Swedish Match will hold its annual general meeting on April 13.
Due to the continued Covid-19 pandemic, the meeting will be conducted pursuant to so called mail-in procedures, meaning that no shareholders will attend the gathering in person or through proxy. Instead, shareholders can participate in the meeting by voting and submitting questions in advance pursuant to the instructions described here.
Swedish Match posted record sales and operating profit in 2020, finishing the year with top-line growth across all product segments.
Performance was driven by strong traction for ZYN nicotine pouches in the U.S. along with double-digit operating profit growth in local currencies for the smoke-free and cigar product segments in both the full year and the fourth quarter, the company announced in February.
Vector Group reported revenues of $554.6 million in the fourth quarter of 2020 compared to revenues of $439.6 million in the fourth quarter of 2019. The company recorded operating income of $87.3 million in the fourth quarter of 2020 compared to operating income of $45.6 million in the fourth quarter of 2019. Net income attributed to Vector Group for the fourth quarter of 2020 was $32.3 million compared to net income of $10.7 million in the fourth quarter of 2019.
For the year ended Dec. 31, 2020, revenues were $2 billion compared to revenues of $1.9 billion for the year ended Dec. 31, 2019. The company recorded operating income of $245.1 million for 2020 compared to operating income of $231.1 million for 2019. Net income attributed to Vector Group for 2020 was $92.9 million compared to net income of $101 million for 2019.
For the fourth quarter of 2020, the tobacco segment had revenues of $286.1 million compared to $260.3 million for the fourth quarter of 2019. For the full year of 2020, the tobacco segment had revenues of $1.21 billion compared to $1.12 billion for 2019.
Operating income from the tobacco segment was $79.7 million and $319.5 million for the three months and the full year 2020, respectively, compared to $60 million and $261.6 million for the three months and year ended Dec. 31, 2019, respectively.
“Vector Group’s strong fourth quarter results reflect our ongoing commitment to creating long-term stockholder value,” said Howard M. Lorber, president and CEO of Vector Group, in a statement. “We are pleased that both our tobacco and real estate segments reported significant increases in operating income this quarter, including record operating income at Liggett, which is well into the income growth phase of its Eagle 20’s brand strategy.”
Imperial Brands is cutting CEO Stefan Bomhard’s performance-linked pay in response to shareholders’ concerns over his remuneration package, reports Reuters.
Bomhard and the remuneration committee have agreed that the value of his 2021 long-term incentive plan award will be cut to 315 percent from 350 percent of his salary.
Around 40 percent of shareholders voted against the directors’ remuneration proposal during Imperial Brand’s annual general meeting earlier this month.
The shareholder revolt over Bomhard’s salary came as it was “significantly larger” than his long-running female predecessor, reported The Times.
When Imperial Brands announced Bomhard’s appointment in February last year, it said he would receive an annual salary of about £1.3 million ($1.82 million) and a pension allowance equivalent to a maximum of 14 percent of salary and other usual benefits.
Since joining, the former Inchcape executive has promised to boost the company’s performance by bringing in new talent, changing incentive structures and sharpening focus on top markets.
In 2017, Imperial Brands shareholders balked a proposal to increase the salary of then-CEO Alison Cooper to almost £8.5 million annually from £5.5 million.
Schweitzer-Mauduit International (SWM) reported sales of $1.07 billion in 2020, up 5 percent from 2019. GAAP operating profit was $128.8 million, or 12 percent of sales, down 4 percent. Adjusted operating profit was $171.6 million, or 16 percent of sales, up 8 percent.
“We are very proud of the performance of our business in a year marked by volatility and uncertainty,” said SWM CEO Jeff Kramer. “We delivered another year of adjusted EPS [earnings per share] growth to $3.68, over $128 million of free cash flow, and exited the year with strong organic sales momentum in AMS [advanced materials and structures].”
In the engineered papers segment, SWM reported sales of $530.9 million in 2020, down 3 percent from 2019, with immaterial currency impacts.
A volume decline of 3 percent was partially offset by positive price/mix performance of 1 percent. Price/mix benefited from a higher mix of high-value cigarette, heat-not-burn, and battery separator papers and a smaller proportion of lower margin nontobacco volumes compared to the prior year period. The 2020 volume decline was driven primarily by the continued strategic deemphasis of lower margin nontobacco volumes while tobacco-related papers declined modestly, in line with industry attrition.
GAAP operating profit was $116.8 million, down 2 percent, and included the $16.2 million of restructuring and site closure expenses. During the third quarter, SWM reached an agreement with a large customer to shift production of papers purchased from the company’s Spotswood, New Jersey, USA, site—which exclusively served this customer—to other SWM facilities. As part of the transition, SWM worked collaboratively with the customer to co-develop a new production technology to better meet the customer’s needs, and SWM and the customer signed a new multi-year supply agreement.
SWM shut down the Spotswood facility during the fourth quarter, and for full-year 2020 incurred $11.7 million of restructuring and related site closure costs, which are excluded from adjusted financial metrics.
Altria Group has reaffirmed its guidance for 2021 full-year adjusted diluted earnings per share (EPS) to be in a range of $4.49 to $4.62, representing a growth rate of 3 percent to 6 percent from an adjusted diluted EPS base of $4.36 in 2020.
Speaking at the virtual Consumer Analyst Group of New York Conference on Feb. 17, CEO Billy Gifford, and CFO Sal Mancuso discussed how Altria is “moving beyond smoking,” advancing its 10-year vision and continuing to focus on environmental, social and governance (ESG) initiatives to create long-term shareholder value through sustainability.
“The pursuit of our vision is about sustainability and businesses that are aligned with the responsibility expectations of our stakeholders,” said Gifford. “We have an unmatched portfolio of noncombustible products in the U.S. market today that we’re rapidly expanding, we’re investing in research and development on innovative noncombustible products and we believe we can continue to deliver significant value for our shareholders while moving beyond smoking.”
In its presentation, Altria announced its new corporate responsibility focus areas and shared examples of its continued ESG leadership. Altria published the first in a series of corporate responsibility progress reports: Engage and Lead Responsibly. This report details Altria’s new 2025 corporate responsibility goals.
British American Tobacco (BAT) reported revenue of £25.78 billion ($35.69 billion) and profit of £9.96 billion in its preliminary announcement for 2020. The figures are down 0.4 percent and up 10.5 percent, respectively, over those of 2019. Operating margin improved 380 base points to 38.6 percent.
Jack Bowles
“As the largest, and only truly global company in our industry, we take seriously our role to transform ourselves and demonstrate thought leadership,” said BAT CEO Jack Bowles. “We have a clear purpose to reduce the harm footprint of our business. We are uniquely positioned to encourage the switch to reduced-risk products.
“We operate worldwide, including the U.S., which represents 40 percent of the global industry’s value. Our well-embedded consumer-centric, multi-category strategy is activated on a global scale, leveraging our insights on consumer satisfaction, innovation needs and taste preference. We are building the brands of the future—strong, global brands, specifically positioned in each target consumer segment.”
The number of people consuming BAT’s noncombustible products grew by 3 million to 13.5 million in 2020, doubling the rate of consumer adoption in the second half of 2020. A fifth consecutive year of value share growth in combustibles enables the company to increase its investment in “new category” products by £426 million compared to 2019.
Initiatives aimed at driving efficiencies and simplifying the company delivered £660 million of cost savings, putting BAT well on track to achieve its target of £1 billion of savings by 2022.
“We are committed to reducing the health impact of our business whilst delivering sustainable results that create long-term multi-stakeholder value,” said Bowles.
ITC reported a net profit of INR36.29 billion ($504.14 million) for the three months ending Dec. 31, 2020, down 3.7 percent from comparable 2019 quarter. Gross revenue stood at INR124.92 billion, up 5 percent and driven mainly by the Indian company’s agribusiness and other fast-moving consumer goods segment.
Cigarette volumes and revenue witnessed strong sequential recovery during the reporting period, led mainly by urban markets on the back of progressive easing of Covid-19-related restrictions and enhanced mobility.
ITC launched several new brands of cigarette variants, including Gold Flake Neo, Classic Connect, American Club Clove Mint, Gold Flake Indie Mint and Capstan Fresh Flavour, catering to evolving consumer preferences.
“The operating environment remained challenging even as economic activity picked up pace progressively during the quarter with the easing of restrictions and increased mobility,” ITC wrote in a press statement. “High frequency lead economic indicators pointed to green shoots of recovery in aggregate demand and supply, leading to upward revisions in GDP growth estimates for FY 2020 to [20]21.”
A 13 percent tax hike that came into effect in February 2020 continues to weigh on legal industry volumes, according to ITC. “Wide availability of smuggled cigarettes continues despite deterrent actions and heightened levels of seizures by concerned authorities,” the company wrote.
In its Union Budget 2021, India’s central government kept the cess and taxes on tobacco unchanged.
With a share of nearly 80 percent, ITC is the undisputed market leader in India’s factory-made cigarette segment.
Philip Morris International (PMI) wants smokefree products to account for more than half of its revenues by 2025, up from its earlier target range of 38 percent to 42 percent. The new goal was announced during PMI’s 2021 investor day on Feb. 10., a virtual event broadcast from the company’s operation’s center in Lausanne, Switzerland, during which senior management presented PMI’s business strategies and growth outlook.
The company shared its 2021 to 2023 targets, including net revenue and adjusted diluted earnings per share (EPS) compound annual organic growth of more than 5 percent and 9 percent, respectively, and 2023 heated-tobacco unit shipment volume of 140 billion units to 160 billion units.
PMI plans to launch IQOS ILUMA, the next generation of its IQOS heat-not-burn product featuring internal heating based on Smartcore induction technology, in the second half of 2021.
In addition, the company intends to launch IQOS VEEV, its MESH technology vapor product, in more than 20 markets this year. PMI expects to commercialize IQOS in a total of 100 markets by the end of 2025, up from 64 markets at the end of 2020.
Also at the investor day, PMI announced its target of at least $1 billion in net revenues from “beyond nicotine” products in 2025.
With the right regulatory frameworks, dialogue and support from civil society, the company said cigarette sales can end within 10 years to 15 years in many countries.
Andre Calantzopoulos
“In just five years, we have thoroughly transformed our company, building IQOS into a top-5 global nicotine brand—with nearly $7 billion in net revenues and over 17 million users across 64 markets—while maintaining our leadership position in the international cigarette category,” said PMI CEO Andre Calantzopoulos in a statement.
“We are now embarking on our next growth phase, further shifting to a better, more sustainable business by driving the development of the smokefree category and leveraging our leading commercial model, which places the consumer at the core, to switch more adult smokers to our smokefree products.”
“This next growth phase is underpinned by our unmatched portfolio of innovative products. We are very excited to announce the planned launch of IQOS ILUMA—the next generation of our IQOS heat-not-burn product featuring a new internal heating induction technology—during the second half of this year.”
“As outlined today, we are well positioned to deliver excellent top-[line] and bottom-line growth as well as strong shareholder returns. We now aim to be a majority smokefree product company by 2025, an important milestone toward our ambition to deliver a smokefree future, to the benefit of adults who would otherwise continue to smoke, society, the company and our shareholders.”
Philip Morris reaffirmed its full-year 2021 guidance for EPS in the range of $5.90 to $6. For the three-year period between 2021 and 2023, Philip Morris is guiding for net revenue and adjusted EPS compound annual growth of 5 percent to 9 percent. Cigarette volume is expected to decline in that period. Philip Morris stock has fallen 3.5 percent over the last year while the benchmark S&P 500 index SPX, -0.03 percent, is up 16.7 percent for the period.
A transcript and slides of the Investor Day are available at www.pmi.com/2021InvestorDay. An archive of the webcast will be available until 5 pm Eastern Time on March 11, 2021.
Net sales of Turning Point Brands (TPB) increased 31.2 percent to $105.3 million for the fourth quarter of 2020. Gross profit increased 321.8 percent to $51.8 million, partly due to certain restructuring expenses incurred in the prior year period. Net income increased $25 million to $12.7 million compared to the previous year’s fourth quarter. Adjusted EBITDA increased 80.9 percent to $25.8 million.
Net sales increased 11.9 percent to $405.1 million for the full year ending Dec. 31, 2020. Gross profit increased 38.7 percent to $189.6 million, partly due to certain restructuring expenses in the prior year period. Net income increased $19.3 million to $33 million, which includes premarket tobacco product application (PMTA)-related expenses from the fourth quarter of 2019 through the third quarter of 2020. Adjusted EBITDA increased 34 percent to $90.2 million.
Turning Point Brands has renamed its core business segments from Smoking Products to Zig-Zag Products and Smokeless Products to Stoker’s Products. Historical financial results are not impacted by the segment name change.
“Despite challenges related to Covid-19, our company remained focused on executing our plan throughout 2020 and finished the year strong with tremendous top-line growth in the fourth quarter,” said Larry Wexler, president and CEO, in a statement.
“The year was especially transformational for our Zig-Zag brand as targeted initiatives led to 22 percent growth for the full year as we repositioned it to be our fastest growing segment. Our Stoker’s segment delivered a second consecutive year of double-digit growth driven by incremental share gains in both product lines. Going forward, we expect Zig-Zag and Stoker’s to continue to be the backbone of our organic sales growth.
“NewGen managed to deliver a solid performance despite market disruption around the PMTA application process while creating long-term upside potential through its filed applications. We also had an active year of capital deployment with the acquisition of assets from Durfort as well as investments in the cannabinoid sector in Dosist and Wild Hempettes.
“Most recently, we successfully priced $250 million of senior secured notes, the latest step in the evolution of our capital structure, which gives us increased flexibility to scale the business through additional acquisitions and investments. Capitalizing on our strong momentum and increased liquidity, we expect another strong year in 2021.”
Swedish Match posted record sales and operating profit in 2020, finishing the year with top-line growth across all product segments.
Performance was driven by strong traction for ZYN nicotine pouches in the U.S. along with double-digit operating profit growth in local currencies for the smokefree and cigar product segments in both the full year and the fourth quarter, the company said in a press release.
Covid-19-related effects are estimated to have elevated sales and operating profit for the full year as well as in the fourth quarter.
In local currencies, sales increased by 15 percent for the fourth quarter and by 17 percent for the full year. Reported sales increased by 5 percent to SEK4.14 billion ($497.12 million) for the fourth quarter and by 13 percent to SEK16.7 billion for the full year despite significant strengthening of the Swedish krona during the year versus the U.S. dollar, the Norwegian krona and the Brazilian real.
In local currencies, operating profit from product segments increased by 23 percent for the fourth quarter and by 28 percent for the full year. Reported operating profit from product segments increased by 12 percent to SEK1.7 billion for the fourth quarter and by 23 percent to SEK7.16 billion for the full year.
Operating profit amounted to SEK1.65 billion for the fourth quarter and to SEK6.99 billion for the full year. The fourth quarter of 2019 included a non-cash impairment charge of SEK367 million related to the European chewing tobacco business.
Profit after tax amounted to SEK1.24 billion for the fourth quarter and to SEK4.89 billion for the full year. The full year 2020 includes a charge of SEK286 million following an adverse ruling in a tax case.
Lars Dahlgren
Referring to the challenges presented by Covid-19, Swedish Match CEO Lars Dahlgren described 2020 as “a year of adaptability.”
“The success that we experienced in 2020 would not have been possible without the tireless dedication and ingenuity of our employees, the long-forged relationships that we have with our vendors and the continued passion and trust that our customers and consumers place in Swedish Match and its brands,” he said.
Swedish Match’s full financial report is available here.
