STG Reports Strong Q2 2021, Raises Guidance Again

Scandinavian Tobacco Group A/S (STG), one of the world’s largest cigar companies, has reported its earnings for Q2 2021 and the results are predictably strong.

The company says it generated DKK 2.156 billion ($339 million) in revenue during the second quarter, up 7.5 percent compared to 2020. EBITDA before special items—a measurement of profits—was DKK 606 million ($95.29 million), an increase of 20.8 percent. It represents an EBIDTA margin of 28.1 percent, which increased from 23.3 percent during the same quarter last year.

Additionally, the company’s free cash flow for the quarter was DKK 434 million ($68.24 million).

Quarter	Net Sales (In Millions of DKK)	EBIDTA Before Special Items (In Millions of DKK)	Free Cash Flow (In Millions of DKK)
Q3 2024	2,431	568	275
Q2 2024	2,366	580	177
Q1 2024	1,948	335	(126)
Q4 2023	2,275	517	452
Q3 2023	2,300	602	622
Q2 2023	2,200	514	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

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.

“We deliver a strong quarterly performance with growth in both net sales and EBITDA driven by strong sales of handmade cigars in the US and a favorable mix,” said Niels Frederiksen, ceo of STG, in a statement. “We expect continued high demand for handmade cigars for the rest of the year and we are raising our financial expectations for 2021 to reflect that. Additionally, we continue to implement our ‘Rolling towards 2025’ strategy and show good progress on the transformation of the company”.

STG says that its revenue for the first six months increased by 9.8 percent to DKK 4.039 billion ($635.1 million) and that its EBITDA before special items was DKK 1.113 billion ($178.15 million), an increase of 32.6 percent compared to last year.

That being said, STG expects the third quarter to be more challenging as it believes that the current sales boon for cigars will taper off. The company has repeatedly said that it believed the high sales would continue in the first half of 2021, but begin to taper in the second half of the year. Today’s statement reiterates the position:

The current high consumption of handmade cigars in the US combined with a strong market mix have driven the extraordinarily strong net sales growth during the first half of 2021. Growth is still expected to taper off during the second half of the year as year-on-year comparisons are more difficult especially in the third quarter and as the market mix is expected to normalize somewhat. However, the full year is now expected to be stronger than previously anticipated, although the risks remain higher than normal due to COVID-19.

STG is once again raising its guidance, the second time it has done so this year. The newly revised guidance is as follows:

• EBITDA: Organic growth in the range of 16%-20% (12%-18%)
• Free cash flow before acquisitions: In the range of DKK 1.0-1.3 billion (no change)
• Adjusted Earnings Per Share >35% increase (>25% increase)

STG’s stock, which is traded on the NASDAQ Copenhagen, fell 1.74 percent today to DKK 129.90. That being said, the strong cigar sales have had a positive impact on the company’s stock, which is up more than 30 percent in the last year.