STG Reports Increased Revenue & Profits in 2020, Stock Hits Record High

Scandinavian Tobacco Group (STG)—the parent company of Cigars International, General Cigar Co. and others—said it met its sales and EBITDA targets in 2020.

The company generated DKK 8.006 billion ($1.28 billion) in revenue, a 6.6 increase compared to 2019, and DKK 1.826 billion ($290 million) in EBIDTA—a form of profit—an increase of 14 percent compared to 2019.

It says that the coronavirus COVID-19 pandemic led to an increase in handmade cigar consumption in the U.S. and it also benefited from the integration of Agio Cigars, which STG acquired last year. STG says it expects the increased sale of handmade cigars due to the COVID-19 pandemic to continue in Q1 and Q2 before normalizing “thereafter on a level higher than pre-pandemic levels.”

“In a challenging year, we delivered a satisfactory financial performance with net sales of DKK 8,006 million, 14% organic EBITDA growth and free cash flow before acquisitions of DKK 1.4 billion,” said Niels Frederiksen, ceo of STG, in a statement. “We saw solid operational performance across all three divisions and we continued to deliver on all major efficiency initiatives ahead of time, but we also benefitted from an increased demand for handmade cigars in the US. A genuine team effort.”

In its annual report, the company said that it was interested in growing its handmade cigar business in North America, saying that it was “continuously evaluating the potential of further retail expansion.”

STG’s guidance for 2021 includes organic growth of EBITDA by greater than 7 percent.

The company also announced a proposed dividend of DKK 6.50 ($1.04) per share and a new share buy-back program, this time up to DKK 600 million ($96.12 million). Last month, STG completed a share buy-back program valued at DKK 300 million.

Shares of STG, which is traded on the NASDAQ Copenhagen, closed at DKK 126.10, up 11.49 percent. It briefly hit DKK 128.60, matching an all-time high for the stock, and marked the first time in over two years the stock was trading above DKK 120 per share.