Scandinavian Tobacco Raises its Guidance

Scandinavian Tobacco Group (STG) has raised its full year guidance. According to STG, the negative impact of the Covid-19 pandemic on the company’s business has been less profound than anticipated earlier in the year as tobacco consumption across markets and categories has displayed significant resilience.

“The current change in consumer behavior in the U.S. as more people work from home has resulted in a likely overall increased consumption of handmade cigars and a strong growth in the online business,” the company wrote in a statement.

“Combined with a stronger-than-anticipated resilience in sales volumes of machine-made cigars and smoking tobacco—and a continued strong internal cost focus—Scandinavian Tobacco Group can for the first six months of 2020 present 4.9 percent organic growth in net sales, 21 percent organic growth in EBITDA and a free cash flow before acquisitions of DKK547 million ($86.76 million).”

According to STG, financial performance also remains positively impacted by phasing in certain markets, which will affect the results in the second half of the year. “While visibility around the financial outlook remains lower than normal it is expected that the change in consumer behavior in the U.S. will continue for the rest of the year,” STG stated.

Based on the year-to-date numbers including a strong performance in the month of July, a successful initial integration of Agio Cigars and assuming no material disruptions to our supply-chain, the group has revised its full-year guidance as follows: EBITDA organic growth of more than 9 percent (previously: 2 percent-plus); and free cash flow before acquisitions: more than DKK1 billion (previously: about DKK850 million)

STG will announce its second-quarter results on Aug. 28, 2020.