Scandinavian Tobacco Group (STG)—arguably the most important company in the U.S. cigar business—generated DKK 1.963 billion ($285.46 million) in revenue during Q1 2023, a 1.3 percent increase compared to the first quarter of 2022. EBITDA, a form of profit, was DKK 474 million ($68.93 million), a margin of 24.1 percent compared to 27.4 percent in the same quarter of last year. Free cash flow before acquisitions was DKK -179 million (-$26.03 million) compared to a DKK 129 million surplus the year before.

While the numbers may not seem all that exciting, this was a rather eventful quarter for STG due to two acquisitions. In February, it purchased Alec Bradley for $72.5 million and last month, it announced an agreement to purchase XQS, a Swedish manufacturer of tobacco-free nicotine pouches, in a deal that could be worth around $22 million. STG, which is publicly traded on the NASDAQ Copenhagen, has a large premium cigar portfolio that includes retailers such as Cigars International,,, Thompson Cigar, and Cigora. It also owns 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 Agio, Alec Bradley, CAO, Macanudo, Room101, and Toraño. STG also has a strong machine-made cigar business, especially in Europe, as well as units that include pipe tobacco, roll-your-own and tobacco-free nicotine products.

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

“STG remains on track to deliver on the 2023 guidance with results for the first quarter being up against strong comparisons in 2022,” said Niels Frederiksen, ceo of STG, in an announcement. “We have stabilized our production issues, but we are still recovering from this impact as well as cost inflation into 2023, affecting margins negatively. The Group is making good progress on our ambition to grow the size of the company with two transactions announced within the last few months.”

In a notice to investors, STG confirmed what many other cigar companies are talking about: sales in the U.S. are once again in decline. Here’s what STG had to say:

Uncertainties relating to key assumptions like consumer behaviour and cost inflation remain moderately high, however year-on-year impacts from cost inflation are expected to decline over the coming quarters.

Consumer demand for handmade cigars in the US in the quarter is still perceived as resilient, although volume declines remained above its structural decline trend as overflow from the exceptionally strong two years during the pandemic trails off. Price increases across most product categories supported the financial performance.

While imports of premium cigars to the U.S. reached record levels in 2022, there’s evidence that consumers have not been purchasing the cigars at the same rate. That has meant that supplies of cigars at retailers—both internet-focused and brick-and-mortar stores—have continued to increase back toward pre-pandemic levels. Many companies have told halfwheel that April was a poor sales month and some cigar companies are offering retailers discounts that are similar to pre-pandemic incentives. STG has repeatedly said that it believed that prior to COVID-19, the U.S. handmade cigar business would decline around 1 percent per year. The COVID-19 pandemic reversed those trends, but STG told its investors it expected it to be temporary. It predicted that handmade cigar sales would decline in 2022 though said that the boost of sales during COVID-19 had meant that the starting point for future decline had been reset to a higher level, meaning the cigar sales are better off today than where it would have been had COVID-19 not happened.

As for price increases, halfwheel has found that the majority of cigar companies, including STG, have increased prices in the last six months.

STG’s guidance for 2023 remains unchanged:

  • 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

Shares of STG closed down 2.19 percent following the announcement.

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Charlie Minato

I am an editor and co-founder of 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.