STG Announces Q1 2019 Results, 7.3 Percent Growth in Profit

Scandinavian Tobacco Group (STG)—the parent company of Cigars International, General Cigar Co., Thompson and others—announced its financial results for the first quarter of 2019.

While revenue growth is down 1.6 percent, the company says that EBITDA growth, a measure of profit, is up 7.3 percent. STG generated DKK 1.464 billion ($218.48 million), which is actually up compared to last year, though last year’s numbers did not include Thompson Cigar Co., which it acquired in January. EBIDTA before special items is DKK 239 million ($35.67 million), up from DKK 199 million last year.

“We are off to a good start to 2019 with overall good organic growth in EBITDA. Our handmade cigars continues to perform well in North America and in France the recovery plan for our machine-made cigars business is showing encouraging results,” said Niels Frederiksen, ceo of STG, in a statement. “During the quarter we have also taken important strides in the execution of our transformationall program Fuelling the Growth which have resulted in improved operational performance, increased cost efficiency and savings.”

STG’s new reporting practices means the company details performance in four of its key sectors:

• North American Online & Retail
• North American Branded
• Region Machine-Made Cigars
• Region Smoking Tobacco & Accessories

Two important categories for the cigar industry are the North American ones. The North American Online & Retail division includes Cigars International, Thompson Cigar Co., Cigar.com, CigarBid.com and other retailers, it accounted for 34 percent of STG’s total revenue and 19 percent of quarterly profits.

The North American Online & Retail generated DKK 496 million ($69.54 million), of which 80 percent of that was from the sale of handmade cigars. The company says that revenue growth is up 2.4 percent, 1.3 percent for just handmade cigars, while EBIDTA was DKK 50 million ($7.46 million).

General Cigar Co.’s performance is included in the North American Branded category, which accounted for 17 percent of revenue and 18 percent of STG’s total profit. Revenues from the Branded businesses were down 5 percent to DKK 257 million ($38.35 million) and profits were down to DKK 45 million ($6.72 million).

STG doesn’t detail just how much of those numbers represent General Cigar Co. Also included are the North American sales of machine-made cigars and smoking tobacco, which the company says were the main cause of the declines for the division.

For 2019, STG says it expects to show greater than 5 percent growth in profits, in large part thanks to its Fuelling the Growth initiative, a cost-cutting program aimed at saving DKK 250 million ($38.5 million) by the end of 2021.