Swedish Match has revised downward its third-quarter and full-year forecasts for its Other Tobacco Products segment following increased competition on the U.S. cigar market.
In a press note dated Oct. 11 and posted on its website, the company said that, as part of its January–June half-year 2013 report, it had stated: “For the full year of 2013, we anticipate higher sales and operating profit for U.S. cigars, driven by strong volume growth. However, due to pricing and promotional activities now planned in light of increased competition, operating profit growth is more uncertain and is expected to be modest.”
But in its Oct. 11 note it said that during recent months, “competitive activities for U.S. cigars” had intensified further, which had resulted in lower than expected volumes and operating profit for its U.S. mass-market cigar business in the third quarter.
“Given this development, we now anticipate operating profit for the Other Tobacco Products segment in the third quarter to be in the range of 50–60 MSEK [SEK50–60 million] below the third quarter of the prior year,” the note said. “As a result 2013 full-year operating profit for Other Tobacco Products will also be below the level of 2012, driven by a decline in our mass-market cigar business.”