Scandinavian Tobacco Group Announces 2016 Financial Report, Proposes Dividend

It’s been a little more than a year since Scandinavian Tobacco Group (STG) went public and today the company announced its fiscal numbers for its first year as a traded company.

The company reported 6.746 billion DKK ($973.8 million USD) in revenue, a .2 percent increase compared to the previous year. Profitability increased 2.1 percent to 681 million DKK ($98.3 million) while EBITDA increased by 2.6 percent to 1.279 billion DKK ($184.6 million). EBITDA is the earnings before interest, tax, depreciation and amortization, an accounting benchmark used to measure a company’s profitability in a specific year.

STG is the parent company of General Cigar Co., which sells the CAO and Macanudo brands globally as well as Cohiba, Hoyo de Monterrey, La Gloria Cubana and Partagas brands in the U.S. It is also the owner of Cigars International and its affiliated brands Cigar.com and Cigar Bid.

“2016 was a year of solid performance,” said Niels Frederiksen, ceo of STG, in a statement. “We improved our EBITDA and had a strong free cash flow on the base of flat net sales. The performance reflects our plans and efforts. We continue to grow our handmade cigars business and see further opportunities to outperform total markets in Americas that now represents close to half of our business.”

Frederiksen also said the company plans on implementing its cost optimization and efficiency plans by the end of 2017, one year ahead of schedule. The company intended on cutting 500 million DKK, around $72 million through this program.

STG stock opened at 100 DKK per share and closed Wednesday at 122.50 DKK, it has not closed below the 100 DKK mark. It is traded on NASDAQ Copenhagen.

Handmade cigar sales are up, 6.9 percent in sales and 6.7 percent in total profit. STG reported 2.067 billion DKK ($298.4 million) in total handmade cigar sales, up from 1.935 billion DKK the year before. The company’s machine-made cigar business, which accounts for 38.4 percent of sales, was down 4.2 percent in sales and 7.2 percent in profit.

STG reported a gross margin of 43.7 percent on its handmade cigars, up slightly from 43.6 percent the year before.

A divided of 5.50 DKK (79 cents) per share has been proposed.

Frederiksen has warned that 2017 might not be as successful of a year with EBITDA growth projected lower than 2016.

“During the first months of 2017, our online and catalogue retail business in the US implemented new IT infrastructure and warehouse management systems. The imple- mentation has caused significant interruptions of a temporary nature in our sales, invoicing and customer service that will affect our full-year 2017 performance. As a con- sequence, we expect growth in EBITDA to be somewhat lower than the previous year. We are confident, though, that the IT implementation is close to completion and we expect to deliver 1-3% organic EBITDA growth in 2017.”