Scandinavian Tobacco Group (STG)—the parent company of Cigars International, Thompson Cigar, General Cigar Co. and, most recently, Alec Bradley—has announced its financial results for 2022. Because STG is publicly traded on the NASDAQ Copenhagen, it is forced to make disclosures that most cigar companies never make.

Given its immense size and focus on cigars, STG’s financial results are a uniquely important barometer for the cigar industry. In 2022, STG revenue was DKK 8.762 billion ($1.241 billion), an organic decline of .8 percent compared to 2021. STG says EBITDA before special items increased to DKK 2.27 billion ($321.75 million) down 3.5 percent. Both figures are actually up compared to the raw 2021 numbers—DKK 8.223 billion and DKK 2.233—however, when factoring in for organic growth, STG says each represents a decline.

Net profits in 2022 were DKK 1.476 billion ($209.21 million) up from DKK 1.391 billion in 2021.

These numbers are in line with STG’s financial estimates of -4 to 0 percent EBITDA growth and adjusted earnings per share of 8 percent, beating the company’s estimate of 5 percent. The company has proposed an ordinary dividend of DKK 8.25 ($1.17) per share.

For 2023, it has provided the following guidance:

  • Net sales in the range of DKK 9.0-9.3 billion
  • EBITDA margin before special items in the range of 24-25%
  • Free cash flow before acquisitions in the range DKK 1.2-1.4 billion
  • Adjusted EPS in the range of DKK 14.5-16.5

STG has consistently said that it considered the massive growth in 2020 and 2021 due to the pandemic to be a temporary phenomenon and it expected the cigar market’s growth to cool down in 2022. It confirmed as much in this year’s report but points out that because of the growth during the pandemic, the company’s estimate of 1 percent contraction per year is now being based on a higher starting point.

“The changes in consumer behavior for handmade cigars brought about by the pandemic have remained sustainable, and consumption in the US turned out to be resilient to the macro-economic developments during 2022. Hence, the demand for handmade cigars has returned to a declining trend, but from its new higher level well above pre-pandemic figures.”

QuarterNet Sales (In Millions of DKK)EBIDTA Before Special Items (In Millions of DKK)Free Cash Flow (In Millions of DKK)
Q3 20232,300Not Announced622
Q2 20232,200Not Announced159
Q1 20231,963474(179)
Q4 20222,185563530
Q3 20232,362631462
Q2 20222,278544143
Q1 20221,938532129
Q4 20212,012474307
Q3 20212,182627564
Q2 20212,156606434
Q1 20211,88352789
Q4 20201,992397238
Q3 20202,231914609

“In the current environment, I’m pleased we can deliver a solid performance for the fourth quarter and the full year, which is in line with our financial expectations,” said Niels Frederiksen, ceo of STG, in a statement. “In a challenging year, we have made good progress on our strategy ‘Rolling Towards 2025.’ Our vision is to become the undisputed and sustainable global leader in cigars and the recent acquisition of the Alec Bradley cigar business brings us one step closer to achieving this. Our ambition of becoming a larger company, to grow our EBITDA margin over time and to generate outstanding cash-flow are all important pillars for creating continuous shareholder value. I am confident we will make further progress in 2023 on our long-term strategy.”

STG says that 92 percent of its retail sales were done via online, catalog or telephone; whereas just 8 percent of sales were sold in its own retail stores. That latter number improved thanks to a shift towards pre-pandemic buying habits.

“After stellar development during the pandemic, we saw a normalisation of handmade cigar sales, with a decrease in sales and stable gross profit margins. Additionally, as consumers returned to the retail channel, we delivered strong performance in retail and wholesale. The number of active consumers (12 months) in the online business decreased by more than 10% as consumers continued to move back to physical retail.”

STG says its North American Online & Retail division—which includes Cigars International, Cigar.com, Cigarbid.com, Thompson Cigar, PipesandCigars.com and Cigora—had “almost 1 million active consumers” in 2022.

Net sales for this division increased 6 percent to DKK 2.778 billion ($322.9 million), though the organic sales growth was down 6.1 percent, which STG blamed on declines in online sales.

STG says it is continuing with its plan of adding 6-8 new Cigars International Super Stores by 2025; there are currently seven in existence.

Last month, STG rocked the cigar world with news that it was acquiring Alec Bradley for $72.5 million. The company makes it clear that it has no plans to slow down in terms of expansion.

We continue to look into opportunities to grow our business, strengthen our brand portfolio across categories and leverage our costs through successful mergers and acquisitions.

We work on strategic screenings of potential M&A targets in the cigar and Next Generation product categories, and geographical locations whilst in parallel strengthening the Group’s M&A playbook and transaction processes. This playbook allows us to have a detailed plan of how torun acquisitions and follow a defined process. The process within each strategic move is important to the business to ensure smooth transitions.

Our playbook comprises of three main elements (strategic screening, deal execution and integration), with the depth and details of these adapted according to the actual acquisition and its complexity. Strategic mergers and acquisitions play a critical role in our ultimate ambition to become the undisputed and sustainable global leader in cigars.

Other tidbits include that STG sold more than 10 million cigars outside of the U.S. in 2022 and that the company says that flavored tobacco product sales in the U.S. make up around 5 percent of the company’s sales and profits. The company also says it is investing in tobacco-free alternatives; recently, it launched STRÖM, a nicotine pouch.

In addition to its retail businesses, STG is the parent company of General Cigar Co. and Forged Cigar Co., which sell Cohiba, La Gloria Cubana, Partagas and other brands in the U.S. In both the U.S. and international markets, it sells CAO, Macanudo, Room101, Toraño and now Alec Bradley, as well as Agio, a large European machine-made cigar brand.

Overall Score

Avatar photo

Charlie Minato

I am an editor and co-founder of halfwheel.com/Rueda Media, LLC. I previously co-founded and published TheCigarFeed, one of the two predecessors of halfwheel. I have written about the cigar industry for more than a decade, covering everything from product launches to regulation to M&A. In addition, I handle a lot of the behind-the-scenes stuff here at halfwheel. I enjoy playing tennis, watching boxing, falling asleep to the Le Mans 24, wearing sweatshirts year-round and eating gyros. echte liebe.