STG Starts Off 2024 With Down Q1

Scandinavian Tobacco Group (STG), the publicly-traded cigar giant, has announced its Q1 2024 financial results; they are down from a year ago.

The company says it experienced net sales grown in handmade cigars and next-generation oral—tobacco-free nicotine pouches—but those increases were offset by declines in machine-made cigars and smoking tobacco sales. The full results for Q1 2024 are as follows:

• Revenue was DKK 1.95 billion ($279.96 million), a 2 percent decrease YoY.
• EBITDA before special items was DKK 335 million ($48.15 million), a 29.3 percent decrease
• The EBITDA margin was 17.2 percent, down from 24.1 percent.
• Free cash flow before acquisitions was DKK -126 million ($18.11 million), up from DKK -179 million.
• Adjusted Earnings Per Share (EPS) were DKK 1.8 (26 cents), down from DKK 3.2.
• Return on Invested Capital (ROIC) was 10.4 percent, down from 13.6 percent.

The company’s growth enablers category, which includes its retail cigar stores, accounted for 11 percent of the company’s sales and delivered a double-digit growth rate.

STG, which is publicly traded on the NASDAQ Copenhagen, has a large premium cigar portfolio that includes retailers such as Cigars International, Cigar.com, Cigarbid.com, Thompson Cigar, PipesandCigars.com 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.

Quarter	Net Sales (In Millions of DKK)	EBIDTA Before Special Items (In Millions of DKK)	Free Cash Flow (In Millions of DKK)
Q1 2024	1,948	335	(126)
Q4 2023	2,275	517	452
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

The company’s guidance remains unchanged:

• Net sales in the range of DKK 8.8-9.1 billion
• EBITDA margin before special items in the range of 22-24 percent
• Free cash flow before acquisitions in the range DKK 800 million-1 billion
• Adjusted EPS in the range of DKK 12.5-14.5

“Despite a slow start to the year and the first quarter profitability being impacted by mix, cost inflation and investments in growth, we maintain our expectations for the full year,” said Niels Frederiksen, ceo of STG, in a statement. “Entering the second quarter, we expect the net sales development to improve and we expect to see a more normalized mix, which will impact profitability and cash-flows positively. In the quarter we have continued to execute our strategy with the opening of three Macanudo concepts stores and investments in our growth initiatives. Our growth enablers constituted around 11% of net sales in the quarter”.