British American Tobacco (BTI) Q2 2022 Earnings Call Transcript

For the period ending June 30, 2022

July 27, 2022 3:00 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Jack Bowles

Good morning, everyone, and welcome to our 2022 interim results presentation. I'm Jack Bowles, Chief Executive of BAT and with me this morning is Tadeu Marroco, our Group Finance and Transformation Director.

Before I start the presentation, I take it that you have all seen the disclaimers on slide two and slide three. As usual, once Tadeu and I have taken you through the presentation, there will be an opportunity to ask questions.

I would like to take a few moments here to express our deep concerns and sadness for everyone affected by the conflict in Ukraine. While we continue to work towards the transfer of our local Russian business, we remain focused on our 2,500 people we employ in Russia and safeguarding their future employment. This is an extremely complex undertaking and we'll provide an update on our progress as soon as we're able. Thank you.

Turning now to our interim results. I'm proud to say that we are both transforming our business and delivering robust results. At the same time, we are successfully navigating an increasingly challenging macro environment in 2022, while delivering superior shareholder returns with our growing dividend and GBP2 billion buyback.

In the first half of this year, we have built on an excellent momentum in 2021. I am proud that we are making strong progress transforming the business from cigarettes to lower-risk alternatives for smokers, while at the same time driving our other ESG priorities.

We have now reached a milestone of over 20 million consumers of our noncombustible products. We grew New Category revenues by 25% in constant currency and we have delivered more than a 50% reduction in New Category losses, alongside a continued increase in New Categories investment to a total of GBP1.1 billion in the first half alone.

This strong performance has again been driven by all three New Categories, with new product launches in all three global drive brands. This demonstrates the importance of a global multi-category strategy, with strong brands and great products in the right markets.

We also continue to make good progress towards our ESG ambitions and targets with 18 certified carbon-neutral facilities, including two added in the first half. And we continue our work towards achieving carbon-neutral operations by 2030 for Scope 1 and 2.

At the same time, we have delivered robust results in the first half, with group revenue up by 3.7%, 90 basis points operating margin improvement and adjusted EPS up 5.7% at constant rate. While we recognize, there may be challenges ahead, we are successfully navigating the current macro environment, driven by the resilience of our business.