tobacco 30 Apr05-Aug05 20 10 Others 0 Jan05 Feb Mar Apr May Jun Jul Aug Note: Imperial estimates ex factory data HY05 26

  27. Slide 27: Czech Republic: Market Share Progression

    Czech Republic: Market Share Progression market share 65% 4% 60% Philip Morris 15% 0% Imperial Tobacco BAT 10% Jun05–Aug05 Gallaher 5% Skandinavisk Tobak 0% Jan05 Feb Mar Apr May Jun Jul Aug Note: Imperial estimates ex factory data HY05 27

  28. Slide 28: Slovenia: Market Share Progression

    Slovenia: Market Share Progression 100 market share % 80 60 40 66.6 65.0 62.5 20 Launched in Sep05 0 FY03 FY04 HY05 Imperial Tobacco Philip Morris Others Note: Imperial estimates ex factory data HY05 28

  29. Slide 29: Accession Market Outlook

    Accession Market Outlook ƒ Challenging environment ƒ Balancing profit & volume - short & long term ƒ Margin opportunities 29

  30. Slide 30: Scandinavia

    Scandinavia 30

  31. Slide 31: Sweden: Market Overview

    Sweden: Market Overview Cigarettes (bns) Snus (tonnes) CAGR -2.0% Roll your own (tonnes) CAGR +2.5% 7,500 7,300 7,200 CAGR 7,400 7,585 7,215 -2.4% 840 850 800 2003 2004 2005 2003 2004 2005 2003 2004 2005 GLH:38%;HoP:31%; GLH:70%;Orlik:20% Swedish Match:95% PMI:21% Note: Imperial estimates 31

  32. Slide 32: Strategy in Sweden

    Strategy in Sweden ƒ Acquisition of Skruf: 14 Sep05 ƒ Experienced sales organisation ƒ Extending our portfolio 32

  33. Slide 33: Overall Summary & Outlook

    Overall Summary & Outlook ƒ Challenging market dynamics ƒ Profitability limited in the mid-term ƒ A sustainable approach - balancing profit & volume ƒ Fine cut tobacco potential ƒ Scandinavia development 33

  34. Slide 34: Trading Update

    Trading Update 20 September 2005 www.imperial-tobacco.com

Imperial Tobacco Group — Corporate Update (September 2005) on 6ix