In the first quarter of 2020, Scandinavian Tobacco Group delivered net sales of DKK1.79 billion ($263.56 million), showing an organic net sales growth of 5 percent. The first quarter of 2020 includes the integration of Agio Cigars.
The company has updated its 2020 financial guidance after seeing the outcome of the first quarter and gaining a better understanding of how Covid-19 may affect the company in the coming quarters. It expects the EBDITA to grow more than 2 percent and free cash flow to be about DKK850 million.
The guidance is based on assumptions of a moderate decline in organic net sales growth for the full year with the highest decline in organic net sales growth in the second quarter and a gradual normalization over the third and fourth quarter as markets reopen and with no material disruptions to the supply chain. The company expects a contribution from cost savings in relation to the integration of Agio Cigars of about DKK70 million to DKK80 million in 2020 as well as further benefits from the Fueling the Growth program. Special costs are expected to be about DKK415 million to DKK435 million, including a noncash impairment charge of DKK109 million. The intention to initiate the previously announced share buyback program at a total value of up to DKK300 million remains unchanged.
“In the middle of a unprecedented global pandemic with a high degree of volatility and uncertainty in most markets, we are able to present a solid result for the first three months of 2020 with net sales growth and a strong cash flow as well as we have revealed the plans for creating significant value with the integration of Agio Cigars,” said Niels Frederiksen, CEO of Scandinavian Tobacco.