Sales Down at Scandinavian Tobacco

Scandinavian Tobacco Group (STG) delivered 3.9 percent negative net sales growth, an EBITDA margin of 26.5 percent and a free cash flow before acquisitions of DKK622 million ($89.36 million) for the third quarter of 2023. For the first nine months of 2023, net sales decreased by 1.8 percent to DKK6.5 billion, the EBITDA margin was 24.6 percent and the free cash flow before acquisitions was positive by DKK602 million.

Consumer trends for the cigar categories remained unchanged throughout the third quarter, according to STG. Decreasing volumes were partly offset by pricing and increasing sales from growth enablers, such as retail stores, next-generation products and international sales of handmade cigars.

STG anticipates net sales growth to recover in the fourth quarter, primarily as a result of the positive trend in North America online and retail, along with growth in Europe and comparison to a soft fourth quarter last year. The EBITDA margin is expected to be somewhat lower than in the fourth quarter last year as a result of category and country mix combined with higher investments in the growth enablers and in stabilizing the market share development in Europe branded. The main uncertainties to the full-year expectations remain the volume development in Europe branded and inventory adjustments with customers in the U.S.  

STG’s board of directors has approved a share buyback program of up to DKK850 million running to the end of February 2025. “With the performance in the third quarter, we are on track to deliver on our revised guidance from August with both cash flow and margin recovering in the quarter,” said CEO Niels Frederiksen in a statement.

“Although key uncertainties persist, we continue to make good progress in the online business, and the growth enablers are also performing well. Whereas the market share for Europe branded continued to decline, we remain confident that the more aggressive initiatives launched over the past few months will support a stabilization.”