Profit in Latin America increased by £78 million to £759 million, mainly as a result of an excellent performance in Brazil and exchange rate movements. At constant rates of exchange, profit would have increased by £25 million or 4 per cent. Volumes were down2 per cent at 147 billion after declines in Mexico and Venezuela.
In Brazil, profit grew strongly, benefiting from higher margins, an improved product mix and a stronger local currency. Market share increased on volumes in line with last year. Leaf export results improved substantially, benefiting from higher volumes, higher pricing and the appreciation of the US dollar.
Volumes in Mexico were lower, resulting in a reduced market share. A price increase in January was not sufficient to fully recover the earlier excise increase and, combined with higher marketing investment behind the GDBs, resulted in a reduced profit.
In Argentina, profit rose mainly as a result of a stronger local currency. Higher margins and an improved product mix, due to the good performance of Lucky Strike, were offset by higher variable costs and higher salaries due to inflationary pressures.
In Chile, volumes were slightly up with the strong growth of Kent and Lucky Strike, while profit was higher due to price increases and product mix benefits, partially offset by higher marketing investment.
In Venezuela, volumes were lower following high excise-driven price increases in the last quarter of 2007 and price rises in 2008. Increased illicit trade resulted in a lower market share, adversely affecting profit.
Volumes in the Central America and Caribbean area were down as a result of lower industry volumes and the resurgence in illicit trade. However, profit increased as margins improved and the local currencies strengthened.