Company Announcement

No. 61/2024

Copenhagen, 12 November 2024

Interim report, 1 January - 30 September 2024

Scandinavian Tobacco Group A/S reports third quarter 2024 results and includes Mac Baren in full-year guidance

For the third quarter of 2024 Scandinavian Tobacco Group delivered a 7.1% increase in reported net sales to DKK 2.4 billion (DKK 2.3 billion) with an EBITDA margin before special items at 23.4% (26.5%). In a like-for-like comparison and excluding exchange rate developments, organic net sales decreased by 0.1%. Discontinuation of distribution of third-party nicotine pouches in the US impacted growth negatively by 1.0%. Growth in Machine-Rolled Cigars & Smoking Tobacco and Next Generation Products was partly offset by a decline in Handmade Cigars and accessories. The Next Generation Product ("NGP”) brand XQS increased 72%, though the absence of the mentioned distribution of nicotine pouches reduced category growth to 2%.

The expected decrease in the EBITDA margin was a result of our investment to support growth of our own NGP portfolio, especially the XQS brand; the currently lower profitability in Mac Baren, which has been consolidated from 1 July 2024, and the comparison to a very strong third quarter 2023. In the fourth quarter of the year the Group is expected to deliver slightly declining organic net sales growth and an unchanged EBITDA-margin compared with the fourth quarter of last year.

The integration of Mac Baren is expected to deliver synergies annually in the level of DKK 150 million with full effect in the financial year 2027. Special costs with cash impact to reach the targeted cost synergies are estimated at the level of 150 million.

Third Quarter 2024 - Financial Performance

Net sales of DKK 2,431 million (DKK 2,269 million) with 0.1% negative organic growth.EBITDA before special items was DKK 568 million (DKK 602 million) with an EBITDA margin of 23.4% (26.5%). Adjusted Earnings Per Share (EPS) were DKK 4.1 (DKK 4.1). Free cash flow before acquisitions was DKK 275 million (DKK 622 million). Return on Invested Capital (ROIC) was 9.8% (12.9%).Growth Enablers delivered a double-digit growth rate and accounted for 9% of Group net sales (8%).Mac Baren delivered net sales of DKK 159 million with EBITDA before special items at DKK 30 million and an EBITDA margin before special items of 18.8%.In the first nine months of 2024, net sales increased by 4.5% to DKK 6.7 billion (DKK 6.5 billion), organic net sales growth was 0.9%, the EBITDA margin was 22.0% (24.6%), free cash flow before acquisitions was DKK 327 million (DKK 602 million) and Adjusted EPS were DKK 9.9 (DKK 10.8). CEO Niels Frederiksen: "With the acquisition of Mac Baren, we are in 2024 on track to surpass DKK 9 billion in net sales for the first time ever and we expect the Mac Baren acquisition to deliver significant synergies as we implement the integration plan. In the third quarter market share in machine-rolled cigars in Europe stabilized and began to improve and in particular France showed promising progress. XQS performed well in both Sweden and in UK as well as in Denmark where the brand has recently been introduced. The remainder of the Growth Enablers also delivered growth. We remain committed to enhancing shareholder returns and we are about to complete our current share buyback, after which we will have returned almost DKK 1.5 billion to shareholders over the course of 2024”.  

Financial Guidance 2024

The financial guidance 2024 now include the financial impact of the Mac Baren acquisition.

Net sales in the level of DKK 9.1 billion (DKK 8.8-9.1 billion)EBITDA margin before special items in the range of 22-23% (22-24%)Free cash flow before acquisitions in the range DKK 0.8-0.9 billion (DKK 0.8-1.0 billion)Adjusted EPS in the level of DKK 12.5 (DKK 12.5-14.5). Numbers in (brackets) are previous guidance, which didn't include Mac Baren.

Excluding Mac Baren, the Group is expected to deliver at the lower end of the previously communicated guidance driven by the market decline for our key cigar markets and the absence of third-party distribution of nicotine pouches in the US. 

For further information, please contact:

Torben Sand, Director of IR & Communication, phone +45 5084 7222 or torben.sand@st-group.com

A conference call will be held on 13 November 2024 at 10.00 CEST. Dial-in information and an accompanying presentation will be available at investor.st-group.com/investor around 09:00 CEST.

Attachment

Interim report Q3 2024