Scandinavian Tobacco Group—the parent company of General Cigar Co., Cigars International, Thompson Cigar, Agio and others—has announced that it is upgrading its financial guidance for 2020 as more people are smoking cigars despite the coronavirus COVID-19 pandemic.
The company made the announcement ahead of its second quarter results, which will be announced on Aug. 28:
The negative impact of the COVID-19 pandemic on Scandinavian Tobacco Group’s business have been less profound than anticipated earlier in the year as tobacco consumption across markets and categories has displayed significant resilience.
A change in consumer behaviour in the US as more people work from home have resulted in an likely overall increased consumption of handmade cigars and a strong growth in the online business.
STG says that it’s had a 4.9 growth in net sales—revenue—and a 21 percent growth in EBITDA compared to the first half of 2019.
As such, it has upgraded its 2020 guidance as follows:
- EBITDA: Organic growth >9% (previously: >2%)
- Free cash flow before acquisitions: >DKK 1000 million (previously: ~DKK 850 million)
STG stock is up over 6 percent following the news, currently trading at DKK 98.25 per share.