Scandinavian Tobacco Group (STG) has announced its financial results for Q2 2020, one of its most positive quarters in recent memory.
The company said it generated DKK 2.097 billion ($335.4 million) in revenue, a 4.6 percent increase from the same period in 2019. EBITDA before special items, a measure of profit, was DKK 489 million ($78.21 million), an increase of 19.1 percent.
“Our strong performance in the quarter is based on an overall increased consumption of handmade cigars in the US as more people work from home and by the skills and hard work of our employees around the world who have been working diligently to mitigate the impacts of the pandemic and keep the business moving forward,” said Niels Frederiksen, ceo of STG, in a press release. “Additionally, a successful initial integration of Agio Cigars and the continued execution of Fuelling the Growth are also positively affecting our cost efficiency in the quarter.”
Earlier this month, STG raised its financial guidance for the year indicating strong Q2 results were likely to follow.
The company has also announced plans for a share buy-back program. STG says that it will purchase up to DKK 300 million ($47.98 million) worth of shares, which could increase its share capital from .32 percent of the company to 9.68 percent of the company.
Nordea, a Finnish bank, will lead the share buyback, which will take place from Aug. 31, 2020-Feb. 26, 2021.
STG is the parent company of General Cigar Co., Cigars International, Thompson Cigar, Agio and others.
The key highlights from Q2 are as follows:
- Net sales grew organically by 4.6% to DKK 2,097 million (DKK 1,782 million).
- EBITDA before special items was DKK 489 million (DKK 398 million) after 19.1% organic growth. The EBITDA margin was 23.3% (22.3%).
- Earnings Per Share (EPS) was DKK 3.1 (DKK 2.2) adjusted for special items.
- Free cash flow before acquisitions improved to DKK 425 million (DKK 243 million).
- Agio Cigars, which was acquired on January 2, 2020 contributed as planned.
- In the first 6 months of 2020, net sales grew 4.9% organically to DKK 3,852 million (DKK 3,212 million), and EBITDA before special items grew 21.0% organically to DKK 815 million (DKK 637 million) with free cash flow before acquisitions improving to DKK 547 million (DKK 316 million).