Where we are located
The region includes the following major markets:
- New Zealand
- South Korea
In Asia-Pacific, profit was up £184 million to £1,332 million as a result of strong performances in Japan, Australia, New Zealand and Bangladesh. Favourable exchange rates and the acquisition of Bentoel were also contributing factors. At constant rates of exchange, profit would have increased by £47 million, or 4 per cent. Volumes were 2 per cent higher at 188 billion, due to increases in Bangladesh and Vietnam and the additional volumes from Bentoel, although these were partially offset by lower volumes in Australia, Japan, Taiwan and Pakistan.
Australia achieved strong profit growth through higher pricing and continued cost saving initiatives. Good performances from both Pall Mall and Winfield led to an increase in market share, although an ad-hoc excise increase in May 2010 resulted in a drop in industry volumes.
In New Zealand, profit increased due to beneficial exchange rate movements and strong growth in share by Pall Mall. However, volumes were lower, impacted by an ad-hoc excise increase and a tax equalisation for roll-your-own products.
Market share in Malaysia was up, although the share gained by Peter Stuyvesant and the resilient performances by Kent and Dunhill were partially offset by the impact of down-trading. Volumes were slightly lower due to both legal industry volume decreases as a result of hefty excise rises, and increased illicit trade. Profit was up as a result of exchange rate movements and price increases, partially offset by lower volumes and higher marketing investment.
Profit grew strongly in Japan, benefiting from increased margins, exchange rate movements and lower overheads. Although industry volumes were down, following the excise rise on 1 October 2010, market share grew. Kent returned to share growth, driven by the successful launch of Nanotek, and Kool continued to grow share.
Vietnam had a solid performance with market share gains and good volume growth, mainly due to Craven 'A'.
South Korea closed the year with market share at a record high, supported by the successful launch of Kent and the growth of Dunhill in the second half of the year. However, volumes were lower due to the contraction of the industry. Profit decreased as a result of lower volumes and investment into the launches of Kent and Dunhill innovations.
Excise and inflation-led price increases in Pakistan, combined with supply chain disruption caused by floods, led to lower volumes and accelerated down-trading to the Low-Price segment and the illicit sector. Profit was adversely affected by the mix deterioration, increased costs and lower volumes.
Bangladesh achieved significantly higher market share. Operating profit was higher, reflecting improved volumes and the impact of excise-led price increases, as well as a tight control on costs.
Volumes, market share and profit in Indonesia grew through the acquisition of Bentoel and the subsequent integration with the existing business. Profit grew strongly on a comparable basis as a result of higher volumes, price increases and synergy savings resulting from the integration.