Scandinavian Tobacco Group (STG) has released its financial results for the first quarter of 2025 and announced some adjustments to its full-year outlook, citing shifts in the U.S. market and global economic conditions.
Key Takeaways from Q1:
- Net sales were up 1.3%, totaling DKK 2.0 billion (approx. $290 million), boosted by the acquisition of Mac Baren and strong growth in nicotine pouches.
- Organic net sales (excluding acquisitions) were down 8.8%, largely due to a drop in handmade cigar sales in the U.S. and changes in how ZYN is distributed.
- Earnings (EBITDA) dropped 5.3%, impacted by supply chain transitions in Europe and investments in reclaiming market share.
- Despite lower earnings, free cash flow improved significantly compared to last year, a positive signal for long-term business strength.
Softer Sales in Q1
Handmade cigar sales in the U.S.—which make up a large share of STG’s premium tobacco business—softened in Q1, and the company is signaling cautious optimism about the months ahead. With the U.S. market accounting for 45% of STG’s sales, changes in consumer spending, retailer inventory decisions, and new tariffs on imported goods are forcing adjustments to projections.
2025 Outlook (Updated):
- Net Sales: DKK 9.1–9.5 billion (slightly reduced from DKK 9.2–9.7 billion)
- EBITDA Margin: 18–22% (from 20–23%)
- Free Cash Flow: DKK 0.8–1.0 billion
- Adjusted Earnings per Share (EPS): DKK 10–13 (down from 11–14)
The company says U.S. tariffs and a weaker U.S. dollar are behind much of the change. Price increases have been implemented to help offset these impacts. Meanwhile, STG is investing in new U.S. retail stores, factory upgrades, and the integration of Mac Baren, showing commitment to long-term growth despite short-term headwinds.
Stay tuned to premiumcigars.org for updates as more data and industry shifts unfold throughout the year.