Scandinavian Tobacco Group has suspended financial guidance for 2020 as a result of the global outbreak of the coronavirus and the uncertainty and lack of transparency it has created.
“As authorities across the world are implementing measures to contain and fight the spread of the coronavirus, we are seeing more and more restrictions to consumer movement, which affects normal purchase and consumption patterns,” the company wrote in a press release.
“This leads to a situation where we have significantly less transparency on consumer behavior and consumption, and retail customers are changing behavior as they try to respond to the constantly changing environment. As the situation develops from day to day in countries around the world, we are currently unable to accurately assess the short-term impact of these developments on our business.
“Hence, we are suspending our financial guidance for 2020 pending further clarification of the general situation, market developments and the impact on our business. We expect consumer behavior to normalize following the pandemic situation and consider the effect on our business temporary,” the statement said.
“We have a fundamentally resilient business with healthy earnings and strong cash flows,” said Niels Frederiksen, CEO of Scandinavian Tobacco.
“I am confident that we are in a good position to deal with the issues we are facing, and we are dedicating all our efforts to navigating through an uncertain period where we both have to protect our employees, our customers and our business.”
The company still expects to provide further financial insights into the impact of the acquisition of Agio Cigars when the integration planning period has been finalized. The decision to initiate a share buyback program in 2020 of a total value of up to DKK300 million ($43 million) is unchanged, although the timing of the initiation may be affected.
The board of directors’ proposal for an ordinary dividend for 2019 of DKK6.10 ($0.87) per share remains unchanged. Scandinavian Tobacco will present its interim report for the first quarter of 2020 on May 20, 2020.