STG’s Revenue Grows During Q2 2024

After starting the year with a percent drop in year-over-year revenue for Q1 2024, Scandinavian Tobacco Group (STG) has reported a positive Q2.

Most notably, STG’s Q2 revenue was DKK 2.37 billion ($350 million), which STG described as a 6.3 percent increase compared to Q2 2023, though the net increase was 4.8 percent. The company said that the growth was “driven by handmade cigars and next generation products,” which includes items like tobacco-free nicotine pouches. Last quarter, STG indicated that a decline in machine-made cigars and smoking tobacco hurt its performance, the company says that those categories are improving.

It also disclosed that volume remains down, though it says it is improving.

• Revenue was DKK 2.366 billion ($350 million), a 6.3 percent increase YoY.
• EBITDA before special items was DKK 580 million ($86.39 million)
• The EBITDA margin was 24.5 percent, up from 23.1 percent.
• Free cash flow before acquisitions was DKK 177 million ($26.37 million), up from DKK 159 million.
• Adjusted Earnings Per Share (EPS) were DKK 4.1 (61 cents), down from DKK 3.5.
• Return on Invested Capital (ROIC) was 10.5 percent, down from 13.1 percent.

On July 1, STG announced that it had agreed to acquire Mac Baren, a pipe tobacco company, for roughly $77 million. That deal closed a couple of weeks later.

“The second quarter financial performance supports our expectation for the full year,” said Niels Frederiksen, ceo of STG, in a statement. “During the past months, we have taken material steps in executing our strategy and to safeguard our financial performance in challenging markets. The new commercial structure has been completed and we have taken additional steps to re-establish our market position in machine-rolled cigars and to improve our cost agility across the group. Further, the acquisition of Mac Baren strengthens our smoking tobacco business where the combination with our existing business will deliver meaningful synergies and good value for our shareholders”.

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)
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

The company’s guidance remains unchanged, though this could change due to the acquisition of Mac Baren. STG says that it will announce whether guidance needs to be adjusted before the release of its 2024 Q3 report on Nov. 12, 2024.

As of now, the guidance is as follows:

• 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