STG’s 2023 Revenue Slightly Up, Profits Slightly Down

Scandinavian Tobacco Group (STG)—the publicly-traded company that owns General Cigar Co., Cigars International and others—has announced that it generated DKK 8.7 billion ($1.27 billion) in revenue, which the company says was up .3 percent compared to 2022.

EBITDA before special items, a measure of profit, decreased to DKK 2.1 billion ($310 million), down from DKK 2.3 billion in 2022. Free cash flow before acquisitions also declined, hitting DKK 1.1 billion ($160 million) in 2023 compared to DKK 1.3 billion in the previous year.

Notably, the company said that it experienced “decreasing volumes in most product categories driven by lower consumption,” though it was able to overcome this due to “solid pricing” and other changes, such as new stores. The company cited its North American Online and Retail and European Branded divisions as helping to drive growth, but indicated there was negative growth in the North American Branded and Rest of the World division, which includes General Cigar Co. and Forged Cigar Co.

“Despite a challenging consumer environment STG delivered solid results for 2023 due to the commitment and performance of our employees across the globe,” said Niels Frederiksen, ceo of STG, in a statement. “We continued to execute well on our strategy with two acquisitions, and I am particularly happy to see the progress in our Growth Enablers, where we saw healthy growth in international handmade cigars, retail expansion and Next Generation Products. As we move into 2024, we are increasing our investments in the Growth Enablers and we expect 2024 to be a year of growth for STG.”

STG says the results for 2023 were in line with its guidance.

For Q4 2023, the results were as follows:

• Revenue was DKK 2.275 billion ($331.13 million), a 5 percent increase YoY.
• The EBITDA margin was 22.7 percent, down from 25.8 percent.
• Free cash flow before acquisitions was DKK 452 million ($65.79 million), down from DKK 530 million.
• Adjusted Earnings Per Share (EPS) were DKK 3.6 (52 cents), down from DKK 4.4.
• Return on Invested Capital (ROIC) was 11.4 percent, down from 14.3 percent.

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.

For 2024, the company has announced the following guidance:

• Net sales in the range of DKK 8.8-9.1 billion
• EBITDA margin before special items in the range of 22-24%
• Free cash flow before acquisitions in the range DKK .8-1 billion