Annual report 2010 - Imperial Tobacco Group

Blondes. In the Middle East, we again grew our marketshares notably with Davidoff in Saudi Arabia, while in Turkeywe posted gains with West driving market share higher.Eastern EuropeIn Eastern Europe, cigarette volumes in our major marketsof Russia and Ukraine have declined, impacted by risingunemployment due to the economic conditions and dutyincreases. However, pricing has been positive throughoutthe region and we delivered strong revenue growth. In Russia,although our overall market share was down to 8.3 per cent(2009: 8.6 per cent) impacted by declining volumes of our lowmargin value brand Balkan Star, we have delivered a positiveperformance with Davidoff supporting our increased share ofthe superslims segment and with Maxim in the value cigarettesegment. In Ukraine, we have also had success with Davidoffwith volumes up almost 50 per cent and our overall marketshare improving to 20.8 per cent. Other regionalbrand highlights include growth in West and Style.Asia PacificIn Asia Pacific, we have delivered an excellent performance withmarket share, volume and profit growth. In Australia and NewZealand, we posted market share growth to 17.5 per cent and18.5 per cent respectively (2009: 16.2 per cent and 18.3 percent), driven by JPS. We have recently introduced a number ofnew JPS variants to further build on this momentum. We grewshare in Cambodia and Laos. In Taiwan, we have deliveredmarket share growth to 11.0 per cent (2009: 9.9 per cent)with Davidoff, West and Boss.Following our agreement signed with KT&G earlier thisyear, we are pleased with the progress we have made withDavidoff in South Korea. In addition, in India our import anddistribution agreement for Davidoff signed in May has madea positive start.CigarWe have made encouraging progress with our luxury Habanoscigar portfolio and have grown volumes, sales and profits.Despite the economic climate we have achieved good resultsin a number of markets in Western Europe, Africa and theMiddle East and Asia Pacific and launched a number of limitededitions and exclusive series, enabling us to continue to buildon the positive momentum we have achieved.OutlookThere are many opportunities for us to grow sales and profitsin this region.In Eastern Europe, we are investing to develop our sales forceand distribution capabilities. We will continue to build on themomentum we have achieved with Davidoff while ensuringour product portfolio is positioned to maximise our growth ingrowing segments such as superslims and kingsize superslims.In Africa, we continue to develop our important regional brandssuch as Excellence and Fine, while in the Middle East we arefocused on further enhancing Davidoff and Gauloises Blondesin the region. In Asia Pacific we are further building our positionin our two major markets of Australia and Taiwan.We will continue to effectively leverage our portfolio acrossthe many markets in this region, while seeking to use ourpartnering credentials to further develop our market footprint.LogisticsOverviewOur logistics business comprises operations in Spain, France,Italy, Portugal and Poland which cover several products andchannels. Our logistics business is one of the largest of itskind in Europe, with more than 40 million deliveries per yearand reaching around 300,000 delivery points across Europe.The point of sales served include tobacconists, conveniencestores, bakeries, grocery stores, kiosks and bookshops,pharmacies, hospitals and petrol stations.Our strategy is to further consolidate our leading positionsand focus on our core profitable activities while wideningthe product offer to the points of sale that we reach andincreasing the channels and countries that we access.Current economic conditions have presented us withchallenges and we have continued to effectively managethese with our diligent approach to cost management.We offer services across the whole logistics value chain toour customers, including order reception, storage and stockmanagement, order preparation, transport and distribution,invoicing and collection and customer services.Performance Highlights:Rest of the WorldWe made gains with Davidoff,West and JPS in a number ofmarkets in Asia Pacific, theMiddle East and Eastern Europe.39