bat plc annual report 2007 - Asia-Pacific
"2007 was a strong year with good Global Drive Brand and overall volume growth, productivity savings, improved distribution effectiveness to the retail trade and a strengthened talent pipeline."
John DalyDirector, Asia-Pacific
In Asia-Pacific, profit rose by £56 million to £672 million, mainly attributable to strong performances from Australasia, Vietnam, Pakistan and Bangladesh, despite the adverse impact of exchange. At comparable rates of exchange, profit would have increased by £66 million or 11 per cent. Volumes at 145 billion were 2 per cent higher as a result of strong growth in Pakistan, South Korea and Vietnam, partially offset by declines in Malaysia and Bangladesh.
In Australia, profit growth was achieved with improved margins from product cost reductions and price increases. Market share grew with good performances from Dunhill, Pall Mall and Winfield. In New Zealand, strong competition affected market share and profit but Pall Mall and Dunhill showed good growth.
In Malaysia, the strong performance of Dunhill and, more recently, Pall Mall, resulted in growth in their respective price segments with Dunhill increasing overall share. However, the large excise increase in July 2007 impacted industry volumes which were already declining due to high levels of illicit trade and total market share was lower. Profit was slightly lower as a result of increased marketing expenditure and lower volumes which more than offset the benefits of higher pricing and an improved product mix.
Share gains for Dunhill across Asia-Pacific
For the second year in a row, Dunhill delivered an additional one billion sticks with over 4 per cent volume growth in 2007.
There were strong performances in the key markets of South Korea, Malaysia and Australia.
The roll-out of the global strategy across Asia-Pacific is led by Dunhill Fine Cut, launched in South Korea and Malaysia. In South Korea, it was successfully introduced as a Super Slim product.
Both launches enhanced the image of the House of Dunhill and strengthened the brand’s premium qualities and attributes.
Volumes and market share rose in South Korea, with Dunhill continuing to grow strongly. However, the positive impact of higher volumes, margins and supply chain savings were offset by increased marketing investment and a weaker local currency. In Taiwan, volume and profit rose due to a strong performance from Pall Mall, increased prices and cost reductions.
Pakistan continued its strong volume growth with Gold Flake the major contributor. Overall market share increased confirming our market leadership. Higher volumes, price increases and effective cost management led to an impressive profit performance. In Bangladesh, despite lower volumes due to the growth of the Value-for-Money segment, profit increased as a result of improved pricing and product mix.
In Sri Lanka, profit and market share continued to grow although overall volumes declined due to the security situation and price increases.