Scandinavian Tobacco Group (STG), the world’s largest publicly-traded company in the premium cigar space, announced slightly declines during Q1 2022.
While the raw revenue and profit figures are up compared to Q1 2021, STG says that its organic growth in both categories was down. STG generated DKK 1.938 billion ($275.63 million) in revenue, which was more than the DKK 1.883 billion in the same quarter last year, though STG says equates the performance to -1.7 percent organic growth. EBITDA, a form of profit, was DKK 532 million ($75.66 million), an organic growth decline of -2.7 percent.
The company said that price increases “almost offset increasing cost inflation and supported the financial performance” though STG’s EBITDA margin dropped from 28 percent to 27.4 percent. The company’s financial guidance—0-6 percent growth in EBIDTA—remains unchanged.
|(In Millions of DKK)||Net Sales||EBIDTA Before Special Items||Free Cash Flow|
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.
Regarding U.S. cigar sales, the company said, “Consumer demand for handmade cigars in the US remained robust in the quarter though with signs at the end of the quarter of a return to the structural declining volume trend.” This is in line with what the company predicted earlier this year when it believed the COVID-19 sales surge was coming to an end and the cigar market would revert back to its pre-COVID-19 trend of 1 percent contraction each year.
“We deliver a satisfactory first quarter result in line with our expectations with negative organic EBITDA growth against a very strong first quarter last year and a continued strong cash flow,” said Niels Frederiksen, ceo of STG, in a statement. “We continue the execution of our strategy ‘Rolling Towards 2025’ and today we are very excited to present a revised, more ambitious sustainability strategy which anchors our environmental and social commitment in the company’s culture.”
Frederiksen is referring to the new sustainability strategy the company announced in March, which STG says will make it the sustainability leader in the cigars.