Net sales of Scandinavian Tobacco Group (STG) grew to DKK2.23 billion ($354.89 million) in the third quarter of 2020, up from DKK1.81 billion in the comparable 2019 period. EBITDA before special items was DKK614 million after 32.5 percent organic growth. The EBITDA margin was 27.5 percent.
STG attributed its performance in part to changes in consumer behavior following the outbreak of the Covid-19 pandemic in the second quarter of 2020, with high tobacco consumption continuing across product categories and markets. In addition to increasing demand for handmade cigars in the U.S., sales of pipe tobacco and fine cut tobacco have performed better in several markets.
While the increased cigar consumption in the U.S. is expected to continue in the near term, STG expects its financial performance in the fourth quarter to be negatively impacted by the loading of net sales in previous quarters and strong comparison numbers partly driven by the change in sales taxing in France in the fourth quarter 2019.
“We are able to present a very strong result for the third quarter with double-digit growth in net sales, EBITDA and cash flow, said STG CEO Niels Frederiksen in a statement. “However, we maintain our guidance for the full year as we expect our financial performance in the fourth quarter to be negatively impacted by phasing, a temporary increase in the OPEX ratio and strong comparisons numbers.”