Denmark · Delayed Price · Currency is DKK Scandinavian Tobacco Group Earnings Call Transcripts
Fiscal Year 2025
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2025 saw challenging conditions with net sales of DKK 9.036 billion and margin pressure from tariffs, competition, and product mix. The Focus 2030 strategy targets stabilization and growth, with 2026 guidance reflecting continued headwinds, margin declines, and a focus on leverage reduction.
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Focus 2030 sets three priorities: stabilize machine-rolled cigars, accelerate handmade cigars, and grow nicotine pouches, with a strong emphasis on portfolio simplification and targeted investments. Financial ambitions include at least 11% ROIC, low single-digit EBIT growth, and DKK 1.2 billion free cash flow by 2030, supported by a new flexible dividend policy and cost improvements.
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Q3 saw organic net sales growth of 0.3% and improved sequential EBITDA margin, despite a 3% reported sales decline due to currency effects. Nicotine pouches and handmade cigars grew, while machine-rolled cigars and smoking tobacco declined. Full-year guidance was narrowed, with risks from U.S. sentiment and SAP rollout.
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Second quarter results showed improved performance, with all core categories returning to growth and Mac Baren integration progressing as planned. EBITDA margin declined due to mix changes and investments, but full-year guidance for sales, margin, and cash flow is maintained, with H2 expected to show positive organic growth.
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First quarter 2025 saw modest reported net sales growth driven by acquisitions, but organic sales declined and margins compressed due to tariffs, FX, and product mix. Guidance for 2025 was revised downward, reflecting increased uncertainty from US tariffs and currency headwinds.
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Record net sales and increased dividends were reported, with strong progress on strategic initiatives and sustainability. All board proposals and elections were approved, and management addressed US tariff risks and ongoing investments in growth enablers.
Fiscal Year 2024
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Record net sales above DKK 9 billion were achieved, driven by acquisitions and growth enablers, despite challenging markets. EBITDA margin met guidance, and shareholder returns remained strong, but 2025 guidance reflects high uncertainty and a pause in share buybacks.
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Q3 net sales rose 7.1% year-over-year, driven by the Mac Baren acquisition, but organic growth was flat and EBITDA margin declined to 23.4%. U.S. handmade cigars and third-party nicotine pouch distribution faced headwinds, while next-generation products and European segments showed growth. Full-year guidance was updated to reflect these trends.
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Q2 2024 delivered strong net sales and margin growth, led by next-gen products and handmade cigars, while the Mac Baren acquisition is set to boost future sales. Market volatility and regulatory changes remain key risks, and guidance for 2024 is maintained, excluding Mac Baren's impact.