Scandinavian Tobacco Group (STG) has released a new report detailing its second quarter 2024 performance. Highlights of this new report include a 6.3% increase in net sales, amounting to DKK 2.4 billion. This growth was driven by a 4.8% organic increase, primarily attributed to strong performances in handmade cigars and next generation products. Despite some challenges in the machine-rolled cigars and smoking tobacco product categories, the company’s overall results show positive momentum.
“The second quarter financial performance supports our expectation for the full year. During the past months, we have taken material steps in executing our strategy and to safe-guard our financial performance in challenging markets. The new commercial structure has been completed and we have taken additional steps to re-establish our market position in machine-rolled cigars and to improve our cost agility across the group. Further, the acquisition of Mac Baren strengthens our smoking tobacco business where the combination with our existing business will deliver meaningful synergies and good value for our shareholders,” commented Niels Frederiksen, CEO of STG.
Key financial highlights:
- Net Sales: The company’s net sales reached DKK 2,366 million, up from DKK 2,225 million in the same quarter last year. Organic growth was a key driver, alongside favorable exchange rates and the acquisition of the XQS brands.
- EBITDA Margin: The EBITDA before special items stood at DKK 580 million, reflecting an improved margin of 24.5%, up from 23.1% last year. This improvement was seen across all divisions, despite ongoing investments in growth initiatives.
- Adjusted EPS: Earnings per share were up to DKK 4.1 from DKK 3.5, signaling healthy profit growth.
- Free Cash Flow: STG generated a free cash flow before acquisitions of DKK 177 million, an increase from DKK 159 million the previous year.
Strategic Developments
One of the most significant developments for STG was the acquisition of Mac Baren Tobacco Company, finalized on July 1, 2024 [read more here]. This acquisition, valued at DKK 535 million, strengthens STG’s position in the global smoking tobacco market. Mac Baren’s portfolio, which includes pipe tobacco, fine-cut tobacco, and nicotine pouches, is expected to contribute positively to STG’s financial results and help STG continue to build in these segments of the premium tobacco industry.
Outlook for 2024
STG has maintained its financial guidance for 2024, expecting net sales to be between DKK 8.8 and 9.1 billion, with an EBITDA margin in the range of 22-24%. The company remains optimistic about continued growth in the second half of the year, driven by Handmade Cigars, Next Generation Products, and expansion in key markets like North America and Europe.
Overall, Scandinavian Tobacco Group’s second quarter reflects a robust financial performance and strategic progress, setting a strong foundation for the remainder of 2024. You can view the full report here.