STG Announces Strong Q3, Cigar Demand Increasing

Scandinavian Tobacco Group—the parent company of Cigars International, General Cigar Co. and other tobacco companies—has announced another strong quarter of financial results as tobacco consumption remains high during the coronavirus COVID-19 pandemic.

The company said revenue grow to DKK 2.231 billion ($353.6 million), up from DKK 1.846 billion from Q3 2019. It said that EBITDA before special items—a measure of profit—increased to DKK 614 million ($97.32 million), an “organic growth” of 32.5 compared to DKK 446 million in Q3 2019.

Its free cash flow increased to DKK 609 million ($96.52 million) and the company has bought back DKK 53 million ($8.4 million) worth of shares as part of a share buyback program that could be as much as DKK 300 million ($47.55 million).

“We are able to present a very strong result for the third quarter with double-digit growth in net sales, EBITDA and cash flow – and overall our performance in the first nine months of 2020 has been better than anticipated,” said Niels Frederiksen, ceo of STG, in a statement. “However, we maintain our guidance for the full year as we expect our financial performance in the fourth quarter to be negatively impacted by phasing, a temporary increase in the OPEX ratio and strong comparisons numbers.”

The company said that while demand for cigars in the U.S. remains strong, some of its other tobacco products could see weaker fourth quarter numbers. It also cited a change in sales tax in France as a potential issue for the fourth quarter.

Shares of STG, which is traded on the NASDAQ Copenhagen, are down roughly 3.5 percent.