STG Reports Q3 2022 Results, Guidance Unchanged

Scandinavian Tobacco Group (STG), the world’s largest cigar company, reported its financial results for Q3 2022.

Revenues were DKK 2.362 billion ($318.72 million), a decline of -1.4 percent organic growth according to the company. EBITDA before special items, a measure of profit, was DKK 631 million ($85.15 million), a decline of -6.2 percent.

Quarter	Net Sales (In Millions of DKK)	EBIDTA Before Special Items (In Millions of DKK)	Free Cash Flow (In Millions of DKK)
Q3 2023	2,300	Not Announced	622
Q2 2023	2,200	Not Announced	159
Q1 2023	1,963	474	(179)
Q4 2022	2,185	563	530
Q3 2023	2,362	631	462
Q2 2022	2,278	544	143
Q1 2022	1,938	532	129
Q4 2021	2,012	474	307
Q3 2021	2,182	627	564
Q2 2021	2,156	606	434
Q1 2021	1,883	527	89
Q4 2020	1,992	397	238
Q3 2020	2,231	914	609

Before the fiscal year, STG predicted that sales would return to pre-COVID-19 levels during the latter half of 2023, something that was cited in its results. It also highlighted inflation, supply chain and “continued promotional pressure in the online business.” As for the latter, for much of 2022, STG’s online cigar retail business, headed by Cigars International, has faced aggressive sitewide discounts from its largest competitor, JR Cigar.

“In the current environment I’m pleased with our performance for the third quarter, delivering solid cash flows and positive EPS growth, which is in-line with our financial expectations for the full year of 2022,” said Niels Frederiksen, ceo of STG, in a statement. “We are driving productivity improvements in the supply chain, an issue we have faced in recent quarters which continues to be our most important short-term priority.”

He also said that the new Cigars International Super Store in San Antonio is “off to a very strong start.”

With these results, guidance for 2022 remains unchanged: EBITDA growth between -4 and 0 percent, free cash flow before acquisitions in the range of DKK 1.1-1.4 billion, and adjusted EPS growth of less than 5 percent. The company expects its European branded and North American retail business to drive revenues in Q4 but says that its North America Branded & Rest of World division will perform worse than it did in 2021 on a revenue basis.

STG is the parent company of Cigars International, General Cigar Co., Thompson Cigar, Forged Cigar Co., Agio and other businesses throughout the U.S. and international markets. Its stock is publicly traded on the NASDAQ Copenhagen.