British American Tobacco p.l.c. (BTI) 9 Dec 202020 Q4 Earnings call transcript

Hello, and welcome to the British American Tobacco 2020 Full Half Pre-Close Trading Update. My name is [Molly] and I’ll be you coordinator for today’s events. Please note that this call is being recorded and for the duration of the call your lines will be in listen-only. [Operator Instructions] I would now like to hand the call over to your host Mike Nightingale, Head of Investor Relations to begin today’s conference. Thank you.

morning Good [Molly.] you, everyone. Thank Head I’m Relations. Investor Mike Nightingale, of Marroco, morning Director. And this Tadeu our with me is Finance Welcome to our full-year XXXX pre-close conference call.

currency begin, focus statements we to stated, contained few short Just you, to open over to I up we I on on to has draw hand comments adjusted to Tadeu. our before a who your will the measures. now cautionary otherwise the current regarding questions. in statements words consent Unless Tadeu forward-looking Over will trading update. need attention trading before

our Thank you, the everyone and health transforming and XXXX, you Throughout challenging Thank of priority BAT being this welcome. well year, caused against are business us morning. employees. has Mike. Good backdrop been we grow morning for COVID. global joining the to our the and continuing by In the

commitment have deliver result a It to all furloughs set are our made employees have to ensured on people that that of of we has strong the the dedication of no full. continued We XXXX. and we around the in pay and track as in results world a of our redundancy crisis, is

We tomorrow our focus Reducing and can to less delivered the the contribution a building is continued greatest through priorities. are society. of we the make three range by strategic our impact of enjoyable to on health business committed a better providing risky products

serious the switch otherwise substantiated health We would BAT continue way through And smoke those quit. pose start avoid clear risk to alternatives. to risks. to encourages cigarettes be continue not this to reduced scientifically or to combustible that to only completely is who

to categories. step in are change to a We drive increase and continuing investments new

proud XX in now to products. million very consumers around are We non-combustible have

Modern value growing in Oral. strong We THP, growth volume delivering sharing sharing revenue and are vapor,

revenue comparator. prior category half performance a the second in is period despite new accelerating Our strong

from XXX of to our track continuing Quantum. We combustible drive savings least are deliver and are at to million on in value business

In brought us the ways organization and The caused to of agility to have remains addition, enabled quickly COVID. the environment pandemic. to effectively challenges increased performing an new adapt by global by due working the uncertain is the business about and radical strongly against transformation which of navigate

deliver improvements We on in guidance. such over in has XXXX markets to second Bangladesh, track by resilience developed THP on half, Cigarette emerging our markets are and improved and driven some and the as the continued Turkey. Brazil, volume

we down We expect volume with U.S. to volume, X% flat. be around which now outperform decline, to industry industry expect broadly

and to thanks category of by reduced strong headwind total further category additional we opportunity to around growth new now in range. the million half COVID X% to cost have trading improving to around guidance our top at management, the increase £XXX taken environment X.X%, and in and end this continuous revenue £XXX fully second new to investments strong This of XXXX. million. close the for X% pricing cash we this minus generation expect tight investments represents a Given deliver In revenue the of

is strong glo of market. to comparator, effect XX impacted withdraw from million, prior diluted EPS adjusted income This investment, revenue further negatively The new COVID. We of category Sens significantly in ITC continue increase that growth. one-off category new of a decision currency the Mid-Single of associate Figure despite deliver following from our to a is and to Japanese period’s impact constant by expect the absorption

for X% on to EPS XXXX X% to of expect the the be between the applying diluted We with translation current foreign impact spot XXXX full-year headwind expected exchange full-year rates. X.X% adjusted

records category Hyper markets. nicotine XXX% metrics. first has migrate Vuse achieved times [rotation will of to was for share share completed with excess markets vapor market percent Vuse the the across value of the five is commenced over XX%. Number success five Vuse/Vype XX% markets, X reached The share in the of rate.] any higher end XX% share inner share points of to nicotine at of in value all grow conversion five brand brand May. gap October, value by took on the X% to of to glo Canada market leadership top than reaching to Vype gross fastest categories. across of top achieved top U.S., in the the at during Turning new the In five within with five show vapor XXXX. has In fastest share to share. migration by in share of leadership the Market nearly Epok. total X year be success Vuse social eight growing to XX% August, markets share in XX% Vuse in Canada of Japan exceeding a XX%. in the Hyper date. total and two leader the is drove previous share achieved now of continues volume THP in volume remaining X.X% in international trading and top nicotine brand maintained performing states. around share vapor, in records the the now the product. brand tracking Glo reflected driven Vuse/Vype markets having X.X% to the its In value share XX% growing and top has of sales with in volume brand global in growing In of XX%, driven large reaching volume Migration markets year-to-date in Hyper all from device also two Vuse Moscow, excess valley is rate October performance Vuse in a with close vapor seven was October four top is device in leadership Hyper in systems auto them. closed THP, total continues in continued by in THP

of to be the Hyper in in expected growth in reflective expanding currently to the down, X% expect Japan US. THP U.S. of in due of to impact above nicotine the has Oral launch in drift. to X% from key to our we the have and products strengthens [indiscernible]. of in April, U.S., in and which mainly the branded geographic The consolidate It Oral, of cities of and category markets. K position, and represents The to [indiscernible] Sens we around segment key market portfolio acquisition into our from Japan. in excise us X in harmonisation Velo leadership Modern and XX% enabled milligram also U.S. now U.S. represents subsequent significantly nicotine, category. We In rollouts Modern close flavors. revenue the outside position mostly grow XXXX, participate In and been the its benefited successful THP acquisition the expansion stores of online all volume the by strongly the is announced continue November, distribution year-on-year the the Circle withdraw in of in into participants Dryft launched our

expand first around expect the We half. the the of products distribution the to to Dryft from of by XXX,XXX end outlets XX,XXX

XXXX. We are of

in our In be capacity position expect building share all are growth leadership are to We unconstrained clear [inner], key around mid-XXXX. consolidating markets. with we and

we In first a verification. summary, launches in a product new half be XX% have of across used trial all good of of We we average exciting than the entering regular new planed. over categories, daily some are higher Canada, launched momentum pilot conversion with achieving to are and as three rates average. Bluetooth with providing consumption the Vuse pouch launching vapor, The electronic version will XXXX. are from XXXX enabled in In market age category

launch consumer QX Modern leading Vuse beyond Oral Sweden, markets planning submission Our in a and we City nicotine, September a to we the are broaden Alto ambition a vaping in least mini in in test needs with in technology. our in-line by expand of pouches the portfolio meet XXXX. also included Also XXXX, recyclable to age to with can Slovakia, to CBD of first XX Switzerland. product our early the And to at We and explore UK. Norway, PMTA are plan better verification with

also to Oral recyclable outside all first XXXX. half U.S. cans of our aim make the in We Modern the

in to We will continue approach. multi-category lead our in innovation

value from driving to Moving combustibles.

by in BAT markets is developed outperforming industry. with excellent resilient particularly underpinned industry volumes, Our the performance

natural up points American business continues views U.S. mix share value is sub spirits price performance global strong excellent The brands bips by in Newport's. value with perform from This strategic basis premium our value points. and good XX combustibles. strongly XX year-to-date. bips drove and pricing is and XX to an driven is up Continued XX share basis up Corporate share and share

share And we trading. are branded down have We no accelerated seen in date, growing segments. value to the

to recent dividend to ratio. will to to our times XXXX, through strong XX% our maintain net strong Moving conversion operational by issues. the to adjusted sheet, maintain We profits three payout excess committed liquidity successful achieved adjusted following debt balance XX% our continued of be remain reduce from of operations. cash and debt profile in around EBITDA adjusted end This we targets

list on central have has been X.XX. recent in Financial which the World Sustainability score company Index the tobacco recognition XX.X received has in to to X.XX that I'm included our strategy. XX.X. named a Sustainalytics second for Dow DJSI report Leaders from further on pleased to improvements to Times the now the is recently be rating and year, our is the ESG, consecutive only consecutive score Jones in MSCI our XXth our from and to with BAT building year the Diversity for again Turning we external included to Index. BBB BAT been increasing

in a the CDP, change for We the A second Carbon Disclosure have by the in List year included been action also climate for row. Project,

the are on conclusion, any we guidance. circumstance is tobacco are we performing In rights, during this challenging report our sustainability tomorrow, company on in human deliver track the to strongly first launching Finally, on by and business industry. focused the a

are transforming our our three We strategic continued Thanks investing, on and priorities. to focus the business. delivering,

agile innovation deliver These We benefits in] enable us priorities. driven [share summary, on in increase categories by We growing the of now we in quantum. to and three noncombustible. have project faster, our considered our combustible investments strategic value delivering simpler, financial million are both a are commitments by and consumers in and more around supported growth In become on XX business. new

XXX an additional categories in to and investing billion new company. leverage the continue are We

now will to I Thank open our better the purpose. We are committed you. questions. to call tomorrow and

Instructions] Jon ahead. First [Operator you. of Please Generale. question Leinster from the Societe comes calling Thank from go line

Good morning, gentlemen.

Hi, John.

I if may. questions, Few Hi.

not your on it's the said interim really why cannibalizing was that of glowing my just think And X.X%. to Japan? glo? total – here, share you then mean, Hyper And, truly with market? June from share in at results, is total is of October say question. sort existing X.X. be glo segment risen question does First high in you why risen market that Hyper X.X exit the rate That’ll within imply the know, X.X%, risen you a of in having is is I of I that is sort first

John. X.X. that time is point was year reading, Okay, reading Look, a the quoted weekly throughout the reading October we reading at one, in in middle one the that now hoc robust ad of end in that of the a month. of this more And the

a There as market but by we growing is of now And the it’s middle the the our Japan, some mark. the clearly family. by share year. are in by below total that, well category, slightly were growing cannibalization, above and the is XX% as We

within the a glo expansion whole is and family there that. growth a, So outperforming on clearly Hyper is the glo

And U.S. some I be? Modern that can constraint don't capacity secondly, Oral of would you you Okay. that be XXXX; of the think in you us middle by idea what capacity to expect give mentioned

SKUs. third well current bringing we U.S. machine part to from Dryft volumes established capacity very Dryft an also in a, we part Well, we our supply for have outside of the are And capacity also and have inheriting acquisition reinforce our capacity the we the are a in current a as

the least to believe would XX is from also when to we to format], we that mean of three, able the eventually capacity our but be current to the above go unconstrained So, fulfill a in million some and one year, which reach plans by a combination capacitor next those period. mid basically be [drifter be that move subsequent good at of all

time. shut And Africa you if obviously bizarrely may, I a know, rather Thanks. lastly, long South was for was,

it's market Now there market problems moved to illicit legal is or has significant with still back the trade? the reopened,

the that crisis many to illicit. market the has inroads doing a Well, of South volume Africa power growing, for have In time. the halt enforcement of all thought, came growing, the we reduction the turnover in before assuming and government massive growing, XXXX, given was new that share growing end the sudden, years, the time, the year. a first been trade, we of this consider on in government illicit in this many, that years was QX And time first [indiscernible], was BAT many a for clearly, in to many, was

as refocused been of the that. before. government that time takes sell back before And would XX%. was then you were what extended has level these dominated time period have be dropped cigarettes. the at able networks is than have be a you consequence some and So, the for the now illicit time know, illicit The of dissemble And to done to illicit it likes being to without established expect, they again, as you'll because on higher network the of this markets, have of new any

today, and the government we'll speak to we close sure. is XX. supporting clear do which to before And before are be now XX% we and of done the There to have increase an the willingness. rate saw go that in needs pandemic, when what ways that, likes they illicit tackle a for have the from we as to back So, demonstration

you Okay, much. very well, thank

from line The far off calling chain of ahead. comes Barclays. from from Gaurav next column the the Please question go Jain

Good for Thank morning, my you questions. Tadeu. taking

morning. Good

you questions. in FY two – the share would be can outlook, one initial Number on have thoughts I XXXX U.S.? you is, volume especially your

note Gaurav, is make volatile still Well predictions to now. for XXXX, that today you'll very us

COVID about crisis the near the a have are the nowhere fiscal discussions U.S. We stimulus, in government end. There now new

the solid time have firm a The the number should this a the terms rolled – call, long as view on XXXX, year-end saw the be light U.S. still difficult favorable months by be that the We at have to very early And tunnel, it's out. that a go, firm to long is months still the but of the it's in at in of fact go impacting end do saw, more prediction to but February. volumes. to – to vaccine it's in point bright about very vaccine, is market markets, a very to U.S. results we in a our U.S. the a our expect factors a you are way, in statement, a of market but we to

growth long-term is new digit revenue XXXX, objectives. next and last million high by are that, investment. you know million question new imply the XXX is, we X £XXX growth, rate per like My have your other? growth Thank you. each I'd million, the question require these two that of would billion in is, And, years. again, XXX revenue to seen growth a significant incompatible [indiscernible] like single step-up that annum, in the with three that One two, two the category EPS second versus category doesn't would be and is ask goals It

to we need. generating No, why allow us that we I launch quantum. the prepared clearly savings we the That's are. to don't company project And a think have they that

know. new very, have combustible business, fulfill will be factors as strong very these you funds the to And categories. a growth necessary the also both generating of We

in half shutdown into the We COVID have as in a consideration consequence in that XXXX supply impact [had XXXX a a we particular year. than that had impact of of second In that the end You the glo to had, shops of year like for in the that more of of headwinds year is And new in of lab]. we activation [auto closure we number The we XXXX, marketing at know Sens first the chain to caught beginning happen Europe. example, you also categories very this we spoke materialize about. and again, take quarter, on in Japan, in China, disruption, the the results. Russia ban] have lockdown

So, the [the the FDA] new the the factors recovering legislation, there U.S. from is at the a were crisis vapor still of the year. number valley of industry also and beginning in

read to XXXX and those momentum terms understand in of numbers think is most in So, through I the thing [NTO], to recognize much categories. important in we we absolute have but the that cannot in all just that the terms

before, As we in of are top is single markets vapor, In of close volume are of we just to growing In are the big solidifying the of the have U.S. making the we headwind five share our Oral, leadership In outside with we getting much despite And U.S. every growth out really the leading Modern quote offers we are categories. inroads four U.S., those more and would competitive now THP, consumers. glo in Sens. XX% to in

we'll gives delivering be And the the over. by as us our this reassurance to same the billion the soon X that's at as think able our target continue pandemic that average, XXXX. I time, is first as So, achieve one, financial

on my associate, of question X% maybe is equity And not much you Once the that is you. of and cash repurchases, we it's have Thank cost is Sure. XX% yield adjust like share last just free debt leverage leverage. X.Xx, really mentioned the lower. north flow for like and corporate X%,

start today? not back the why stock buying So

look, thing – sheet. for basis. subject our the on capital year that location can constant this best reviewing is strengthen balance We a to will is the Well, next a do be we believe the we

the shape nicely in the like exercise of our We We is time also reviewing the business there undervalue we reach we’ll you dividends the remove our the want the continue circumstance keep of you around this is of to is in those the the By U.S. point to we the DNA three vesting rate some shareholders And location. is, to of XXXX, categories just company, way the company. that part it time announcement. date, in and in forward out reconsidering of at the with it a as to liability to management in capital all of change of recently Dryft leverage, point like moving done eventually very of because points believe the with new And good we best we be, death the M&A’s times have we terms the profile by again that the we'll be agree as get quite business, then. end if again through persist about M&A did I know,

Okay.

Thanks a lot.

of comes question next go ahead. from Alicia Investec. the from line Forry The Please calling

on expecting, the first higher SKU better look you’re Hi, on mix is a about that's with and good morning previously [Technical volumes global Difficulty] Tadeu. My guidance. The to than X% market. question developed price down the

surprised that raised I'm So, roughly the more X% the line by was not top guidance you've than indicated.

I So, primarily you've year, but bit have appreciate more this be growth back holding held revenue could few a on factors you perhaps which back? touched on factors a a specific

sure there half are Alicia. bit Look, BAT a drags the three we like major Yeah, year. in year, for this articulated

is The global first retailer. the one travel

material, to anything there Although value if is that those decimated. business, massive a was the is volumes the much volume completely and not intrinsic

The big we because the until in are second of one end is, the we since of for South April us and one Africa leaders, couldn't of August. – in cigarettes of stick market is sell a terms second half

So, like blow this markets of refer predominant. that this in drag terms developed we beneficial. where Pakistan, clearly the and year. there turnover. and that to a of the you impact sales half difficult of that performance are as in it X.X outperform We But quoting in big markets. this some are the likes There in well a big had saw likes this all to, crisis, revenue, Sri Lanka, U.S. particular to a stick terms markets weakness disruption, of many nets in are the that we was upsides, very lot first mainly, our was was emerging the of recover. Mexico, The was of And and in happening

And behind so, lies that's what the it numbers. –

mix? on Okay. the Oral this to seeing change involved you're My Thank companies particular any there? there characterize in there price landscape a obviously in growth you. developing you competitive space. in Many Modern second in dynamics category. very competitive that with U.S., regard been the question And has is Can exciting are

perspective. although there, you this is it's U.S. things Look, yeah, know, X% put important growing a that said to pool. very nicotine you to is segment, because, into still the of Yeah. quote fast we And have

they referred development of more the competitive XX% for in Modern If Oral of where west market. more you that's XX%. similar like likes developer, the you of the It's from is – Oral Norway very something the And markets, look closer example, to example, reaching [XX%], of is bit are a for to. – now it's the to XX% traditional Sweden, the category, a like

case We able investing we place. office we we products. particular, of because the limited had new the the we scope were category compete our not players in with to were in And with freely – across in have whole that

we in are to So, able now we of be The as test of as next are to mix And the from testing. K Circle marketing beginning more make order it our reason is to day that possible. rest to actually competitive [Country] the onwards. in roll-out

of I very from in SKUs the before. range above our extend offers of imagine, think how were be terms able segment And a to not that you and that of XX optimistic to as we compete X pans X we'll in can see to milligrams possibility we out. this are

make mix. think see early a a prediction to it’s have of So, price I terms to bit in that and

I compete, now more distribution. to is in players to the have right think that trying trying moment marketing to is And increase the place. are mix important old

that where Thank in menthol if in seeing if consumer behavior various respect U.S. you those I are anything you. you with [local bans]? on And bans]? on impact areas can could there been you're one, any, a market [local update ask seeing has menthol final the just to What

by at impact, by close up other much consumer or in and buying if they because the the that of Well, we where circumvent commerce, possible. day end the haven't in been, end have seen reality, geographies

And one the control responsible XXX%. of future. a year, as that Europe, And ban the the just saw menthol the also to strong. of Turkey, out space. make In to reference FDA, see for the weren't really type just sales. to January spoke we still or we the list seeing believe are introduction reality, in in present a no decide and we for for soon. in Turkey, terms quit anytime the the you of we calls. made we nicotine had in we balances FDA can of implications in both retention above that had where is XX%, future. of vapor, level May are move new we of either the of that the was example, X% very priority in we were we to is retention enforcement category like there example, the because In these and we menthol on not the In X% in a with So, based this saw year, Europe, the And new this in And ban where in and expecting see body know, I share, research incidents And youth the the X%, a terms takes – about our latest that time is even to some having that a the by, vaping, than in reduction U.S., you and cigarettes, in just to move that around point year, make we completely category the product of like categories this differentiated to XXX%, remarkable we as which of decide cigarettes use in examples a gain Turk passed compared being retention that had menthol was as would off. market with in another outside and was from can pressure start menthol you differentiated of kind of use previous because of these case, a higher cards we

XXX% the in nicotine you menthol one largest seventh the of that the Newport, are menthol analogy ban. the is circumstance in which brand the franchise in XXX an that As copied. be the cannot has more make U.S. millimeters were than that, format of now that if before a differentiated our U.S., we we terms back percent of with And length see you consequence of retention, a were than to those

As FDA know, cigarettes you frozen XXXX. old specification the has of since

new big market. [mentholation] And also in making the in-roads launch And in level market. the categories. and are has we cannot you the So, in the SKUs in lowest present it new

think ban clear well U.S. I we in the and the the we prepared indication facts menthol in will that be happening outside coming for if are So, that. a see a U.S. future, those is

Thank you.

ahead. of Next Sanath go Stanley. Sudarsan Please the Morgan from question line calling comes from

seems the restrictions? you emerging mean shaping is up you all And of Are for the in Hello, maintaining good X market terms on know, seeing down profit are a shareholders? then level to upon what you've Particularly how your level good post forward? done secondly, do, could keep just higher. briefly this [indiscernible] touch seeing think investment you. this year. the from you you're about, in of what How more [Indiscernible] should Could be the market of Thank illicit The revenue all. category market? away consumers please? you general overall should recruiting very view more to going of brand levels about seeing you interested it migration? job just still morning the consumer Are trading? us right you [indiscernible] the the by Are billion ambition XXXX? new But we emerging give

Okay.

questions. lot there’s So, a of

So, let with me pleased on try the performance are consumer’s Look, very to address we base. the them. noncombustible

We have year XX% XX than million, ago. it is almost more a

more – those As already by XXXX [indiscernible]. XX in out that million million set ambition revised of in our the recognize And important than you in there. consumers the that out released back we to today, XX reach know, there to non-combustible XX it's have have are And our we we that million strategy of that.

and anything indications our categories, time, over achieve today, new space achieve and year. growth we next that all day for if strength after. we And XXXX. to that this So, the confidence is us massive are contestable a the go by the from today, contestable that Because there are in are start will there give us a given our of increasing to what accelerating continue billion portfolio X gives will – already and the of we is the space read able that that able means to

of that In And the see designs, faster. to the investments. likes locate we of and a of necessary In in through lot in more resource shareholders, the XXXX, to year-after-year, know, investments now reality, the have are we that be new IP’s, a losses is so consumer means the new have the years type of, that innovations, I new there first done forth. now capabilities believe categories. which profit – expect growing this P&L in facing do that the digital a our invested we in of you we categories successful. right The XXXX categories a we in More have have level revenue building have so in is of recently, for terms terms on, we three level think the reached in consequence for peak we consequence onwards, to

accretive, we full-year, be us the agenda our that expect cost more to delivering expect We and EPS generate transforming articulated in at financial our this continue necessary last and quarter the the leavers algorithm for mid-year we two to while the terms together of with to business. year,

well. a here because have a of we for terms mix it bit basket markets, of is example, countries the mixed case mixer a like Now, your as extremely terms perform of Brazil, emerging in – is in today of is case,

by lot that and grow, of example, anything emerging have illicit previous is but We it's more growth year, year, this to markets above seen a The now growing and year. still on. the likes is of digit of impacted lower still of excise for the been Indonesia Pakistan, of growing; if a as because so in has illicit recently flow likes from the volume illicit slightly a those this double interruption Paraguay. of Brazil Remember consequence is

we extremely well. illicit Brazil South a is typical we recovering where with of where do like performing cannot, Africa markets a So, we can to in like example, an have control terms that work was And lost. example; of that space you extreme lot still

other today to but very we is [more that spots a day, So, we studies mixed good I or We of overall Bangladesh, the are which some trying called picture of think the there, view]. and at Brazil, negative it's end performance. some talked to Turkey, offset seeing out

Okay. Thank you very much.

Rey question Please line the Instructions] ahead. calling from [Operator Securities. The comes SBG go Wium of next from

now curious Hi, in on mean, little allowed you market? month market in know Is Are illicit you a the in since bit understood relative Africa. that. gained same share, struggling, and down it was the your it's a have what South know, What just – if prior the the a is still maybe that, can is for side Tadeu. it to instance, has I'm this back year? we elaborate just I you you assumption? while you to is if what take, been or correct more foothold dismantle I

is they the though whole problem there with Yeah, is related – We Difficult] about actually, market to the is, problem incidence growing close to likes The problem South like is illicit before. mentioned not [Technical because market had X%. this the from share. of the market Africa very I of illicit the

a growing until and when Our share, had share we the I QX like pretty is our performance before much throughout been saw XXXX. flattish mentioned you period,

government networks the was this needs South in This cigarettes. were have has in strong that that level there get no the broadly, were some, of a to some the past illicit The problem momentum we and the in able menthol, illicit to COVID able say, the size the you got months be now this we possible to is, legal through. it is because we I crisis. just So, established of to that those of to at after but make market, sales know, the And done. of before are – went crisis tackle demonstrated inroads, – of Africa, that the be enter to in because very problem

COVID, that the they So, again, making that had before learnings and could reassess that inroads optimistic they very South with problem Africa. we illicit are tackling in

Good. I products or Then, your revenue, the like new longer-term think is agro I think I XX% have year. XX%. I just regarding medium-term XX% question know to in the a it a category half first was In target,

first get until of a have said want we the hit sort heating you an we short the half to £XX an up, of target? million half, you idea just down, revenue falling the and that to the [indiscernible]? growth what about acceleration know, know, second on to into I ramp you rate, XX% revenue going of get products tobacco bit in and based probably So, get versus of Japan, are

the that to that did second better for before. And our new that of year, difficult were half. to my didn't problems is we mentioned a Europe, closed XXXX. that and in half. the year. vapor have all Sens, had second XX% example, I first we are very with we the provide raised in in guidance had points time. we the across first half are half, the despite at make increase we before, revenue expecting in and And recently cautious year comment half to this given points before, first this year, we categories the particular into in so that for this glo are second No, I for in until Yeah. is the highlight saying that we a perform very stores than the We that again was be we in We growth But all And from that for lockdown. is example, backdrop coming on. headwinds the want we And a all I accelerate ��� a the point

put context So, now. this we to had into

labels what consider. get once then share feature want backs. Okay. that I again? to you probably put And the on idea then correctly that, understand you put I would to about Did buy a spot of want broad finally, you said back sort just around to back of to it the about just get on Xx could be the debt-to-EBITDA buybacks a table at share the net a sort I to it

ahead we're Well, the I game think getting here. that very of

allocation said, being is I As constantly reviewed. capital

for clear dividends the in want the and have while. are of for the been doing the new and the sheet. leverage, before, continue to saying very investing we continue We have year said that Hence, levels the component we we that to our we categories to to strengthen want come balance a [XX%] payout as

you'll is hence put of but will I those company and to what level said the back to get that the on the more at well. to this time time to as this by things Xx of flexibility all – get have you around terms evaluation get of the sure, that the depend So, leverage table, in we for

a of So, number factors [indiscernible].

Yeah.

Okay. Excellent. Thank you.

Thank you.

from The next Please calling question line Erskine comes Alan the of go ahead. Credit Suisse. from

everyone. morning, Good

retail, some people Northern more time, harder COVID-XX, Just home that for of imagine quantify, some spending certainly have and will I I easy quantify. very income clarification tourists from like have of discretionary obviously mean, more to U.S. two point in impact better performance etcetera, at similarly, a the are benefited the to some me. because they is questions X.X% on of the spend, elements and travel, would have to home. One, Europe

what you, question launch that with is failure my Tadeu that, that then those was had just, what So, indicated what sort to you the have that of quantify clearly, two just from work best the you wrong all mean, of of is into know that didn’t second quantify learnings of disappointed that of X.X what I the you. that and And a And product? case. went easy you want to, Sens? I it net the through were. think impacts I Thank was to glo you clarify your easy number. guess less

Thank you, Alan. Look, your first question.

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guys. Thanks,

you. Thank

phone on have no the We lines. coming questions further through

I'd So, close Tadeu like over back Thank to Marroco call. you. hand call to to the the

So, thank you everyone.

you in The just well So, is challenging circumstance. summary, in all. business leave to performing with the mess

We on are our are X% X% invest guiding we our of revenue new in categories. further range, top to the end XXX to a to and momentum the million business strong capitalizing in

share almost increased its to XX terms saw, five growing have has you consumers non-consumable, million across the We combustible product big substantially inroads as our XX% markets in top Vapor THP. value of now. been, making in big, Vuse

markets be track how strength, to our U.S. positioned. or leadership currency on outside and guidance. above the the The on XX% in mid-single-digit U.S. growth Velo/Lyft has eight expect significant consulted are Oral deliver we business We of well, acquisition, is Any Dryft the to top now category. constant the performing Modern

– we delivered this me tell Let year single we if have could XXXX. in you, figure EPS high

that the to However, to we we thing the for on we want the are continue momentum to have. business. invest leverage is that new clear And behind categories do right

We the we to are are are better are our and we we business, a to build investing, transforming delivering, committed purpose tomorrow.

to prelims Thank Christmas. your and you look very I you everyone. in I you. thank Happy at February speaking So, the all you forward to and a families wish

you today's call. Thank joining for

now please may You stay disconnect lines. your Host, connected.