Scandinavian Tobacco Group (STG), the parent company of Cigars International, General Cigar Co. and others, announced its annual results for 2018. The result shows a slight increase in revenue, a positive growth in EBITDA, but a decrease in profit.
The generated reported 6.718 billion DKK ($1.018 billion), an increase from 6.46 billion DKK in 2017. EBITDA, a form of profit, increased by 3.5 percent to 1.304 billion DKK ($197.74 million). Last year the company’s EBITDA decreased by 3.67 percent. Net profit was down to 666 million DKK ($100.99 million) from 794.8 million DKK the year before. It seems likely that the disparity between EBITDA and profit is likely the result of the company’s acquisition of Thompson Cigar Co. last year.
STG bought Thompson for $62 million, it said the retailer added roughly $100 million to its top line revenue in 2018.
“Our biggest category – the handmade cigars category – continues to perform well and remains an important growth driver for our company,” said Niels Frederiksen, ceo of STG, in a statement. “In 2018, we strengthened our position across the value chain in the handmade cigars category as we had a record year in the branded business, acquired online retailer Thompson Cigar and expanded our brick and mortar cigar superstore network. With these steps we are well-positioned for future growth and development in this category.”
The key metric seems to EBIDTA, which the company predicted would increase by 3 percent. Shares of STG, which is traded on NASDAQ Copenhagen increased slightly following the company’s report. It closed at 86.9 DKK, roughly $13.18.
Frederiksen said the company’s Fueling the Growth Initiative, a cost-cutting program that resulted in over 100 white-collar layoffs last year, will be able to deliver a savings of 250 million DKK ($37.91 million) by the end of 2021. STG expects that its EBITDA will show a greater than 5 percent organic growth in 2019.