Company Announcement
No. 42/2021
Copenhagen, 19 August 2021
Interim report, 1 January - 30 June 2021
raises full year guidance
In the second quarter of 2021, Scandinavian Tobacco Group delivered a strong organic growth in net
sales and EBITDA. The results were primarily driven by a continued high demand in handmade ci-
gars in the US, a favourable market mix and synergies from the integration of Agio Cigars. The sec-
ond quarter of last year was negatively impacted by the early phases of the COVID-19 pandemic
making comparisons relatively easy.
Q2 Highlights
• Net sales were DKK 2,156 million (DKK 2,097 million) with 7.5% organic growth.
• EBITDA before special items was DKK 606 million (DKK 489 million) with 20.8% organic
growth. The EBITDA margin was 28.1% (23.3%).
• Adjusted Earnings Per Share (EPS) were DKK 4.1 (DKK 3.0).
• Free cash flow before acquisitions was DKK 434 million (DKK 425 million).
• Return on Invested Capital was 12.3% (7.6%).
• In the first 6 months of 2021, net sales grew by 9.8% organically to DKK 4,039 million (DKK
3,852 million), and EBITDA before special items grew by 32.6% organically to DKK 1,133
million (DKK 815 million) with free cash flow before acquisitions stable at DKK 523 million
(DKK 547 million).
CEO Niels Frederiksen: “We deliver a strong quarterly performance with growth in both net sales and
EBITDA driven by strong sales of handmade cigars in the US and a favorable mix. We expect contin-
ued high demand for handmade cigars for the rest of the year and we are raising our financial expec-
tations for 2021 to reflect that. Additionally, we continue to implement our “Rolling towards 2025”
strategy and show good progress on the transformation of the company”.
The current high consumption of handmade cigars in the US combined with a strong market mix
have driven the extraordinarily strong net sales growth during the first half of 2021. Growth is still ex-
pected to taper off during the second half of the year as year-on-year comparisons are more difficult
especially in the third quarter and as the market mix is expected to normalize somewhat. However,
the full year is now expected to be stronger than previously anticipated, although the risks remain
higher than normal due to COVID-19.
The financial outlook for 2021 is revised to:
• EBITDA: Organic growth in the range of 16%-20% (from 12%-18%)
• Free cash flow before acquisitions: In the range of DKK 1.0-1.3 billion
• Adjusted Earnings Per Share >35% increase (from >25% increase)
2
For further information, please contact:
Investors: Torben Sand, Head of IR, phone +45 5084 7222 or torben.sand@st-group.com
Media: Simon Mehl Augustesen, Director of Group Communications, phone: +1 484-379-8725 or si-
mon.augustesen@st-group.com
A conference call will be held on 25 August 2021 at 10.00 CEST. Dial-in information and an accom-
panying presentation will be available at investor.st-group.com around 09:00 CEST.
3
Key Figures*
DKK million
Q2 2021
Q2 2020
6M 2021
6M 2020
Year
2020
INCOME STATEMENT
Net sales
2,156
2,097
4,039
3,852
8,006
Gross profit before special items
1,071
940
2,026
1,721
3,712
EBITDA before special items
606
489
1,133
815
1,826
Special items
-24
-78
-41
-234
-435
EBIT
492
304
911
370
986
Net financial items
1
-21
-2
-32
-45
-53
Profit before tax
480
305
894
332
951
Income taxes
-104
-52
-194
-57
-274
Net profit
376
254
700
274
678
BALANCE SHEET
Total assets
14,455
14,911
13,996
Equity
8,323
8,664
8,372
Net interest-bearing debt (NIBD)
3,732
3,995
3,274
Investment in property, plant and equipment
47
58
89
91
157
Total capital expenditures
61
71
107
106
201
CASH FLOW STATEMENT
Cash flow from operating activities
489
494
621
649
1,585
Cash flow from investing activities
-56
-69
-98
-1,662
-1,752
Free cash flow
434
425
523
-1,013
-166
Free cash flow before acquisitions
434
425
523
547
1,394
KEY RATIOS
2
Net sales growth
2.8%
17.6%
4.8%
20.0%
19.2%
Gross margin before special items
49.7%
44.8%
50.2%
44.7%
46.4%
EBITDA margin before special items
28.1%
23.3%
28.1%
21.1%
22.8%
Effective tax percentage
21.7%
16.9%
21.7%
17.3%
28.7%
Equity ratio
57.6%
58.1%
59.8%
Cash conversion
120.3%
143.1%
86.2%
127.4%
135.4%
Organic net sales growth
7.5%
4.6%
9.8%
4.9%
6.6%
Organic EBITDA growth
20.8%
19.1%
32.6%
21.0%
14.0%
NIBD / EBITDA before special items
1.7
2.4
1.8
ROIC
12.3%
7.6%
7.7%
ROIC ex. Goodwill
20.5%
12.4%
12.7%
Adjusted earnings per share (DKK)
4.1
3.0
7.4
4.5
9.8
Basic earnings per share (DKK)
3.9
2.5
7.3
2.7
6.8
Diluted earnings per share (DKK)
3.9
2.5
7.3
2.7
6.8
Number of shares issued ('000)
100,000
Number of treasury shares ('000)
2,324
Share price at balance date (DKK)
104.10
Dividend per share (DKK)
6.5
Pay-out ratio
95.9%
1. Excl. share of profit of associated companies.
2. See definition/explanation of financial ratios in note 5.8 in the Annual Report 2020.
* Unaudited figures
4
Business overview Q2 2021
The Group delivered a strong financial performance in the second quarter with 7.5% organic growth
in net sales to DKK 2,156 million. Reported growth in net sales was 3% with exchange rate develop-
ments impacting negatively by 5%. The performance was driven by strong growth in North America
Branded & Rest of World, a positive growth in Europe Branded and a negative growth in North America
Online & Retail driven by channel shift in the market from online back to retail following the extensive
retail close-downs in the second quarter of 2020.
Earnings and profitability improved significantly compared with the same quarter last year driven by a
strong organic net sales performance with increased volumes and improved pricing as well as in-
creased cost efficiency supported by the integration of Agio Cigars and Fuelling the Growth initiatives.
Furthermore, the performance was also impacted by a continued strong market mix. EBITDA before
special items was DKK 606 million with 21% organic growth entailing an EBITDA margin before special
items of 28.1%. Special items came to DKK -24 million (DKK -78 million) comprising costs for the
integration of Agio Cigars and the integration of production facilities, see note 3.
The Group’s free cash flow before acquisitions was DKK 434 million (DKK 425 million) driven by the
operational performance and supported by a positive impact from working capital. The Group´s lever-
age ratio was 1.7x.
The overall consumption of our tobacco products remains strong with sales of handmade cigars in the
US continuing at a high level, though a part of volume has switched back to the retail channel from
online.
Divisional split Q2 2021
Net sales EBITDA before special items
Group net sales and EBITDA Q2 2021
Table 1: Net sales
Table 2: EBITDA before special items
Q2
Q2
Change
DKK million
2021
2020
in %
Net sales
2,156
2,097
2.8%
Currency development
97
Organic net sales
2,253
2,097
7.5%
Q2
Q2
Change
DKK million
2021
2020
in %
EBITDA
606
489
23.9%
Acquisitions
23
Currency development
12
Organic EBITDA
618
512
20.8%
35%
32%
33%
NA Branded & RoW
Europe Branded
NA Online & Retail
49%
30%
21%
+2.8%
DKK 2,156m
+23.9%
DKK 606m
5
Business development Q2 2021
Retail expansion
The expansion of the retail network in the US has in the past couple of years resulted in four new super
stores in Texas and Florida delivering valuable contributions to net sales and profits. While we continue
to evaluate the performance of these four super stores and consider on the longer-term ambition for
retail stores in the US, an additional super store will open in San Antonio, Texas during the first quarter
of 2022. The San Antonio super store will bring the total number of super stores to seven.
Integration of Agio Cigars
The integration of Agio Cigars is progressing according to the plan, which was revised in May 2021.
The next phase is integration of the production facilities with the planned closure of the factory in Eersel
in The Netherlands in the third quarter and with the closure of the production facility in Duizel, the
Netherlands planned for the end of 2021.
The expectation for total net synergies by the end of 2022 is maintained at DKK 250 million with cost
savings in 2021 of about DKK 100 million.
Special costs in relation to the integration of Agio Cigars of DKK 18 million have been expensed in the
second quarter. The expectation is maintained that total special costs related to the integration until
end of 2022 will be at the level of DKK 450 million.
Financial ambitions update
In the second quarter of 2021 the EBITDA margin improved to 28.1% (23.3%) driven by the stronger
net sales performance, savings from the integration of Agio Cigars and Fuelling the Growth and a DKK
23 million negative fair value adjustment in the second quarter of 2020. For the first six months of 2021
the EBITDA-margin improved to 28.1% (21.1%)
The ROIC improved to 12.3% (7.6%) with a DKK 579 million improvement in EBIT (12 months rolling)
driven by the operational performance and based on an invested capital of DKK 12.4 billion (DKK 12.5
billion).
Capital allocation
At the Annual General Meeting on 14 April 2021, it was decided to reduce the share capital by DKK
2,500,000. The reduction of the share capital was effectuated 19 May 2021, and consequently the
Company’s share capital amounts to DKK 97,500,000 divided into 97,500,000 shares of DKK 1 each.
During the second quarter of 2021 Scandinavian Tobacco Group has bought back 1,162,903 shares
at a market value of DKK 146 million under the current DKK 600 million share buy-back programme.
During the first half of 2021, the Company has bought 1,575,333 shares at a market value of DKK 197
million under the current programme that was launched 11 March 2021.
6
Financial guidance for 2021
Scandinavian Tobacco Group delivered a strong financial performance in the first six months of 2021
and the outlook for the second half of the year is supported as the demand for handmade cigars
seems more persistent than expected.
Although, the continuance of the COVID-19 pandemic implies that uncertainty and lack of visibility in
the market development for the second half of the year remains high and accuracy in predictions on
consumer behaviour and consumption remains lower than usual, the outlook for the full-year is now
reflecting a more positive expectation for the second half of the year.
As consequence the guidance for the full year 2021 is revised to:
• EBITDA: Organic growth in the range of 16%-20% (previously 12%-18%)
• Free cash flow before acquisitions in the range of DKK 1.0-1.3 billion (unchanged)
• Adjusted EPS >35% (>25% increase)
The high end of the guidance range for organic EBITDA growth is based on a positive organic net
sales growth during 2021. In this scenario demand for handmade cigars in the US remains strong
across all channels in the second half of the year and a continued movement towards a normalisa-
tion of the European markets is assumed with the opening of societies positively impacting volumes
in Europe Branded.
The low end of the guidance range assumes that net sales for the Group will equalize in the second
half of the year with consumer behaviour in the US market reversing and the restrictions and border
closures in Europe prevailing.
In both scenarios, organic EBITDA growth is expected to be supported by synergies from the inte-
gration of Agio Cigars of about DKK 100 million and the full year effect of Fuelling the Growth.
The organic growth in EBITDA is now expected to be close to flat in the third quarter versus the pre-
vious expectation of a negative growth. Organic growth in EBITDA is still expected to be positive in
the fourth quarter of 2021. Across all scenarios, the general risk level remains higher than normal as
COVID-19 continues to influence the business and in the supply chain we see increasing issues with
cost going up and lead times being longer.
The expectation for free cash flow before acquisitions is maintained as the higher activity level will
tie-up more working capital. Total capex is maintained at DKK 370 million and includes relatively high
investments in production footprint and digitalisation initiatives and the impact from working capital is
assumed to be slightly negative. The expectations for total capex and working capital movements
may be impacted by decisions to delay investments and to change inventory positions should
COVID-19 or the development in consumer demand across product categories necessitate that.
The guidance of an increase of >35% (from DKK 9.78) in adjusted EPS includes a positive impact
from share repurchases and a negative impact from currency developments. The guidance and as-
sumptions are based on current exchange rates.
7
Events after the reporting period
There are no other events than those mentioned in the above that have occurred after 30 June 2021
and that are expected to have material impact on the financial position of the Group.
Forward-looking statements
This report contains forward-looking statements. Such statements are subject to risk and uncertainties
as various factors, many of which are beyond Scandinavian Tobacco Group’s control, may cause
actual developments and results to differ materially from the expectations set out in this report.
8
Divisional update
North America Online & Retail
In the second quarter of 2021 the North American online channel experienced as expected a decline
in the active customer base versus previous quarters and decreasing volumes versus the second
quarter of last year. However, this was partly offset by significant growth in the retail channel as con-
sumers returned to the physical trade and due to the expansion of the super store retail network during
the past year. Volume in the online channel continue to be well above 2019 and the channel is believed
to have seen a permanent structural increase versus the pre-COVID-19 level.
The new super stores, which opened in 2020, are performing better than expected and a new super
store will open in San Antonio, Texas early next year.
Quarterly development, Q2 2020-Q2 2021
Net sales decreased by -11% to DKK 703 million during the quarter composed of a 2% negative or-
ganic net sales growth and a negative exchange rate effect of 9%. The organic development was
driven by a negative contribution in the online channel with consumers moving back to retail from
online and comparison data reflecting the significant move to online sales last year. The retail super
stores contributed with high double-digit growth in the quarter.
EBITDA before special items decreased by 20% to DKK 132 million with an EBITDA margin before
special items of 18.8% (20.9%). The margin development is driven by higher sales related costs, the
retail expansion and an increase in promotional spending versus last year.
First six months of 2021
Net sales for the first six months of 2021 decreased by -1% to DKK 1,267 million and organic growth
was positive by 8.9%. Gross profit before special items increased by 3% to DKK 508 million and the
gross margin was 40.1% (38.6). EBITDA before special items remained unchanged at DKK 231 million
with an EBITDA margin of 18.2% (18.1%).
-5%
0%
5%
10%
15%
20%
25%
30%
200
300
400
500
600
700
800
900
Q2 2020 Q3 Q4 Q1 2021 Q2
Quarterly net sales
Net sales (DKK million) Organic sales growth
0%
5%
10%
15%
20%
0
20
40
60
80
100
120
140
160
180
Q2 2020 Q3 Q4 Q1 2021 Q2
Quarterly EBITDA b.s.i.
EBITDA (DKK million) EBITDA margin
9
North America Branded & RoW
In the second quarter of 2021 organic net sales growth accelerated compared with the previous quar-
ter. The performance was driven by a continued strong volume growth across most product categories,
a very favourable market mix and a lower comparison base due to the negative implications of the
COVID-19 pandemic during the second quarter of last year. The consumption of handmade cigars in
the US remains at a high level, though growth rates for the rest of 2021 will reflect the tougher com-
parison base of last year. The divisional net sales continue to be strong across both the online and
retail sales channels and the new national distribution network, the Forged Cigar Company has come
off to a very good start adding growth to the division.
Quarterly development, Q2 2020-Q2 2021
Net sales increased by 21% to DKK 761 million during the quarter composed of a 26% positive organic
net sales growth and a negative exchange rate effect of 5%. The organic development was primarily
driven by a continued strong increase in the volumes of handmade cigars. Machine-rolled cigars in
Canada and pipe tobacco in the US also delivered growth in net sales in the quarter whereas Global
Travel Retail is only recovering slowly and remains substantially below the pre-COVID-19 level.
EBITDA before special items increased by 35% to DKK 311 million with an EBITDA margin before
special items of 40.9% (36.7%). The margin improvement was realised with an improved gross margin
driven by market and product mix as well as an improved OPEX ratio which decreased due to lower
freight and travel expenses and general efficiency improvements. Sales and marketing investments
have started to increase after a subdued level since the outbreak of the pandemic.
First six months of 2021
Net sales for the first six months of 2021 increased by 19% to DKK 1,454 million and organic growth
was positive by 24%. Gross profit before special items increased by 29% to DKK 795 million and the
gross margin was 54.7% (50.3%) primarily driven by market and product mix and price increases.
EBITDA before special items increased by 44% to DKK 585 million with an EBITDA margin of 40.2%
(33.2%).
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
500
550
600
650
700
750
800
Q2 2020 Q3 Q4 Q1 2021 Q2
Quarterly net sales
Net sales (DKK million) Organic sales growth
10%
15%
20%
25%
30%
35%
40%
45%
0
50
100
150
200
250
300
350
400
Q2 2020 Q3 Q4 Q1 2021 Q2
Quarterly EBITDA b.s.i.
EBITDA (DKK million) EBITDA margin
10
Europe Branded
Market developments and performance during the second quarter of 2021 have been consistent with
recent performance in the division with stable market shares and slightly positive organic growth in net
sales. The structural volume decline in machine-rolled cigars continues to be managed through price
increases. COVID-19 still affects border trading as well as tourist areas and in markets like Germany
and the Benelux government-mandated closure of non-essential retail shops has negatively impacted
sales.
The integration of Agio Cigars progresses well with the integration of the production facilities being
implemented according to plans. The market share decreased in France during the second quarter
due to a temporary shortage of employees in production causing an out-of-stock issue. The issue is
expected to be solved in the second half of the year. The combined market share of machine-rolled
cigars in the key markets, which includes France, is slightly down in the second quarter of 2021 to
32.5% versus 33.3% in the second quarter of 2020 and versus 33.1% in the full year of 2020.
Quarterly development, Q2 2020-Q2 2021
Net sales increased by 2% to DKK 692 million during the quarter explained by positive organic net
sales growth of 2%. The organic development was primarily driven by strong growth in smoking to-
bacco, a decrease in machine-rolled cigars as well as an about 1% negative impact from the termina-
tion of a distribution agreement. Price/mix remains positive.
EBITDA before special items increased by 79% to DKK 191 million with an EBITDA margin before
special items of 27.6% (15.7%). The increase in margin was driven by pricing and mix, savings in
relation to the integration of Agio Cigars, the termination of the distribution agreement and comparison
with a second quarter 2020 negatively impacted by a DKK 23 million fair value adjustment of invento-
ries.
First six months of 2021
Net sales for the first six months of 2021 decreased by -3% to DKK 1,318 million and organic growth
was negative by -2%. Gross profit before special items increased by 18% to DKK 723 million and the
gross margin was 54.9% (45.3%). EBITDA before special items increased by 74% to DKK 370 million
with an EBITDA margin of 28.0% (15.7%). The margin improvement was driven by price/mix, integra-
tion of Agio Cigars, the termination of the distribution agreement and a DKK 62 million fair value ad-
justment of inventories in the first half of 2020.
-10%
-5%
0%
5%
10%
15%
100
200
300
400
500
600
700
800
900
Q2 2020 Q3 Q4 Q1 2021 Q2
Quarterly net sales
Net sales (DKK million) Organic sales growth
0%
5%
10%
15%
20%
25%
30%
35%
0
25
50
75
100
125
150
175
200
225
250
Q2 2020 Q3 Q4 Q1 2021 Q2
Quarterly EBITDA b.s.i.
EBITDA (DKK million) EBITDA margin
11
Quarterly Financial Data
2021
2020
2021
2020
DKK million
Q2
Q1
Q4
Q3
Q2
6M
6M
12M
Reported data
Net sales
2,156
1,883
1,922
2,231
2,097
4,039
3,852
8,006
Gross profit before special items
1,071
955
867
1,124
940
2,026
1,721
3,712
EBITDA before special items
606
527
397
614
489
1,133
815
1,826
Special items
-24
-17
-121
-80
-78
-41
-234
-435
EBIT
492
419
180
436
304
911
370
986
Net financial items
-21
-12
-15
7
-2
-32
-45
-53
Profit before tax
480
414
170
450
305
894
332
951
Income taxes
-104
-90
-122
-94
-52
-194
-57
-274
Net profit
376
324
48
356
254
700
274
678
Other financial key data
Organic EBITDA growth
20.8%
49.1%
-14.6%
32.5%
19.1%
32.6%
21.0%
14.0%
Organic net sales growth
7.5%
12.5%
4.2%
12.0%
4.6%
9.8%
4.9%
6.6%
Gross margin before special items
49.7%
50.7%
45.1%
50.4%
44.8%
50.2%
44.7%
46.4%
EBITDA margin before special items
28.1%
28.0%
20.7%
27.5%
23.3%
28.1%
21.1%
22.8%
Free cash flow before acquisitions
434
89
238
609
425
523
547
1,394
North America Online & Retail
Net sales
703
564
639
746
788
1,267
1,277
2,662
Gross profit before special items
277
231
272
309
310
508
493
1,075
EBITDA before special items
132
99
135
151
165
231
231
517
Net sales growth
-10.8%
15.3%
12.5%
20.5%
24.9%
-0.8%
15.7%
16.2%
Organic net sales growth
-2.0%
26.5%
21.7%
27.0%
22.5%
8.9%
13.0%
18.9%
Gross margin before special items
39.4%
41.0%
42.6%
41.5%
39.3%
40.1%
38.6%
40.4%
EBITDA margin before special items
18.8%
17.5%
21.1%
20.2%
20.9%
18.2%
18.1%
19.4%
North America Branded & RoW
Net sales
761
693
572
734
629
1,454
1,222
2,527
Gross profit before special items
422
373
240
386
329
795
615
1,241
EBITDA before special items
311
274
128
279
230
585
406
813
Net sales growth
21.0%
16.8%
-6.9%
12.4%
-1.9%
19.0%
4.5%
3.8%
Organic net sales growth
25.6%
22.7%
-8.5%
12.1%
-4.3%
24.2%
-1.3%
0.4%
Gross margin before special items
55.4%
53.8%
42.0%
52.6%
52.4%
54.7%
50.3%
49.1%
EBITDA margin before special items
40.9%
39.5%
22.4%
38.0%
36.7%
40.2%
33.2%
32.2%
Europe Branded
Net sales
692
626
712
752
680
1,318
1,353
2,817
Gross profit before special items
373
351
355
428
301
723
613
1,397
EBITDA before special items
191
179
156
213
107
370
212
581
Net sales growth
1.8%
-7.0%
37.6%
40.1%
33.1%
-2.6%
44.2%
41.4%
Organic net sales growth
1.7%
-6.6%
2.1%
-0.4%
-3.0%
-2.4%
4.0%
2.3%
Gross margin before special items
53.8%
56.0%
49.9%
57.0%
44.2%
54.9%
45.3%
49.6%
EBITDA margin before special items
27.6%
28.5%
21.9%
28.3%
15.7%
28.0%
15.7%
20.6%
Group costs
EBITDA before special items
-28
-24
-21
-28
-13
-52
-35
-85
12
EXECUTIVE MANAGEMENT
BOARD OF DIRECTORS
13
STATEMENT OF COMPREHENSIVE INCOME
1 JANUARY - 30 JUNE
CONSOLIDATED INCOME STATEMENT
DKK million
Q2 2021
Q2 2020
6M 2021
6M 2020
Net sales
2
Cost of goods sold
2
-1,084.5
-1,156.5
-2,012.7
-2,131.1
Gross profit before special items
2
Other external costs
2
-240.3
-216.0
-473.3
-463.8
Staff costs
2
-224.8
-234.9
-419.8
-442.7
Earnings before interest, tax, depreciation, amortisation
and special items (EBITDA before special items)
Depreciation and impairment
-49.9
-65.8
-100.2
-126.6
Earnings before interest, tax, amortisation and special
items (EBITA before special items)
Amortisation and impairment
-40.2
-41.3
-80.7
-84.6
Earnings before interest, tax and special items (EBIT be-
fore special items)
Special items, costs and impairment
3
-24.1
-78.4
-40.9
-233.8
Earnings before interest and tax (EBIT)
Share of profit of associated companies, net of tax
Financial income
Financial costs
-31.7
-23.4
-56.3
-81.0
Profit before tax
Income taxes
-104.2
-51.7
-194.1
-57.4
Net profit for the period
Earnings per share
Basic earnings per share (DKK)
Diluted earnings per share (DKK)
OTHER COMPREHENSIVE INCOME
Items that will be recycled subsequently to the Consolidated Income Statement, when specific conditions are met:
Cash flow hedges, deferred gains/losses incurred during the
period
-1.9
-11.8
Tax of cash flow hedges
-0.4
-0.8
Foreign exchange adjustments on net investments in foreign
operations
-74.3
-137.3
-100.1
Other comprehensive income for the period, net of tax
-72.5
-138.8
-109.3
Total comprehensive income for the period
14
Net sales
In the second quarter of 2021, net sales were DKK 2,156 million (DKK 2,097 million). Adjusted for
negative exchange rate impact of DKK 97 million, the organic growth in net sales was positive by 7.5%.
For the first six months of 2021, net sales came to DKK 4,039 million (DKK 3,852 million).
Profit
Gross profit before special items for the second quarter of 2021 was DKK 1,071 million (DKK 940
million) driven by the positive organic growth in net sales, a DKK 23 million negative fair value adjust-
ment of inventories in the second quarter of 2020 and an improving gross margin. The gross margin
before special items was 49.7% (44.8%) with increasing margins in North America Branded & RoW
and Europe Branded and unchanged margins in North America Online & Retail.
Operating expenses for the second quarter increased to DKK 465 million (DKK 451 million) primarily
driven by the development in net sales, increased expenses for sales & marketing partly off-set by
continued savings from the integration of Agio Cigars. The OPEX ratio was unchanged at 21.6%
(21.5%) as consequence of the higher cost base combined with high sales for the second quarter.
EBITDA before special items for the second quarter of 2021 amounted to DKK 606 million (DKK 489
million). The development is explained by the organic growth in net sales, a positive contribution from
the integration of Agio Cigars, a positive impact from other cost efficiency improvements like Fuelling
the Growth and the DKK 23 million negative fair value adjustment in the second quarter of 2020. Ex-
change rate developments impacted negatively by DKK 12 million. Organic EBITDA growth was
20.8%.
EBITDA margin before special items for the second quarter of 2021 was 28.1% (23.3%).
During the quarter DKK 24 million (DKK 78 million) have been expensed as special items. Special
items relating to the integration of Agio Cigars were DKK 18 million (DKK 70 million). DKK 6 million
have been expensed in relation to the production footprint (DKK 7 million). See note 3 for an overview
of special items.
Net profit was DKK 376 million (DKK 254 million). Earnings per share (EPS) were DKK 3.9 (DKK
2.5). Earnings per share adjusted for special items, fair value adjustments and currency gains/losses
on financial items, net of tax increased to DKK 4.1 (DKK 3.0).
In the first six months of 2021, gross profit before special items was DKK 2,026 million (DKK 1,721
million) with a gross margin of 50.2% (44.7%). EBITDA before special items was DKK 1,133 million
(DKK 815 million) with an EBITDA margin of 28.1% (21.1%) Special items were DKK 41 million (DKK
234 million), net profit was DKK 700 million (DKK 274 million) with Earnings per share adjusted for
special items, fair value adjustments and currency gains/losses on financial items, net of tax increased
to DKK 7.4 (DKK 4.5).
Quarterly development, Q2 2020-Q2 2021
-2%
2%
6%
10%
14%
1,700
1,800
1,900
2,000
2,100
2,200
2,300
Q2 2020 Q3 Q4 Q1 2021 Q2
Quarterly net sales
Net sales (DKK million) Organic sales growth
0%
5%
10%
15%
20%
25%
30%
100
200
300
400
500
600
700
Q2 2020 Q3 Q4 Q1 2021 Q2
Quarterly EBITDA b.s.i.
EBITDA (DKK million) EBITDA margin
15
CONSOLIDATED BALANCE SHEET
ASSETS
DKK million
30 Jun 2021
30 Jun 2020
31 Dec 2020
INTANGIBLE ASSETS
Goodwill
Trademarks
IT software
Other intangible assets
Total intangible assets
Property, plant and equipment
Investments in associated companies
Deferred income tax assets
Total non-current assets
Inventories
Trade receivables
Other receivables
Corporate tax
Prepayments
Cash and cash equivalents
Assets classified as held for sale
Total current assets
Total assets
16
CONSOLIDATED BALANCE SHEET
EQUITY AND LIABILITIES
DKK million
30 Jun 2021
30 Jun 2020
31 Dec 2020
Share capital
Reserve for hedging
-11.5
-24.3
-14.5
Reserve for currency translation
Treasury shares
-258.9
-30.8
-227.7
Retained earnings
Total equity
Borrowings
Deferred income tax liabilities
Pension obligations
Other provisions
Leasing liabilities
Other liabilities
Total non-current liabilities
Credit facilities
Trade payables
Corporate tax
Other provisions
Leasing liabilities
Other liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
Equity
Total shareholders’ equity as at 30 June 2021 amounted to DKK 8,323 million (DKK 8,372 million on
31 December 2020). The equity was positively impacted by profit for the period and a positive impact
from foreign exchange adjustments on net investments in foreign operations partly offset by the current
share buy-back programme and dividend payment. As at 30 June 2021 the equity ratio was 57.6%
(59.8% on 31 December 2020).
Net interest-bearing debt
Net interest-bearing debt increased by DKK 342 million to DKK 3,732 million versus the end of the first
quarter of 2021. The development was explained by positive free cash flow being more than offset by
the purchase of own shares and dividend payment. The leverage ratio (net interest-bearing debt to
LTM EBITDA before special items) remained unchanged at 1.7x (1.7x at 31 March 2021). The im-
provement of LTM EBITDA before special items offset the increased level of net interest-bearing debt.
17
Return on Invested Capital
The return on invested capital (ROIC) improved to 12.3% (7.6%) with a DKK 579 million improvement
in EBIT (12 months rolling) driven by the operational performance and based on an invested capital of
DKK 12.4 billion (DKK 12.5 billion).
18
CONSOLIDATED CASH FLOW STATEMENT
1 JANUARY - 30 JUNE
DKK million
Q2 2021
Q2 2020
6M 2021
6M 2020
Net profit for the period
Depreciation, amortisation and impairment
Adjustments
Changes in working capital
-221.1
Special items, paid
-47.2
-65.2
-100.4
-86.8
Cash flow from operating activities before financial
items
Financial income received
Financial costs paid
-29.4
-55.7
-47.6
-146.9
Cash flow from operating activities before tax
Tax payments
-108.8
-35.2
-156.9
-106.4
Cash flow from operating activities
Acquisitions
-1,560.1
Investment in intangible assets
-13.6
-12.7
-18.1
-15.1
Investment in property, plant and equipment
-47.3
-58.4
-88.8
-90.5
Sale of property, plant and equipment
Dividend from associated companies
Cash flow from investing activities
-55.6
-69.0
-98.4
-1,661.7
Free cash flow
-1,013.1
Repayment of lease liabilities
-13.4
-17.9
-29.3
-37.0
Other financing
-21.5
RCF / New external funding
Repayment bank loans
-626.3
-4,374.3
Dividend payment
-626.7
-626.7
-608.3
Purchase of treasury shares
-153.1
-294.8
Cash flow from financing activities
-376.5
-642.4
-417.2
Net cash flow for the period
-217.0
-681.6
Cash and cash equivalents, net at 1 April / 1 January
Exchange gains/losses on cash and cash equivalents
-4.2
Net cash flow for the period
-217.0
-681.6
Cash and cash equivalents, net at 30 June
Cash flows
Cash flow from operations before changes in working capital in the second quarter of 2021 was DKK
430 million (DKK 386 million). The development was driven by the improved operational results partly
offset by higher tax payments.
Working capital in the second quarter of 2021 had a positive impact on the cash flow by DKK 59 million
(DKK 109 million) mainly due to a reduced level of finished goods inventories.
19
Cash flow from investing activities amounted to DKK -56 million (DKK -69 million). The drop is ex-
plained by lower investments in property, plant and equipment.
Free cash flow before acquisitions in the second quarter of 2021 was positive by DKK 434 million
(DKK 425 million). The cash conversion ratio was 120% (143%).
For the first six months of 2021 cash flow from operations before changes in working capital was
DKK 842 million (DKK 619 million). Working capital had a negative impact of DKK -221 million (DKK
29 million) with a significant impact from a planned higher level of inventories of tax stamps. Free
cash flow before acquisitions was DKK 523 million (DKK 547 million) and the cash conversion ratio
was 86% (127%).
20
STATEMENT OF CHANGES IN GROUP EQUITY
1 JANUARY - 30 JUNE 2021
DKK million
Share
capital
Reserve
for
hedging
Reserve
for
currency
translation
Treasury
shares
Retained
earnings
Total
Equity at 1 January 2021
-14.5
-227.7
Comprehensive income for the period
Net profit for the period
Other comprehensive income
Cash flow hedges
Tax of cash flow hedges
-0.8
-0.8
Foreign exchange adjustments on net
investments in foreign operations
Total other comprehensive income
Total comprehensive income for the
period
Transactions with shareholders
Capital reduction
-2.5
-244.7
Purchase of treasury shares
-294.8
-294.8
Share-based payments
Settlement of vested PSUs
-16.4
Settlement in cash of vested PSU's
-4.5
-4.5
Dividend paid to shareholders
-650.0
-650.0
Dividend, treasury shares
Total transactions with shareholders
-2.5
-31.2
-885.5
-919.2
Equity at 30 June 2021
-11.5
-258.9
21
STATEMENT OF CHANGES IN GROUP EQUITY
1 JANUARY - 30 JUNE 2020
DKK million
Share
capital
Reserve
for
hedging
Reserve
for
currency
translation
Treasury
shares
Retained
earnings
Total
Equity at 1 January 2020
-15.1
-35.0
Comprehensive income for the period
Net profit for the period
Other comprehensive income
Cash flow hedges
-11.8
-11.8
Tax of cash flow hedges
Foreign exchange adjustments on net
investments in foreign operations
-100.1
-100.1
Total other comprehensive income
-9.2
-100.1
-109.3
Total comprehensive income for the
period
-9.2
-100.1
Transactions with shareholders
Share-based payments
Settlement of vested PSUs
-4.2
Settlement in cash of vested PSU's
-1.3
-1.3
Dividend paid to shareholders
-610.0
-610.0
Dividend, treasury shares
Total transactions with shareholders
-608.0
-603.8
Equity at 30 June 2020
-24.3
-30.8
22
NOTES
NOTE 1
BASIS OF PREPARATION
The unaudited interim report has been prepared in accordance with IAS 34 and additional Danish
disclosure requirements for listed companies.
Significant accounting estimates
The estimates made by STG in the determination of the carrying amounts of assets and liabilities are
based on assumptions that are subject to future events. For a description of risks and accounting es-
timates, see the Annual Report for 2020.
Accounting policies
The interim report has been prepared in accordance with the accounting policies set out in the An-
nual Report for 2020.
NOTE 2
SEGMENT INFORMATION AND NET SALES
6M 2021
North
America
Online
& Retail
North
America
Branded
& RoW
Europe
Branded
Group
costs /
not
allocated
Total
DKK million
Net sales
1,266.6
1,453.6
1,318.4
-
4,038.6
Cost of goods sold
-758.7
-658.9
-595.1
-
-2,012.7
Gross profit before special items
507.9
794.7
723.3
-
2,025.9
Staff and other external costs
-277.3
-209.7
-353.7
-52.4
-893.1
EBITDA before special items
230.6
585.0
369.6
-52.4
1,132.8
Depreciation and impairment
-100.2
-100.2
Amortisation and impairment
-80.7
-80.7
EBIT before special items
-233.3
951.9
Special items, costs and impairment
-40.9
-40.9
EBIT
-274.2
911.0
Share of profit of associated
companies, net of tax
15.6
15.6
Financial income
24.1
24.1
Financial costs
-56.3
-56.3
Profit before tax
-290.8
894.4
23
NOTE 2
SEGMENT INFORMATION AND NET SALES (continued)
6M 2020
North
America
Online
& Retail
North
America
Branded
& RoW
Europe
Branded
Group
costs /
not
allocated
Total
DKK million
Net sales
1,277.1
1,221.9
1,353.2
-
3,852.2
Cost of goods sold
-783.9
-607.0
-740.2
-
-2,131.1
Gross profit before special items
493.2
614.9
613.0
-
1,721.1
Staff and other external costs
-262.1
-208.7
-400.5
-35.2
-906.5
EBITDA before special items
231.1
406.2
212.5
-35.2
814.6
Depreciation and impairment
-126.6
-126.6
Amortisation and impairment
-84.6
-84.6
EBIT before special items
-246.4
603.4
Special items, costs and impairment
-233.8
-233.8
EBIT
-480.2
369.6
Share of profit of associated
companies, net of tax
7.1
7.1
Financial income
36.1
36.1
Financial costs
-81.0
-81.0
Profit before tax
-518.0
331.8
DKK million
6M 2021
6M 2020
Category split, net sales
Handmade cigars
1,474.1
1,349.6
Machine-rolled cigars
1,426.4
1,437.6
Smoking tobacco
590.6
547.2
Accessories and CMA
547.5
517.8
Total net sales
4,038.6
3,852.2
Licence income and other sales of DKK 22.5 million (DKK 20.9 million) are included in the category 'Accesso-
ries and Contract Manufacturing'.
DKK million
6M 2021
6M 2020
Geographical split, net sales
Americas
2,132.0
1,936.7
Europe
1,688.4
1,721.8
Rest of World
218.2
193.7
Total net sales
4,038.6
3,852.2
24
NOTE 3
SPECIAL ITEMS
DKK million
6M 2021
6M 2020
Integration and transactions costs (Agio Cigars)
23.1
108.4
Fuelling the Growth programme
-
2.6
Production footprint
17.8
13.5
Impairment tangible assets
-
109.3
Total special items
40.9
233.8