Tobacco companies worldwide faced tighter government restrictions on smoking and cigarette advertisements last year, as well as declining numbers of smokers and higher taxes.

Yet shares of the three biggest companies – Altria Group Incorporated, British American Tobacco, and Japan Tobacco Incorporated – are surging to record highs. Profits are rising as cigarette makers expand in poorer countries such as Indonesia and Russia, where smokers are switching to more expensive brands. The addictive nature of nicotine also helped manufacturers raise prices, something most consumer-goods companies are struggling to do.

“These companies have a nice exposure to emerging markets,” said Concepcion Moreno, who helps Brussels-based Petercam Asset Management oversee $14.2 billion, including shares in Altadis SA, British American, and Imperial Tobacco Group Plc. “This is also an industry with very inelastic demand. The pricing power is strong.”

Altria’s shares returned 28% last year including dividends. London-based British American advanced 52% and Japan Tobacco of Tokyo jumped 49%, also including dividends.

Sweden banned smoking in restaurants in June, and Spain approved a workplace smoking ban that took effect on Sunday. Britain and Germany raised tobacco taxes in 2005. Nine American states also increased cigarette levies, according to a Citigroup analyst, Bonnie Herzog.

“Even though governments have been attacking tobacco companies, there’s still a hard core of smokers,” said David Liston, who helps Barclays Private Clients in London manage about $34.5 billion.