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BAT Capital Markets Webcast: Building a Better Tomorrow
British American Tobacco p.l.c.
Incorporated in England and Wales
(Registration number: 03407696)
Short name: BATS
Share code: BTI
ISIN number: GB0002875804
("British American Tobacco p.l.c." or "the Company")
British American Tobacco p.l.c.
18 March 2020
BAT CAPITAL MARKETS WEBCAST: BUILDING A BETTER TOMORROW
Building A Better Tomorrow by reducing the health impact of our business through a greater
choice of enjoyable and less risky products
£1bn efficiencies to fuel New Category investment and delivery against our financial guidance
Stretching new ESG ambitions including 50 million non-combustible product consumers and
carbon neutrality by 2030
Chief Executive of British American Tobacco p.l.c., Jack Bowles, and members of the management
team, will today host a capital markets update via webcast.
This will provide an update on BAT’s three clear priorities to:
• Drive value from combustibles
• Ensure a step change in New Categories performance
• Simplify the business
In 2019, we made good progress on these priorities. We delivered against our financial guidance
with a strong operational performance and cash generation driving deleveraging of the balance
sheet. This was achieved while investing significant additional resources into New Categories to drive
revenue growth and build the capabilities required for long-term success. During 2019, we recruited
over 300 new specialist management hires, and women now represent 37% of the management
population. This has injected new capabilities and diverse skillsets including digital, product
development, science and design. With these strong foundations we remain confident in our ability
to deliver.
As we continue to become a stronger, simpler and faster organisation we are announcing:
• An ambition to satisfy evolving consumer preferences and recapture moments through a
focused portfolio of products that offer sensorial enjoyment for a variety of moods and
moments, leveraging our unique multi-category consumer insights platform (PRISM)
• £1bn of efficiencies over the next three years from an extended project Quantum, our
simplification program that will fuel New Category investment and delivery against our
financial guidance
• The creation of open innovation and corporate venture teams to assess, test and ultimately
accelerate the development of products, including beyond nicotine, that leverage our
proven delivery technologies.
These underpin our new corporate purpose: to build A Better Tomorrow by reducing the health
impact of our business through offering a greater choice of enjoyable and less risky products for our
consumers.
Jack Bowles, Chief Executive, British American Tobacco said:
“I am pleased that our organisation fully embraced the priorities I set out in early 2019 and has
started to deliver against them. We are now challenging ourselves with a clear purpose to build A
Better Tomorrow by reducing the health impact of our business through offering a greater choice of
enjoyable and less risky products for our consumers.
Today we underscore our commitment to our new sustainability agenda by announcing stretching
new targets across the ESG landscape. Our ambition is to have 50 million non-combustible product
consumers by 2030 and to achieve carbon neutrality by 2030, while bringing forward our existing
2030 environmental targets to 2025. The importance of this agenda, and communicating our
progress against it, is reflected in our new organisational structure, with the ESG and
Communications functions now reporting to Kingsley Wheaton, Chief Marketing Officer.
To achieve our ambitions, we need to be bold, fast, empowered, responsible and diverse. As we drive
value from our combustibles business, and generate £1billion in efficiencies over the next three years
through an extended Quantum simplification programme, we can accelerate the revenue growth of
our New Categories business.
Looking forward, we will drive the implementation of our strategy and deliver on our financial
guidance through the framework of our three clear priorities. We are on a journey and these are
exciting times at BAT. I very much look forward to sharing our plans”.
2020 Outlook
COVID-19 is developing rapidly. We are fortunate that our business is resilient and is supported by a
geographically diversified supply chain from both a manufacturing and distribution standpoint. As
yet, we have seen no material impact.
As previously stated, New Category revenue growth in the first half of the year will be difficult and,
although supply chains in China are recovering, we have postponed certain launches and we are
seeing some disruption in activation. Nevertheless, in 2020 we expect to make further progress
towards our ambition of £5bn New Category revenue in 2023/24.
Although we have seen limited impact to date on consumer demand for cigarettes (outside the Duty
Free channel, which is not material), we continue to monitor the situation closely. At present we are
maintaining our expectations for 2020 global industry cigarette and THP volume to be down c.4%
and, while year to date US industry volume contraction has been c.1% more benign than last year
(YTD to February c.-4%), we retain our Full Year 2020 US industry volume decline forecast of c.5%,
given the rapidly changing environment.
Overall, despite the global uncertainty, the business is performing well, and we have already
achieved close to 60% of the pricing we planned for 2020. At this stage, we maintain our guidance
for constant currency adjusted revenue growth of 3-5%, together with an improvement in operating
margin, and are confident of another year of high single figure constant currency adjusted diluted
EPS growth. With strong operating cashflow conversion in excess of 90%, we expect to continue to
delever the balance sheet and remain committed to a 65% dividend pay-out ratio on adjusted
diluted EPS and growth in sterling terms. Extrapolating yesterday’s foreign exchange spot rates for
the full year, we would now expect a headwind of less than 1% on full year adjusted diluted EPS
growth, although exchange rates are clearly very changeable.
Webcast and Conference Call Participant Passcode: 89120655#
A live webcast of the event is available via www.bat.com on 18 March 2020 at 13.30 GMT
If you wish to listen to the presentation via a conference call facility and ask questions at the end of the
session please use the dial in details below:
Standard International Access: + 44 333 300 0804 SA (toll free): 0 800 111 446
UK (toll free): 0800 358 9473 US (toll free): +1 855 85 70686
Representatives from the media can watch the presentations live online – please contact the British
American Tobacco p.l.c. press office for further details.
ENQUIRIES:
INVESTOR RELATIONS: PRESS OFFICE:
Mike Nightingale +44 (0)20 7845 1180 Press Office +44 (0)20 7845 2888
Rachael Brierley +44 (0)20 7845 1519
Victoria Buxton +44 (0)20 7845 2012
William Houston +44 (0)20 7845 1138
John Harney +44 (0)20 7845 1263
Forward looking statements
This announcement does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or
dispose of any British American Tobacco p.l.c. ("BAT") shares or other securities. This announcement contains
certain forward-looking statements, including “forward-looking” statements made within the meaning of
Section 21E of the United States Securities Exchange Act of 1934, regarding our intentions, beliefs or current
expectations concerning our year-end results as well as, amongst other things, our results of operations,
financial condition, liquidity, prospects, growth, strategies and the economic and business circumstances
occurring from time to time in the countries and markets in which the Group operates.
These statements are often, but not always, made through the use of words or phrases such as “believe,”
“anticipate,” “could,” “may,” “would,” “should,” “intend,” “plan,” “potential,” “predict,” “will,” “expect,”
“estimate,” “project,” “positioned,” “strategy,” “outlook,” “target” and similar expressions.
All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties
and other factors. It is believed that the expectations reflected in this announcement are reasonable but they
may be affected by a wide range of variables that could cause actual results to differ materially from those
currently anticipated.
Among the key factors that could cause actual results to differ materially from those projected in the forward-
looking statements are uncertainties related to the following: the impact of competition from illicit trade; the
impact of adverse domestic or international legislation and regulation; changes in domestic or international
tax laws and rates and the impact of an unfavourable ruling by a tax authority in a disputed area; adverse
litigation and dispute outcomes and the effect of such outcomes on the Group’s financial condition; changes or
differences in domestic or international economic or political conditions; adverse decisions by domestic or
international regulatory bodies; the impact of market size reduction and consumer down-trading; translational
and transactional foreign exchange rate exposure; the impact of serious injury, illness or death in the
workplace; the ability to maintain credit ratings and to fund the business under the current capital structure;
the inability to develop, commercialise and deliver the New Categories strategy; and changes in the market
position, businesses, financial condition, results of operations or prospects of the Group.
Past performance is no guide to future performance and persons needing advice should consult an
independent financial adviser. The forward-looking statements reflect knowledge and information available at
the date of preparation of this announcement and BAT undertakes no obligation to update or revise these
forward-looking statements, whether as a result of new information, future events or otherwise. Readers are
cautioned not to place undue reliance on such forward-looking statements.
No statement in this communication is intended to be a profit forecast and no statement in this
communication should be interpreted to mean that earnings per share of BAT for the current or future
financial years would necessarily match or exceed the historical published earnings per share of BAT.
Additional information concerning these and other factors can be found in the Company’s filings with the U.S.
Securities and Exchange Commission (“SEC”), including the Annual Report on Form 20-F to be filed on or about
26 March 2020 and Current Reports on Form 6-K, which may be obtained free of charge at the SEC’s website,
http://www.sec.gov, and the Company’s Annual Reports, which may be obtained free of charge from the
British American Tobacco website www.bat.com.
Sponsor: UBS South Africa (Pty) Ltd
Date: 18-03-2020 02:00:00
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