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Asia Pacific

Key financials

2012 Reported
(restated)£ million
Exchange
£ million
Aquisitions and disposals
£ million
Organic movement
£ million
2013 reported
£ million
Reported movement
%
Net sales 1,501 4 116 46 1,667 11
Marketing spend 343 5 27 (5) 370 8
Operating profit before exceptional items 342 11 40 21 414 21
Exceptional items (10)       (1)  
Operating profit 332       413 24

"Asia Pacific grew net sales 3% having faced a difficult trading environment in Korea and the duty free channel. In Korea, the traditional on trade channel has declined. We have delivered a strong performance from Smirnoff and Guinness however these newer categories are not yet large enough to offset a 23% decline in Windsor and therefore net sales in Korea were down 17%. Our travel retail business slowed due to softness in spend by Chinese travellers and destocking which will improve performance in the new fiscal year. In the emerging markets of Asia, which now account for over 60% of net sales in the region, net sales were up 8%.

In South East Asia we continued to perform strongly with Johnnie Walker up 17% and double digit growth of Guinness. In China, despite weakness in the beverage alcohol sector in the second half, we delivered 7% net sales growth with a very strong performance from our super and ultra premium scotch brands which grew net sales 59% and gained 5ppts of share. In Taiwan, Japan, Australia and the Middle East we delivered good growth mainly driven by the performance of our scotch brands. Scotch is the biggest category in the region and the performance of our scotch brands across the region accounted for more than 50% of our top line growth. We have invested strongly behind our reserve brands which grew 17% and in December 2012 a new Johnnie Walker house opened in Beijing, which at four times larger than the Shanghai house is the world’s largest embassy for luxury scotch. We also expanded our regional footprint in the year with further investment in Indonesia, Sri Lanka and Nepal. The weakness in Korea and Asia duty free did have a negative impact on operating margin, however this was more than offset by the strong improvement in margin we achieved in the emerging markets as we leveraged both marketing and overheads, and in total operating margin for the region improved by 60bpts."

Gilbert Ghostine, President, Diageo Asia Pacific

  Organic volume movement *
%
Organic
net sales movement
%
Reported
net sales movement
%
Key markets and categories      
Asia Pacific (1) 3 11
South East Asia 5 14 13
Greater China 1 8 75
India (5) (2) (7)
Global Travel Asia and Middle East (1) (2) (2)
Australia (4) 3 4
North Asia (9) (11) (11)
       
Spirits (1) 3 14
Beer 3 9 7
Ready to drink (4) 2 2
       
The strategic brands:**      
Johnnie Walker 4 8 8
Windsor (20) (21) (19)
Smirnoff (8) 4 3
Baileys 3 8 9
Guinness 7 10 8

* Organic equals reported movement for volume except for Asia Pacific 2%, Greater China 30% and spirits 1% due to the Shuijingfang acquisition and Australia (3)% due to the termination of the distribution contract for Jose Cuervo.

** Spirits brands excluding ready to drink.

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