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In Asia-Pacific, regional profit rose by £85 million to £616 million, mainly attributable to good performances in Australasia, Malaysia, South Korea and Pakistan. Volumes at 142 billion were 4 per cent higher as strong increases in Pakistan, Bangladesh, South Korea and Vietnam were partially offset by declines in Malaysia and Indonesia.
Profit grew strongly in Australia, as a result of improved margins from a combination of product cost reductions, price increases and a substantial reduction in overheads. Good performances from Winfield and Dunhill, and the launch of Pall Mall, contributed to a higher overall market share in a reduced total market. New Zealand also showed strong profit growth in local currency as margins increased but this was eroded by the weakening of the currency. Volumes were in line with last year despite the growth of Dunhill and Pall Mall and market share was slightly down.
In Malaysia, profit increased strongly due to productivity initiatives and higher margins, as well as the absence of one-off costs which reduced profit in 2005. Dunhill and Pall Mall grew market share but total volumes declined due to reduced industry volumes as a result of the growth of illicit trade and the impact of significant excise increases in the past two years. In Vietnam, volumes increased despite the higher prevalence of illicit brands. Pall Mall grew strongly following its launch in the middle of the year and Craven ‘A’ continued its growth. However, profit was lower as a result of increased marketing investment.
In South Korea, impressive profit growth was achieved from higher volumes and strong market share gains by Dunhill and Vogue, helped by supply chain cost reductions. Industry volumes increased, reflecting volume distortions last year as a result of the excise increases at the end of 2004. Volumes and market share grew in Taiwan, but profit was adversely impacted by higher marketing investment and down-trading after manufacturers’ price increases.
In Pakistan, market leadership was strengthened with excellent performances by Gold Flake and Capstan, resulting in a strong market share increase. Profit was up significantly with strong volume growth and higher margins. In Bangladesh, volumes and market share were higher while profit significantly increased, with improved margins after industry-wide price increases. In Sri Lanka, good profit growth was achieved with higher margins and an improved product mix.
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