british american tobacco p.l.c. annual report 2008 - Africa and Middle East

Profit in the Africa and Middle East region grew by £69 million to £536 million mainly as a result of the acquisition of Tekel and the good performance in Nigeria. At constant rates of exchange, profit would have increased by £76 million or 16 per cent. Volumes were 19 per cent higher at120 billion, following increases in Nigeria, Egypt and Saudi Arabia, coupled with the additional volumes from the acquisition of Tekel during the year. These increases were partially offset by the disposal of the Chesterfield trademark in South Africa.

In South Africa, profit was only slightly higher than last year, adversely impacted by the weaker exchange rate. In local currency, profit growth was achieved as a result of higher prices and an improved product mix, partially offset by the decline in volumes. Volumes and market share were lower following the termination of the Chesterfield trademark license agreement at the end of 2007. Dunhill and Peter Stuyvesant continued to deliver strong share performances, while Kent performed well after its migration from Benson & Hedges.

Profit in Nigeria increased as a result of good volume growth, a favourable exchange rate, an improved product mix, productivity benefits and higher margins.

In the Middle East, profit and volumes were higher due to the impressive growth of Dunhill in Saudi Arabia. Strong sales across the Caucasus led to volume, market share and profit increases as Kent performed well.

In Turkey, the acquisition of the cigarette assets of Tekel was completed in June 2008 and was successfully integrated with the existing business, which reached break even in 2008 following good organic volume growth. GDBs grew strongly with good performances by Kent and Pall Mall.