Financial Data and Key Metrics Changes - The company reported a net revenue growth of 1.4% at constant currency, with total volumes declining by 2.9% [26] - Tobacco net revenue grew by 1.5%, driven by a price mix of 4.4%, while excluding excise changes in Australia, tobacco net revenue grew by 2.7% [27] - Free cash flow was £1.5 billion, with a reduction in leverage and a 1% growth in the dividend [17][35] - Earnings per share (EPS) increased by 2.8% at constant currency, reflecting profit delivery and lower interest charges [34] Business Line Data and Key Metrics Changes - The Next Generation Products (NGP) net revenue was broadly stable, but grew by 8.6% when excluding market exits [28] - Adjusted operating profit grew by 4.8% at constant currency, impacted by various factors including lower stock profits in Australia and litigation charges in the U.S. [29] Market Data and Key Metrics Changes - The U.S. market represents about 35% of tobacco profit, with market share gains in the sub-premium segment and a 45% increase in mass-market cigar volumes [61][63] - In Germany, market share performance improved over the last four months, although the company lost share overall [65] - In Australia, the company adjusted prices to reflect brand equity, leading to share gains in the second half of the fiscal year [68] Company Strategy and Development Direction - The company aims to transform into a business capable of delivering reliable, attractive returns over the long term, focusing on five key combustible markets that generate around 70% of profits [4][8] - A new focus on consumer-centric strategies and a refreshed leadership team has been implemented to support operational improvements [12][13] - The company is committed to harm reduction through its NGP business, with a disciplined approach to investment and market entry [10][56] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by COVID-19 and regulatory changes but expressed confidence in the strategic focus on key markets [89] - The outlook for fiscal year 2022 includes expectations for net revenue growth similar to the previous year, with a focus on maintaining market share and improving operational performance [39][40] - Management emphasized the importance of a strong balance sheet and disciplined capital allocation as key priorities moving forward [38][85] Other Important Information - The company has committed to achieving net zero emissions by 2040 and has strengthened its ESG team to enhance sustainability efforts [58][59] - A restructuring program is in place to deliver savings and optimize the NGP business, with an annualized savings target of nearly £70 million by the end of fiscal year 2022 [31] Q&A Session Summary Question: Outlook for major markets post-COVID - Management indicated that predicting the impact of COVID-19 on volume outlook is challenging, with potential headwinds in the UK and Germany due to changes in consumer behavior and tax increases [89][90] Question: NGP losses and future expectations - Management expects NGP losses to continue declining in fiscal year 2022, with ongoing investments in testing and trials [92] Question: Confidence in mid-single-digit EBIT growth - Management expressed confidence in achieving mid-single-digit EBIT growth due to a strategic focus on key markets and improved market share performance [94][95] Question: E-cigarettes in the UK medicinal channel - Management is encouraged by the UK government's recognition of vaping as a smoking cessation tool and is evaluating participation in the medicinal channel for blu [99][100] Question: Progressive dividend policy - Management confirmed the commitment to a progressive dividend policy, emphasizing the importance of maintaining a strong balance sheet before considering capital returns [103][106]

Financial Data and Key Metrics Changes - The company reported a net revenue growth of 3.5%, driven by strong pricing in tobacco and better NGP sales against a weak comparator period [12][23] - Adjusted operating profit increased by 8.1%, with underlying tobacco profitability growing almost 5% [14][30] - Net cash flow for the 12-month period was GBP 2.5 billion, supporting debt reduction priorities [15][31] - Adjusted net debt to EBITDA ratio improved to 2.6x, down from 2.7x at the end of September [33] Business Line Data and Key Metrics Changes - Total tobacco volumes declined by 3.3%, with a 1.3% reduction from the global duty-free business [21] - NGP revenues increased by 16% against a weak comparator, benefiting from targeted investments [23][62] - Underlying NGP operating income improved by GBP 46 million due to a more targeted investment approach [28] Market Data and Key Metrics Changes - Market share in the five priority markets increased modestly by 6 basis points, reversing a 37 basis points decline from the previous year [12][40] - The U.S. market saw share growth in cigarettes, with a focus on maintaining share in the premium value segment [43] - Northern European markets benefited from higher domestic sales and lower levels of illicit trade, while Southern European markets faced volume reductions [22] Company Strategy and Development Direction - The company is focused on implementing a new strategy aimed at stabilizing market share and improving performance in priority markets [10][36] - There is a clear market prioritization in place, with investments realigned to support strategic initiatives in the five priority markets [16][39] - The company aims to build a successful NGP business while supporting harm reduction, with plans for market trials in heated tobacco and vapor [55][61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver full-year results in line with guidance despite ongoing COVID-19 impacts [11][72] - The outlook for the second half anticipates modest growth in tobacco profitability, with continued investments in NGP [73] - Management emphasized the importance of consumer insights and data in driving future strategies and operational changes [64][66] Other Important Information - The company is undergoing leadership changes, with a new Chief Consumer Officer appointed to enhance consumer engagement [65][69] - The organizational structure is being simplified to improve efficiency and focus on strategic priorities [68] Q&A Session Summary Question: On leverage and share repurchases - Management acknowledged progress in deleveraging but noted that currency fluctuations have impacted net debt levels [80][81] Question: On Pulze product launch and patent litigation - Management indicated that the Pulze product has been in the market without litigation challenges, suggesting confidence in the upcoming launch [84] Question: On pricing architecture in Australia - Management expressed confidence in the pricing architecture, stating that recent share losses were due to strategic price increases [107][109] Question: On U.S. vapor market turnaround - Management plans to reset marketing and route-to-market capabilities for the blu brand, aiming to regain lost market share [110]

Interim Results 2021 Imperial Brands PLC 18 May 2021 Disclaimer Certain statements in this announcement constitute or may constitute forward-looking statements. Any statement in this announcement that is not a statement of historical fact including, without limitation, those regarding the Company's future expectations, operations, financial performance, financial condition and business is or may be a forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may c ...

Financial Data and Key Metrics Changes - The company reported a 1.8% increase in Tobacco net revenue, driven by a strong second half performance in the U.S. and a return to growth in the AAA division [45] - Adjusted operating profit decreased by 4.8% at constant currency, with Tobacco profits down £118 million [61] - Earnings per share (EPS) declined by 5.6%, reflecting a higher tax rate [45][46] Business Line Data and Key Metrics Changes - Tobacco volumes declined by 2.1%, with a 3.5% decrease in Europe and a 3.3% decline in the Americas [36][47] - NGP (Next Generation Products) revenue fell by 27%, primarily due to destocking and reduced investment levels [45][55] - The AAA division saw a 5% increase in net revenue, supported by strong performance in the Middle East and Africa [59] Market Data and Key Metrics Changes - The company gained 50 basis points in total market share, with growth in seven of its ten priority markets, although it continued to lose share in the UK and Germany [45][51] - The U.S. market saw a cigarette share increase for the second consecutive year, driven by successful product offerings [53] - The overall market size decreased by 4.3%, with stronger performance in Northern Europe and the U.S. offset by declines in Australia and Spain [54] Company Strategy and Development Direction - The company is undergoing a strategic review to address performance issues and improve accountability, focusing on core markets and enhancing management oversight [14][72] - There is an emphasis on consumer insights and adapting to changing consumer preferences, particularly in the NGP segment [25][32] - The company aims to strengthen its organizational capabilities and improve capital allocation to support strategic objectives [33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the resilience of tobacco demand despite challenges posed by COVID-19, with expectations for a cautious recovery in 2021 [35][70] - The company is taking a disciplined approach to managing NGP investments, with a focus on improving execution and product differentiation [26][27] - Future performance is expected to be impacted by ongoing COVID-19 restrictions and regulatory costs, with a cautious outlook for the duty-free business [70][71] Other Important Information - The company completed the sale of its Premium Cigar business for €1.2 billion, which will be used to support deleveraging efforts [37] - An ESG Steering Committee has been established to enhance the company's focus on environmental, social, and governance issues [41][42] Q&A Session Summary Question: Trends on blu in the U.S. and market share improvement - Management noted a flattening of market share for blu and indicated that future NGP strategy details will be shared at the Capital Markets Day [77] Question: Potential divestiture of non-core assets - Management confirmed that a rigorous review of business units is underway, but specific divestiture plans will be discussed post-strategic review [79] Question: Margin reset concerns and EPS guidance - Management reassured that there will not be a major margin reset and that current guidance is expected to be retained [83] Question: Focus on top five markets - Management emphasized the importance of focusing on the top five markets that significantly impact business performance [85] Question: Impact of excise tax cycles in Australia and France - Management indicated that while excise tax cycles may be stabilizing, Australia is expected to face headwinds due to previous duty windfalls [88] Question: Changes in profitability concentration among main markets - Management acknowledged that profitability has increasingly concentrated in the top five markets, which are critical for overall performance [92][94] Question: Agility in decision-making and organizational structure - Management highlighted that becoming more agile involves cultural changes and improved focus on core markets rather than structural IT investments [96] Question: Trends in fine cut tobacco - Management observed that fine cut tobacco has seen growth in certain markets, primarily due to shifts from illicit trade rather than consumer down-trading [98]

Financial Performance - Imperial Brands' FY20 constant currency tobacco net revenue decreased by 0.1% to £8,053 million[44], while NGP net revenue decreased significantly by 27% to £201 million[44, 57] - The company's adjusted operating profit decreased by 4.8% in constant currency to £3,527 million[60, 81] - Adjusted EPS decreased to 254.4 pence, impacted by operating profit decline, but partly offset by share buybacks[28, 89] - The company achieved a strong underlying cash conversion rate of 107%, excluding a 20% benefit from a change in the timing of excise payments in the UK & Logista[28, 29] - Net debt reduction was £1.1 billion before FX and changes in fair value of derivatives[28] Volumes and Market Share - Overall volumes decreased by 2.1%[28] - Europe volumes decreased by 3.5%, while Americas volumes increased by 0.4% and AAA volumes increased by 4.8%[33] - The company reported improving sequential share in Germany and the UK, and share gains in US cigarettes[40] Outlook and Priorities - The company expects a stronger financial performance in 2021, with low-mid single digit organic operating profit growth and EPS slightly ahead at constant currency[69, 75] - Priorities for 2021 include concluding the strategic review, implementing a revised strategy, strengthening performance management, and combining existing strengths with fresh perspectives[77, 79]

Financial Data and Key Metrics Changes - The operating profit declined by 8.5%, with over 6% attributed to one-off charges related to the write-down of flavored pods in the US and slow-moving inventory [24][36] - Earnings per share (EPS) decreased by just over 9% in constant currency, slightly better than guidance, driven by a 2% improvement from trading [28][59] - Overall revenues declined by 0.9% for the period, with tobacco revenues up by 0.9% supported by strong volume performance and pricing [26][35] Business Line Data and Key Metrics Changes - Tobacco volumes declined by only 0.5%, with growth in the Middle East and Southeast Asia contributing positively [30] - NGP (Next Generation Products) net revenue declined by 43%, reflecting destocking in Europe and the US, although sellout rates remained resilient [34][78] - The tobacco business saw a net revenue growth of just under 1% for the half, while NGP-related write-downs impacted profit significantly [36][34] Market Data and Key Metrics Changes - The company experienced a decline in duty-free and travel retail sales due to international travel restrictions, which is expected to continue [10][60] - In the US, market share grew, with a cigarette price/mix increase of over 5%, although this was offset by lower Backwoods revenue [68] - European markets showed a decline in tobacco volumes by 3%, but revenues grew by 0.5% due to positive pricing in several markets [78] Company Strategy and Development Direction - The company is focusing on a 'back to basics' approach to tobacco, enhancing in-market execution and prioritizing high-margin products [13][84] - A strategic shift has been made to right-size investments in NGP, focusing on effective investment behind blu and reducing spending in less effective areas [15][53] - The board has decided to rebase the dividend by one-third to strengthen the balance sheet and accelerate debt reduction [18][54] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by COVID-19 but emphasized the resilience of the tobacco business, which remains broadly stable [59][60] - The company expects continued downtrading in the market, particularly towards value formats, but is well-positioned due to lower exposure to premium products [62] - Future performance is expected to be impacted by the ongoing effects of COVID-19, particularly in duty-free and travel retail operations [60][64] Other Important Information - The company has secured a new €3.5 billion multi-currency revolving credit facility and additional bank facilities to improve liquidity [47][48] - The sale of the Premium Cigar business is expected to strengthen the balance sheet and reduce net debt to EBITDA by around 0.2 times [49][50] - The company is committed to its ESG agenda and is developing KPIs for priority ESG issues [22] Q&A Session Summary Question: Concerns about downtrading to illicit products post-2008 - Management noted a reduction in illicit trade during COVID-19 due to closed borders, and they are adapting offerings to consumer demands to mitigate downtrading risks [88][90] Question: US volume guidance for FY 2020 - Management refined the guidance to expect total market volumes to be down around 5%, while focusing on growing market share [94][97] Question: NGP losses and investment focus - Management indicated a focus on OND (Oral Nicotine Delivery) while moderating investments in heated tobacco and EVP (Electronic Vapor Products) due to varying consumer loyalty [98][100] Question: Dividend reduction and potential for buybacks - The board emphasized prioritizing debt reduction over share buybacks in the short term, with a review of shareholder returns expected in 2022 [111][115] Question: Impact of duty-free sales transition to local markets - Management expects a slight positive impact on price mix despite lower volumes, as consumers will purchase in home markets where margins may be higher [120]

Financial Performance - Tobacco & NGP net revenue decreased by 1.7% to £3,592 million[19] - Tobacco net revenue increased by 0.9% to £3,509 million[19] - Tobacco & NGP adjusted operating profit (AOP) decreased by 10.1% to £1,383 million[19] - Adjusted EPS decreased by 10.9% to 103.0 pence[19] - The company rebased dividend by one third to strengthen the balance sheet[41] Volumes and Pricing - Tobacco volumes decreased by 0.5%[19] - Strong cigarette pricing was partly offset by mix[22] - NGP net revenue decreased by 43%[28] Regional Performance - Americas: Tobacco net revenue was flat, NGP net revenue decreased by 50.8%, and adjusted EBIT decreased by 11.8%[45] - AAA: Tobacco net revenue increased by 2.9%, NGP net revenue increased by 57.1%, and adjusted EBIT decreased by 7.9%[52] - Europe: Tobacco net revenue increased by 0.5%, NGP net revenue decreased by 56.2%, and adjusted EBIT decreased by 6.7%[60] Cash Flow and Debt - Cash conversion was 103%[19] - Annualized net debt movement was a decrease of £0.1 billion[19] - Adjusted net debt was £13,476 million[71] Outlook - Revised FY20 expectations: EPS (constant currency) -3% plus COVID impact[43]

Creating Something Better for the World's Smokers Imperial Brands PLC: CAGNY 2020 20 February 2020 Disclaimer Certain statements in this presentation constitute or may constitute forward-looking statements. Any statement in this presentation that is not a statement of historical fact including, without limitation, those regarding the Company's future expectations, operations, financial performance, financial condition and business is or may be a forward-looking statement. Such forward-looking statements are ...

Financial Data and Key Metrics Changes - The tobacco business grew net revenue by 1.1% and operating profit by 2%, driven by strong performance in the U.S. and resilience in Europe, despite challenges in the AAA division and share declines in Germany and the UK [4][9] - Group adjusted operating profit declined by 2.4% due to higher investments in NGP, while EPS benefited from lower interest charges and a favorable tax rate [9][10] - Tobacco volumes decreased by 4.4%, with a recovery in Middle East volumes and resolution of distributor disruptions in Southeast Asia contributing to a better second half [10][12] - Cash conversion was at 95%, slightly higher than initially guided, primarily due to working capital flows [9][23] Business Line Data and Key Metrics Changes - NGP net revenue grew by 48% overall, with trading revenue up 137% after adjusting for last year's IP income [11] - The tobacco valuation model continued to deliver, with price rises in higher-value markets supporting price mix gains despite volume declines [12] - The AAA division faced tougher trading conditions, with profit impacted by lower price mix and increased investment in Australia [13] Market Data and Key Metrics Changes - The Americas delivered strong tobacco performance, with cigarette share growing by 10 basis points to 8.8%, and net revenue grew by 6.8% on a constant currency basis [40][41] - In Europe, tobacco net revenue increased by just under 1%, with profit growth of just over 3%, while NGP revenue grew by around 300% to GBP 131 million [48][50] - The UK and Germany saw share declines, impacted by the timing of price increases, while share growth was achieved in Italy and Spain [48][51] Company Strategy and Development Direction - The company is focusing on a multi-category approach, strengthening its presence in heated tobacco and modern oral nicotine, while adapting its investment strategy for NGP to drive stronger performance [8][30] - A cautious approach is being adopted for 2020, with revenue and EPS expected to grow by low single digits, excluding divestment impacts [55][56] - The company aims to improve brand loyalty and consumer experience in the NGP segment, with a focus on enhancing the blu product line and increasing online consumer engagement [33][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging year with mixed results, emphasizing the need for an agile approach in a fast-moving environment [3][7] - The regulatory environment for vapour products has been volatile, impacting market dynamics, but management believes that a clearer regulatory framework will restore confidence and improve returns [37][79] - The company expects a stronger underlying cash performance in 2021, despite anticipated lower post-dividend cash flow in 2020 due to one-off cash outflows [25][56] Other Important Information - The company has reset its investment plans for NGP, focusing on building brand loyalty and enhancing consumer experience [8][30] - A significant impairment charge of GBP 525 million was recorded for the Premium Cigars assets, with expectations of offsetting cumulative FX gains upon completion of the sale [17][63] - The company is actively engaging with regulators to promote higher product and marketing standards for vapour products [37][53] Q&A Session Summary Question: Update on the Premium Cigars sale and potential future disposals - Management confirmed that the Premium Cigars sale is at an advanced stage, with efforts to conclude it shortly, while future asset disposals will be kept under review [58][60] Question: Explanation of cigar impairments and risk of other asset write-downs - The impairment was driven by accounting standards and market conditions, with management comfortable regarding the cash flows of existing assets [61][64] Question: NGP margins and competition outlook - Management acknowledged that NGP margins are expected to improve over time, but the timeline has been pushed out due to increased competition and high consumer churn [61][67] Question: Trends in the U.S. cigarette market and impact of e-cigarette bans - Management noted that the U.S. market has been volatile, with structural declines expected to continue, but the impact of e-cigarette bans is still uncertain [71][76] Question: Guidance on free cash flow post-dividend - Management assured that cash flow will cover dividend obligations, despite lower expected cash generation due to one-off payments [102][105]

Financial Performance - Tobacco net revenue increased by 2.7% to £7.713 billion, but at constant currency, the increase was 1.1%[13] - NGP (Next Generation Products) net revenue increased significantly by 52% to £285 million, or 48% at constant currency[12] - Total adjusted operating profit (AOP) decreased by 0.5% to £3.749 billion, or a decrease of 2.4% at constant currency[15] - Adjusted EPS (Earnings Per Share) increased slightly by 0.4% to 273.3 pence, but decreased by 1.6% at constant currency[17] - Net debt movement was a decrease of £0.3 billion[20] Tobacco Business - Tobacco volumes decreased by 4.4%[10] - Asset Brand net revenue increased by 4.4%[55] NGP Strategy - The company is resetting its NGP investment to support sustainable growth, focusing on priority market/category combinations[6] - Heated tobacco net revenue increased by 400% from a low base[66] Regional Performance - Americas tobacco net revenue increased by 6.8%, while NGP net revenue increased by 30.5%[69] - In AAA (Africa, Asia, and Australasia), tobacco net revenue increased by 4.8%, while NGP net revenue increased by 880%[73] - Europe tobacco net revenue increased by 0.3%, while NGP net revenue increased by 309%[79] FY20 Outlook - The company expects low single-digit revenue and EPS growth (at constant currency) in FY20[91]