Scandinavian Tobacco Group Reports Flat Sales, Higher Profits

Scandinavian Tobacco Group Reports Flat Sales, Higher Profits

Scandinavian Tobacco Group, the parent company of General Cigar and one of the world's largest cigar and pipe tobacco producers, reported flat sales but slightly increased profits for the first nine months of 2016. The company's handmade cigar segment grew.

Total sales for the company were 4.9 billion Danish krone, or DKK ($703 million), with earnings before interest, taxes, depreciation and amortization of 960 million DKK ($137,000), a 2.3 percent increase over the same period in 2015. The company forecasts total 2016 sales to be similar to last year, making the year flat, as opposed to the small decrease of 1.3 percent the company previously expected.

While machine-made cigar sales and pipe tobacco sales were down, the company's handmade cigar sales grew. For the first nine months of 2016, STG had handmade cigar sales of 1.5 billion Danish krone ($215 million), up from 1.4 billion in the same period one year ago. Profits were up slightly to 677 million DKK, from 627 million DKK a year ago.

"Our U.S. handmade cigar business continues to grow and outperform the market," said STG Group CEO Niels Frederiksen in a statement. He mentioned government regulation—on both sides of the Atlantic—for impacting results in a negative way. "Net sales have been impacted across all categories from fluctuations following new FDA regulations in the U.S., and the late adoption of new EU regulations into national legislation."

Scandinavian Tobacco Group, which is a publicly listed company on the Nasdaq Copenhagen, employs more than 8,000 people in the Dominican Republic, Honduras, Nicaragua, Indonesia, Europe, New Zealand, Australia, Canada and the United States, and sells products in more than 100 countries. Its business ventures include handmade cigars (Macanudo, Punch, Hoyo de Monterrey, La Gloria Cubana and others) via its subsidiary General Cigar Co., machine-made cigars such as Café Crème, Captain Black and other pipe tobaccos.

This article first appeared in the December 5 edition of Cigar Insider.