XCSE:STG ESEF Annual Report
SCANDINAVIAN TOBACCO GROUP A/S (XCSE:STG)
ESEF Annual Report
2024-11-26
For: 2024-09-30
View Original
Added on
September 22, 2026
Company Announcement
No. 61/2024
Copenhagen, 12 November 2024
Interim report, 1 January - 30 September 2024
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 Genera-
tion Products was partly offset by a decline in Handmade Cigars and accessories. The Next Genera-
tion 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 bil-
lion), 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).
2
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 communi-
cated 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 ac-
companying presentation will be available at investor.st-group.com/investor around 09:00 CEST.
3
Key Figures
DKK million
Q3 2024
Q3 2023
9M 2024
9M 2023
FY2023
INCOME STATEMENT
Net sales
2,431
2,269
6,745
6,456
8,731
Gross profit before special items
1,126
1,092
3,116
3,115
4,204
EBITDA before special items
568
602
1,483
1,589
2,106
Special items
-49
-14
-131
-58
-92
EBIT
401
489
1,039
1,254
1,638
Net financial items
1
-26
-44
-132
-98
-177
Profit before tax
383
453
927
1,180
1,491
Income taxes
-86
-102
-208
-266
-308
Net profit
297
351
719
914
1,182
BALANCE SHEET
Total assets
16,803
16,484
15,853
Equity
8,698
9,511
9,434
Net interest-bearing debt (NIBD)
5,804
4,482
4,057
Investment in property, plant and equipment
69
54
169
142
199
Total capital expenditures
84
75
215
221
308
CASH FLOW STATEMENT
Cash flow from operating activities
355
694
530
813
1,347
Cash flow from investing activities
-565
-72
-774
-794
-875
Free cash flow
-210
622
-245
19
472
Free cash flow before acquisitions
275
622
327
602
1,053
KEY RATIOS
2
Net sales growth
7.1%
-3.9%
4.5%
-1.8%
-0.4%
Gross margin before special items
46.3%
48.2%
46.2%
48.3%
48.2%
EBITDA margin before special items
23.4%
26.5%
22.0%
24.6%
24.1%
Effective tax percentage
22.4%
22.5%
22.5%
22.5%
20.7%
Equity ratio
51.8%
57.7%
59.5%
Cash conversion
111.6%
164.6%
86.1%
88.7%
103.0%
Organic net sales growth
-0.1%
-1.1%
0.9%
-1.2%
0.3%
Organic EBITDA growth
-9.2%
-0.1%
-8.5%
-4.7%
-5.0%
NIBD / EBITDA before special items
2.9
2.1
1.9
ROIC
9.8%
12.9%
11.4%
ROIC ex. Goodwill
15.5%
20.6%
18.1%
Adjusted earnings per share (DKK)
4.1
4.1
9.9
10.8
14.4
Basic earnings per share (DKK)
3.7
4.1
8.6
10.6
13.7
Diluted earnings per share (DKK)
3.6
4.0
8.6
10.5
13.6
Number of shares issued ('000)
86,000
87,000
87,000
Number of treasury shares ('000)
6,244
382
1,105
Number of outstanding shares ('000)
3
83,083
86,798
86,668
Share price at balance date (DKK)
102.80
107.50
117.30
Dividend per share (DKK)
8.40
Pay-out ratio
61.8%
1. Excl. share of profit of associated companies.
2. See definition/explanation of financial ratios in note 5.8 in the Annual Report 2023.
3. Average number of shares outstanding, including dilutive effect of PSUs.
4
Third Quarter 2024 - Financial performance
In the third quarter of 2024 the Group´s net sales reported in DKK increased by 7.1% to DKK 2,431
million. The increase in reported net sales was impacted by the acquisition of Mac Baren by 7%, whilst
the impact from exchange rate developments was close to 0%. The organic growth in net sales was
negative by 0.1% (see Table 1).
The Group’s organic net sales performance was comprised by positive contributions from the product
categories Machine-Rolled Cigars & Smoking Tobacco and Next Generation Products, whereas the
product category Handmade Cigars and Others (primarily accessories in Australia) delivered negative
organic net sales growth. Measured by our reporting divisions, the organic net sales performance was
driven by 6% growth in Europe Branded (“EUB”) while the development was negative in both North
America Online & Retail (“NAOR”) with 1% and North America Branded & Rest of World (“NABROW”)
with 5%.
The EBITDA margin before special items decreased to 23.4% (26.5%). The margin decreased in all
three reporting divisions compared to the third quarter of last year. The lower Group margin is primarily
driven by the comparison to a strong third quarter 2023, the inclusion of Mac Baren, continued invest-
ments in our NGP category and the continued absence of the distribution of third-party NGP products
in the US, which we communicated in our half-year report in August. The OPEX ratio increased to
23.3% in the quarter from 21.6% in the third quarter last year. Special items were DKK 49 million
primarily relating to the Group’s ERP implementation programme, One Process and the reorganisation
to One Commercial Organisation. Net profit was DKK 297 million (DKK 351 million) with Adjusted
Earnings Per Share at DKK 4.1 (DKK 4.1).
Divisional split Q3 2024
Net sales and organic growth EBITDA before special items and organic growth
Group net sales and EBITDA Q3 2024
Table 1: Net sales
Table 2: EBITDA before special items
Q3
Q3
Change
DKK million
2024
2023
in %
Net sales
2,431
2,269
7.1%
Acquisitions
173
Currency development
8
Organic net sales
2,439
2,442
-0.1%
Q3
Q3
Change
DKK million
2024
2023
in %
EBITDA
568
602
-5.7%
Acquisitions
23
Currency development
0
Organic EBITDA
568
625
-9.2%
34%
35%
31%%
NA Branded &
RoW
Europe Branded
NA Online &
Retail
50%
33%
17%
DKK 2,431m
-0.1%
DKK 568m
-9.2%
5
The Group’s free cash flow before acquisitions was DKK 275 million (DKK 622 million). The develop-
ment is negatively impacted by the operational performance as well as changes in working capital,
which was negative by DKK 25 million in the third quarter of 2024 compared with positive DKK 303
million in the third quarter of 2023. The Group´s leverage ratio was 2.9 times versus 1.9 times by the
end of 2023 and 2.1 times by the end of the third quarter 2023. The leverage ratio is expected at about
2.7x times by the end of 2024 supported by a strong cash-flow in the fourth quarter.
The 12 months rolling Return on Invested Capital (ROIC) decreased to 9.8% versus 11.4% by the
end of 2023 driven by the development in EBIT (12 months rolling). Invested capital showed a slight
increase compared to 31 December 2023 and stood at DKK 14.5 billion (DKK 14.3 billion).
Update Strategy and Other Key Events
Integration of Mac Baren
Following the acquisition of Mac Baren Tobacco Company A/S (“Mac Baren”) at a transaction value of
DKK 535 million with effect from of 1 July 2024, the plan for the integration of Mac Baren into Scandi-
navian Tobacco Group has been completed.
The integration plan confirms the value creation by acquiring companies within our core product cate-
gories. The combination of Scandinavian Tobacco Group and Mac Baren is expected to deliver signif-
icant cost synergies within sales & marketing, back-office functions, and by combining the manufac-
turing footprint as well as by optimising the combined brand portfolios. The integration of Mac Baren
is expected to deliver synergies in the level of DKK 150 million. The majority of the synergies are
expected to be realised during 2025 and 2026 with full effect in 2027. Special costs to reach the tar-
geted cost synergies are estimated at the level of 150 million. Additionally, capital expenditures in the
level of DKK 125 million are expected in relation to the integration.
For the fourth quarter 2024, synergies as well as special costs will be immaterial. The timing of syner-
gies as well as special costs will be communicated in relation to the announcement of the Annual
Report 2024, in March 2025.
Mac Baren is a leading global smoking tobacco company, which includes a strong portfolio of pipe
tobacco brands, fine-cut tobacco brands and brands within the nicotine pouch category.
Growth Enablers
Growth Enablers comprise international sales of handmade cigars (outside of the US), retail stores
and Next Generation Products.
Cigars International opened one new retail superstore in August 2024, located in East Ridge, Tennes-
see to be followed by the opening of two stores, one in Jacksonville, Florida and another in South
Fayette, Pennsylvania in the fourth quarter. Cigars International now operates 12 cigar super stores
across four states in the US. The retail stores are accretive to both the EBITDA margin and to ROIC
for the Group and have become an important part of the Group’s ambition to grow the handmade cigar
category through an increasing amount of consumer touchpoints. Retail delivered double-digit growth
with same-store sales up by 11% in the third quarter.
International sales of handmade cigars continued to deliver growth in net sales and the expansion of
the handmade cigar business outside the US remains a high priority and further expansion of con-
sumer touchpoints will contribute to this growth.
6
Reported net sales for Next Generation Products (NGP) increased by a high double-digit percentage
primarily driven by strong performance of the nicotine pouch brand XQS, which increased by 72%.
Market share developments remain positive in Sweden and the recent launches in the UK market late
in the second quarter have been positively received by consumers. The brand was also launched in
the Danish market in September. We aim to take further market share in these markets.
As communicated in our results release in August, NGP net sales have since the beginning of the third
quarter been negatively impacted by the absence of the third-party distribution of nicotine pouches in
the US. The distribution will be discontinued.
Net sales from the Growth Enablers accounted for 9% of Group net sales in the third quarter of 2024
compared with 12% in the second quarter 2024, which included about 3% of group net sales from the
mentioned third-party distribution agreement. The Growth Enablers accounted for 8% of Group net
sales in the full-year 2023, which included about 1% of net sales from the above-mentioned third-party
distribution agreement.
Capital Allocation
During the quarter, the Group repurchased 2,033,083 treasury shares at a total value of DKK 209
million as part of the up to DKK 850 million share buy-back programme which was launched November
2023. During the first nine months of 2024, the Group has repurchased shares at a total value of DKK
660 million.
By the end of the third quarter Scandinavian Tobacco Group owned a total of 6,243,982 treasury
shares, corresponding to 7.3% of the total share capital.
The capital distribution to shareholders, including the ordinary dividend payment of DKK 731 million in
April, amounts to DKK 1,391 million during the first nine months of 2024.
Refinancing
In September, Scandinavian Tobacco Group A/S issued 5-year senior unsecured notes for a principal
amount of EUR 300 million with maturity in September 2029 and with a coupon of 4.875%. Moody´s
Investor Services has assigned the bond a rating of Baa3, in line with the rating of Scandinavian To-
bacco Group A/S. The bond was issued on 12 September 2024 and is listed on the regulated market
of Euronext Dublin.
Simultaneously, Scandinavian Tobacco Group launched a tender offer for its outstanding EUR 300
million corporate bond with a coupon of 1.375% and with expiration due 24 September 2025. As result
of the tender a total of EUR 187 million have been repurchased, whereby the principal amount of
1.375% notes that remain outstanding is EUR 113 million.
7
Financial Guidance 2024
The full-year 2024 expectations have been updated to include the financial impact from Mac Baren,
which was consolidated from 1 July 2024. Excluding the impacts from Mac Baren the expectations
remain within the original guidance range, as communicated in August 2024, though in the lower end
given the absence of the third-party distribution of nicotine pouches in the US and weaker total market
developments.
The consumption of handmade cigars has been declining following the extraordinary growth during
the pandemic in 2020 and 2021. Currently, the market is estimated to contract by a mid-single digit
percentage and there are still no clear signs of when the decline rate will stabilise at a lower level due
to low visibility of US consumer behaviour and spending. However, we continue to expect price in-
creases on our products, continued growth in our online and retail distribution channels as well as in
our international markets to more than offset the decrease in US-based consumption. For 2024, we
expect organic net sales of handmade cigars to increase compared with last year.
The total market for machine-rolled cigars in our key markets in Europe has recently delivered im-
proving volume decline rates compared with the first half of the year. Furthermore, the strategy to
reverse our market share position by increased investments has started to pay off as we have seen
the European market share index slightly improve for the second quarter in a row. However, our
actions must continue to be based on up-to-date assessments of the market trends with our initiatives
focusing on rebuilding our market positions further as well as to improve our cost agility, should market
volumes trends deteriorate again.
We expect net sales from our own NGP brands to continue the current momentum and to increase
versus last year by more than 50% for the full year driven by market share expansion and roll-out to
new markets. The nicotine pouch business from Mac Baren will add to reported growth, while the
organic growth rate for the product category will be negatively impacted by the discontinuation of the
third-party distribution of nicotine pouches in the US.
Based on the above and at current exchange rates, the Group reported net sales are expected in the
level of DKK 9.1 billion (2023: DKK 8.7 billion). The Growth Enablers are expected to account for about
10% of Group net sales in 2024.
The EBITDA margin before special items is expected in the range of 22-23% (2023: 24.1%). The
margin is being diluted by increased investments in the roll-out of XQS to new markets, expansion of
our retail network in the US, investments in regaining market positions in machine-rolled cigars in
Europe as well as product and market mix changes, including the impact from Mac Baren. These
factors are partly being offset by price increases, continued cost optimisations and the expected refund
of certain import tax payments. With the continued uncertainty in volume trends for our core cigar
categories, the Group ongoingly is implementing cost initiatives to optimise cost structures, increase
agility and achieve efficiency gains like we have done with the implementation of One Commercial
Organization.
Free cash flow is expected in the range of DKK 0.8-0.9 billion (DKK 1,053 million) and is impacted by
investments of up to DKK 300 million compared with a level of DKK 200 million in 2023 in the retail
expansion in the US, the completed track and trace implementation in the EU and in the ERP-roll-out.
Despite an expected improvement in the fourth quarter, the working capital for the full year is expected
to deliver a negative contribution primarily relating to the expected increase in net sales, higher cost
prices and the expansion into new product groups.
8
Adjusted EPS is expected in the level of DKK 12.5 including an estimated impact from the share re-
purchase programme of DKK 0.7-0.8.
Given these considerations and including Mac Baren, guidance for 2024 is:
• 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.
For the fourth quarter of the year, the Group is expected to deliver a slightly declining organic net sales
growth and an EBITDA margin at the level of the fourth quarter of last year.
The largest uncertainties for the guidance are ongoing changes in consumer behaviour, the market
share development in machine-rolled cigars in Europe and changes in market and/or product mix.
Guidance and assumptions are based on no impact from potential new acquisitions and at current
exchange rates*.
* A 10% change in the USD/DKK exchange rate would impact group net sales by approximately 5 percentage points with
EBITDA margins being only marginally impacted.
Events after the reporting period
There are no other events than those mentioned in the above that have occurred after 30 September
2024 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.
Financial calendar for 2025
Annual Report 2024 6 March 2025
Annual General Meeting 9 April 2025
Interim report Q1 2025 14 May 2025
Interim report Q2 2025 27 August 2025
Interim report Q3 2025 11 November 2025
9
Sales performance by category
Net sales distribution and growth by category
Handmade Cigars
Handmade cigars net sales decreased in the third quarter of the year by 1% organically and by 1% in
reported net sales. The impact from exchange rates have been immaterial during the quarter. Reported
net sales of handmade cigars in international markets (excl. the US) increased 4%. Reported net sales
of handmade cigars in our retail superstores in the US continued its healthy performance by delivering
14% growth as result of store openings in the previous two years as well as growth in the same-store
sales. Reported net sales of handmade cigars sold online increased by 2% as an increase in the
average basket size more than offset the decline in the number of active consumers, which has not
yet fully stabilised. Reported net sales of handmade cigars to external wholesalers and distributors
supplying retail in North America (within NAB) is primarily impacted by an overall consumption in the
US, which as of end of September 2024, is estimated to have declined by more than 5%.
Machine-rolled Cigars and Smoking Tobacco
Machine-rolled cigars (MRC) and smoking tobacco (ST) net sales increased in the third quarter of the
year by 3% organically and by 15% in reported net sales. The acquisition of Mac Baren increased net
sales by 11%.
For the third quarter, improving volume decline in machine-rolled cigars, a positive organic growth for
smoking tobacco in Europe, in particular fine-cut tobacco, and pricing across all categories contributed
to the improved overall performance compared to a weak beginning to the year. The decrease in
organic net sales in machine-rolled cigars was 2% compared with more than 5% in the second quarter.
Preliminary data for the total market development in our key European markets indicate a decline rate
of 1.4% in the third quarter compared with a decline of 3.7% year-to-date. All markets delivered im-
proved volume trends in the third quarter compared to the first half of the year. The UK market continue
to decline by a low double-digit rate, whereas markets like France and Belgium have shown most
improvement. In our key European markets, preliminary data indicate that our volume market share
improved to 28.1% compared with 27.9% in the second quarter and 27.7% in the first quarter of 2024.
France in particular is showing market share improvements in the third quarter compared to the second
quarter. Pricing remains sound in all major markets supported by the initiatives we are taking to rebuild
long-term market positions.
The organic development within Smoking Tobacco was positive by 11% driven by a double-digit vol-
ume increase for fine-cut tobacco and sound pricing in all categories. Net sales of fine-cut tobacco
were driven by Germany, where our brand BREAK continue to take market share, Norway and Global
Travel Retail.
10
Next Generation Products
Reported net sales for Next Generation Products (NGP) increased by 72% driven by the acquisition
of the Mac Baren brands Ace and Gritt, continued high double-digit growth by the XQS brand being
partly offset by the pause the distribution of a third-party NGP product in the US market. Organic
growth, including the impact from acquisition of Mac Baren on a like-for-like basis was 2%.
NGP accounted for almost 4% of Group net sales in the third quarter compared with 2% in the third
quarter of 2023. For the first nine months 2024, the share was 5% compared with 2% for the first nine
months of 2023. The strong performance by the XQS brand relates to its launch in the UK and the
Danish markets during 2024 and as the brand continue to take market share in its largest of markets,
Sweden. The roll-out of the brand in additional markets is expected to continue during the coming
quarters.
Other
In the third quarter organic net sales in the category Other, declined by 11% organically. The decline
primarily relates to lower sales of accessories in Australia.
Financial performance by division
Europe Branded
Europe Branded delivered 5.8% positive organic net sales growth in the third quarter of 2024, while
reported net sales increased by 18.8%. Acquisitions impacted net sales by almost 12%. Handmade
cigars, smoking tobacco and NGPs delivered double-digit organic net sales growth while the decline
rate in organic net sales for machine-rolled cigars was about 1%. The development in market share
for machine rolled cigars continued to improve from its low point in the beginning of the year and it
remain a key focus for the Group to rebuild market share over time. The volume decline in the category
is being partly offset by pricing.
Third Quarter Development, 2020-2024
For the third quarter of 2024, EBITDA before special items increased to DKK 200 million (DKK 176
million) with an EBITDA margin before special items of 23.6% (24.6%). The decrease in the EBITDA
margin is primarily driven by the inclusion of Mac Baren and the investments in continued growth of
our NGP business.
10%
15%
20%
25%
30%
35%
400
500
600
700
800
Q3 2020 Q3 2021 Q3 2022 Q3 2023 Q3 2024
Net sales and EBITDA margin b.s.i.
Net Sales (DKK million) EBITDA margin
11
For the first nine months of 2024 reported net sales increased to DKK 2,242 million with a positive
organic growth of 1.8%. Gross profit before special items increased by 3.4% to DKK 1,093 million and
the gross margin was 48.8% (51.1%). EBITDA before special items decreased by 2.0% to DKK 477
million with an EBITDA margin of 21.3% (23.5%).
North America Branded & Rest of World
North America Branded & Rest of World delivered a 3.5% increase in reported net sales in the third
quarter of 2024, while organic net sales decreased by 4.8%. The acquisition of Mac Baren added 8%
to net sales, while the impact from exchange rate developments was immaterial.
The development was impacted by volume decline from handmade cigars in the US and lower contract
manufacturing sales. Machine-rolled cigars and smoking tobacco delivered positive organic net sales
growth. Net sales of handmade cigars in the US to external wholesalers and distributors declined by
a high single digit percentage driven by the overall decline in consumption as well as lower contract
manufacturing sales. Net sales to our international markets continue to develop well, although the
growth rate was lower than in previous quarters.
Third Quarter Development, 2020-2024
EBITDA before special items decreased to DKK 297 million (DKK 321 million) with an EBITDA margin
before special items of 35.5% (39.7%). The development in the profitability was driven by a normali-
sation of mix compared to a strong third quarter last year as well as the impact of lower margin of the
Mac Baren net sales. The OPEX ratio was almost unchanged.
For the first nine months of 2024 reported net sales decreased to DKK 2,269 million with organic
growth being negative by 4.8%. Gross profit before special items decreased by 6.5% to DKK 1,147
million and the gross margin was 50.5% (53.3%). EBITDA before special items decreased by 9.1% to
DKK 783 million with an EBITDA margin of 34.5% (37.4%).
North America Online & Retail
North America Online & Retail delivered 0.9% negative organic net sales growth in the third quarter of
2024, while the reported net sales decreased by 0.2%. The acquisition of Mac Baren added 1.5% to
net sales growth, while exchange rate developments impacted negatively by almost 1%.
Organic net sales growth was negatively impacted by the discontinuation of distribution of third party
NGP products. The positive momentum of handmade cigars in both the online business and in our
retail stores continued. In the online business growth was driven by an increase in the average basket
size while double digit net sales in the retail business were driven by the opening of new super stores
in previous years and a 11% increase in the same-store-sales. One new store was opened during the
third quarter of the year with an additional two stores being opened in the early part of the fourth
quarter.
20%
25%
30%
35%
40%
45%
500
600
700
800
900
Q3 2020 Q3 2021 Q3 2022 Q3 2023 Q3 2024
Net sales and EBITDA margin b.s.i.
Net Sales (DKK million) EBITDA margin
12
Third Quarter Development, 2020-2024
EBITDA before special items decreased to DKK 103 million (DKK 129 million) with an EBITDA margin
before special items of 13.9% (17.4%). The development in the profitability was a result of the absence
of third-party distribution of NGP products, impacting OPEX ratio negatively as well as the inclusion of
Mac Baren net sales.
For the first nine months of 2024 net sales increased by 7.1% to DKK 2,234 million with an organic
growth of 6.6%. Gross profit before special items increased by 5.5% to DKK 876 million and the gross
margin was 39.2% (39.8%). EBITDA before special items increased by 0.7% to DKK 336 million with
an EBITDA margin of 15.1% (16.0%).
5%
10%
15%
20%
25%
300
400
500
600
700
800
Q3 2020 Q3 2021 Q3 2022 Q3 2023 Q3 2024
Net sales and EBITDA margin b.s.i.
Net Sales (DKK million) EBITDA margin
13
Quarterly Financial Data
2024 2023 2024 2023
DKK million Q3 Q2 Q1 Q4 Q3 9M 9M 12M
Reported data
Net sales 2,431 2,366 1,948 2,275 2,269 6,745 6,456 8,731
Gross profit before special items 1,126 1,109 881 1,089 1,092 3,116 3,115 4,204
EBITDA before special items 568 580 335 517 602 1,483 1,589 2,106
Special items -49 -53 -30 -35 -14 -131 -58 -92
EBIT 401 429 208 385 489 1,039 1,254 1,638
Net financial items -26 -53 -54 -79 -44 -132 -98 -177
Profit before tax 383 385 159 311 453 927 1,180 1,491
Income taxes -86 -88 -34 -43 -102 -208 -266 -308
Net profit 297 297 125 268 351 719 914 1,182
Other financial key data
Organic EBITDA growth -9.2% 11.4% -29.1% -5.7% -0.1% -8.5% -4.7% -5.0%
Organic net sales growth -0.1% 4.8% -2.1% 5.0% -1.1% 0.9% -1.2% 0.3%
Gross margin before special items 46.3% 46.9% 45.2% 47.9% 48.2% 46.2% 48.3% 48.2%
EBITDA margin before special items 23.4% 24.5% 17.2% 22.7% 26.5% 22.0% 24.6% 24.1%
Free cash flow before acquisitions 275 177 -126 452 622 327 602 1,053
North America Online & Retail
Net sales 743 840 650 738 745 2,234 2,086 2,824
Gross profit before special items 290 331 255 293 299 876 831 1,124
EBITDA before special items 103 152 81 108 129 336 334 443
Net sales growth -0.2% 13.6% 8.1% 4.9% -3.2% 7.1% 0.5% 1.7%
Organic net sales growth -0.9% 12.1% 9.2% 10.4% 4.4% 6.6% 2.9% 4.8%
Gross margin before special items 39.0% 39.4% 39.2% 39.8% 40.1% 39.2% 39.8% 39.8%
EBITDA margin before special items 13.9% 18.1% 12.5% 14.7% 17.4% 15.1% 16.0% 15.7%
North America Branded & RoW
Net sales 837 751 681 743 809 2,269 2,301 3,044
Gross profit before special items 416 391 340 380 435 1,147 1,227 1,606
EBITDA before special items 297 275 211 242 321 783 861 1,104
Net sales growth 3.5% -2.9% -5.4% -1.0% -4.9% -1.4% -5.8% -4.7%
Organic net sales growth -4.8% -3.5% -6.1% -1.4% -2.6% -4.8% -5.8% -4.7%
Gross margin before special items 49.7% 52.0% 50.0% 51.1% 53.8% 50.5% 53.3% 52.8%
EBITDA margin before special items 35.5% 36.6% 31.2% 32.6% 39.7% 34.5% 37.4% 36.3%
Europe Branded
Net sales 850 775 617 794 716 2,242 2,069 2,863
Gross profit before special items 420 388 286 416 359 1,093 1,058 1,474
EBITDA before special items 200 193 83 196 176 477 487 683
Net sales growth 18.8% 8.8% -3.8% 8.6% -3.5% 8.3% 0.5% 2.6%
Organic net sales growth 5.8% 6.1% -7.7% 6.7% -4.8% 1.8% 0.1% 1.8%
Gross margin before special items 49.5% 50.0% 46.3% 52.4% 50.1% 48.8% 51.1% 51.5%
EBITDA margin before special items 23.6% 24.9% 13.8% 24.7% 24.6% 21.3% 23.5% 23.8%
Group costs
EBITDA before special items -33 -40 -40 -30 -25 -113 -93 -123
14
EXECUTIVE MANAGEMENT
BOARD OF DIRECTORS
15
CONSOLIDATED STATEMENT OF INCOME
1 JANUARY - 30 SEPTEMBER
DKK million
Note
Q3 2024
Q3 2023
9M 2024
9M 2023
INCOME STATEMENT
Net sales
2
Cost of goods sold
2
-1,304.5
-1,176.3
-3,628.2
-3,341.0
Gross profit before special items
2
Other external costs
2
-293.8
-277.8
-878.2
-847.5
Staff costs
2
-272.9
-212.6
-783.0
-678.7
Other income
2
Earnings before interest, tax, depreciation, amortisa-
tion and special items (EBITDA before special items)
2
Depreciation and impairment
-68.9
-52.3
-176.1
-147.1
Earnings before interest, tax, amortisation and special
items (EBITA before special items)
Amortisation and impairment
-48.9
-46.2
-137.0
-130.8
Earnings before interest, tax and special items (EBIT
before special items)
Special items, costs and impairment
3
-48.8
-14.2
-131.4
-57.8
Earnings before interest and tax (EBIT)
Share of profit of associated companies, net of tax
Financial income
Financial costs
-78.4
-105.7
-216.2
-259.2
Profit before tax
Income taxes
-85.9
-102.0
-208.3
-265.5
Net profit for the period
Earnings per share
Basic earnings per share (DKK)
Diluted earnings per share (DKK)
STATEMENT OF COMPREHENSIVE INCOME
Net profit for the period
OTHER COMPREHENSIVE INCOME
Items that will be recycled subsequently to the Consolidated Income Statement, when specific conditions are met:
Foreign exchange adjustments on net investments in
foreign operations
-271.0
-86.2
Other comprehensive income for the period, net of tax
-271.0
-86.2
Total comprehensive income for the period
16
Net sales
In the third quarter of 2024, net sales were DKK 2,431 million (DKK 2,269 million). Adjusted for a
negative exchange rate impact of DKK 8 million and acquisitions of DKK 173 million, the organic growth
in net sales was negative by 0.1%. For the first nine months of 2024, net sales came to DKK 6,745
million (DKK 6,456 million) with organic net sales growth being positive by 0.9%.
Profit
Gross profit before special items for the third quarter of 2024 was DKK 1,126 million (DKK 1,092 mil-
lion) driven by the increase in net sales. Gross margin before special items decreased to 46.3%
(48.2%).
Operating expenses for the third quarter of 2024 increased by 15.6% compared to same quarter last
year and stood at DKK 567 million (DKK 490 million). The OPEX ratio increased to 23.3% (21.6%).
EBITDA before special items for the third quarter of 2024 amounted to DKK 568 million (DKK 602
million). The development is mainly explained by the decreased gross margin and increased OPEX
ratio. Organic EBITDA growth was negative by 9.2% (-0.1%).
EBITDA margin before special items for the third quarter of 2024 was 23.4% (26.5%).
During the quarter DKK 49 million (DKK 14 million) have been expensed as special items, relating to
the ERP implementation project, OneProcess, the reorganisation to One Commercial Organisation
and transaction costs for the Mac Baren acquisition.
Net profit was DKK 297 million (DKK 351 million). Earnings Per Share (EPS) were DKK 3.7 (DKK 4.1).
Earnings Per Share adjusted for special items, fair value adjustments and currency gains/losses, net
of tax was unchanged compared to same quarter last year and stood at DKK 4.1 (DKK 4.1).
In the first nine months of 2024, gross profit before special items was DKK 3,116 million (DKK 3,115
million) with a gross margin of 46.2% (48.3%). EBITDA before special items was DKK 1,483 million
(DKK 1,589 million) with an EBITDA margin of 22.0% (24.6%). Special items of DKK 131 million were
expensed (DKK 58 million), net profit was DKK 719 million (DKK 914 million) with an EPS adjusted for
special items, fair value adjustments and currency gains/losses, net of tax at DKK 9.9 (DKK 10.8).
Third Quarter Development, 2020-2024
10%
14%
18%
22%
26%
30%
1000
1300
1600
1900
2200
2500
Q3 2020 Q3 2021 Q3 2022 Q3 2023 Q3 2024
Net sales and EBITDA margin b.s.i.
Net Sales (DKK million) EBITDA margin
17
CONSOLIDATED BALANCE SHEET
ASSETS
DKK million
Note
30 Sep 2024
30 Sep 2023
31 Dec
2023
INTANGIBLE ASSETS
Goodwill
Trademarks
IT software
Other intangible assets
Intangible assets under development
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
Total current assets
Total assets
18
CONSOLIDATED BALANCE SHEET
EQUITY AND LIABILITIES
DKK million
Note
30 Sep 2024
30 Sep 2023
31 Dec 2023
Share capital
Reserve for currency translation
Treasury shares
-682.8
-56.2
-141.4
Retained earnings
Total equity
Borrowings
4
Deferred income tax liabilities
Pension obligations
Other provisions
Lease liabilities
Other liabilities
Total non-current liabilities
Borrowings
4
Trade payables
Corporate tax
Other provisions
Lease liabilities
Other liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
Net interest-bearing debt
Net interest-bearing debt increased by DKK 1,747 million to DKK 5,804 million versus the end of 2023.
The development is mainly explained by additional draw on RCF during the first half of 2024 and the
bond issuance in the third quarter of 2024. The leverage ratio (net interest-bearing debt to LTM
EBITDA before special items) increased to 2.9x (1.9x on 31 December 2023) partly as result of the
Mac Baren acquisition being consolidated as from 1 July 2024.
Return on Invested Capital
The return on invested capital (ROIC) decreased to 9.8% versus 11.4% by the end of 2023, explained
by a DKK 215 million decrease in EBIT (12 months rolling) driven by the operational performance.
Invested capital showed a slight increase and amounted to DKK 14.5 billion (DKK 14.3 billion).
19
CONSOLIDATED CASH FLOW STATEMENT
1 JANUARY - 30 SEPTEMBER
DKK million
Q3 2024
Q3 2023
9M 2024
9M 2023
Net profit for the period
Depreciation, amortisation and impairment
Adjustments
Changes in working capital
-24.7
-302.7
-291.1
Special items, paid
-54.5
-17.0
-121.9
-64.2
Cash flow from operating activities before financial
items
Financial income received
Financial costs paid
-87.6
-81.8
-181.1
-174.7
Cash flow from operating activities before tax
Tax payments
-76.3
-135.0
-357.2
-319.0
Cash flow from operating activities
Acquisitions
-485.6
-571.5
-582.5
Investment in intangible assets
-15.0
-20.7
-46.5
-79.0
Investment in property, plant and equipment
-68.6
-54.1
-168.8
-141.9
Sale of property, plant and equipment
Dividend from associated companies
Cash flow from investing activities
-564.7
-71.6
-774.3
-794.0
Free cash flow
-210.2
-244.5
Repayment of lease liabilities
-37.3
-18.9
-73.6
-50.6
RCF
-354.8
-660.0
New external funding - bond issuance
Repurchase of bonds
-1,355.0
-1,355.0
Repayment bank loans
-0.9
-1.0
-2.9
-3.2
Dividend payment
-709.8
-714.6
Purchase of treasury shares
-217.0
-650.5
-103.8
Cash flow from financing activities
-679.9
Net cash flow for the period
-57.8
-33.8
Cash and cash equivalents, net at 1 July / 1 January
Exchange gains/losses on cash and cash equivalents
-1.6
-0.4
-1.0
-6.4
Net cash flow for the period
-57.8
-33.8
Cash and cash equivalents, net at 30 September
20
Cash flow
Cash flow from operations before changes in working capital in the third quarter of 2024 was DKK 379
million (DKK 391 million). The development was driven by the operational result, higher special item
payments and slightly higher net financial costs paid, being partly offset by lower tax payments.
Changes in working capital in the third quarter of 2024 had a negative impact on the cash flow by DKK
25 million (positive DKK 303 million) mainly due to increased level of trade receivables partly offset by
reduced inventories.
Cash flow from investing activities amounted to DKK -565 million (DKK -72 million). The third quarter
of 2024 was impacted by the acquisition of Mac Baren, 1 July 2024.
Cash flow from financing activities amounted to DKK 268 million (DKK -680 million). The third quarter
of 2024 was impacted by issuance of a new bond with external funding of DKK 2,233 million, being
partly offset by repurchase of the existing bond (only partly repurchased), repayment of credit facilities
and purchase of treasury shares. The third quarter of 2023 consisted of repayment on credit facilities.
Free cash flow before acquisitions in the third quarter of 2024 was positive by DKK 275 million (DKK
622 million). The cash conversion ratio was 112% (165%).
For the first nine months of 2024 cash flow from operations before changes in working capital was
DKK 833 million (DKK 1,104 million). Working capital had a negative impact of DKK 303 million (DKK
-291 million) mainly coming from a higher level of inventories, but also from increased trade receiva-
bles and a lower level of trade payables. Free cash flow before acquisitions for the first nine months
was positive by DKK 327 million (DKK 602 million) and the cash conversion ratio was 86% (89%).
STATEMENT OF CHANGES IN GROUP EQUITY
1 JANUARY - 30 SEPTEMBER 2024
DKK million
Share
capital
Reserve
for
currency
translation
Treasury
shares
Retained
earnings
Total
Equity at 1 January 2024
-141.4
Comprehensive income for the period
Net profit for the period
Other comprehensive income
Foreign exchange adjustments on net invest-
ments in foreign operations
-86.2
-86.2
Total other comprehensive income
-86.2
-86.2
Total comprehensive income for the period
-86.2
Transactions with shareholders
Capital reduction
-1.0
-117.8
Purchase of treasury shares
-660.2
-660.2
Share-based payments
Dividend paid to shareholders
-730.8
-730.8
Dividend, treasury shares
Total transactions with shareholders
-1.0
-541.4
-826.5
-1,368.9
Equity at 30 September 2024
-682.8
21
Equity
Total shareholders’ equity as at 30 September 2024 amounted to DKK 8,698 million (DKK 9,434 million
on 31 December 2023). The equity was positively impacted by profit for the period being partly offset
by negative impact from foreign exchange adjustments on net investments in foreign operations, pur-
chase of treasury shares and dividend payments to shareholders. As of 30 September 2024, the equity
ratio was 51.8% (59.5% on 31 December 2023).
STATEMENT OF CHANGES IN GROUP EQUITY (continued)
1 JANUARY - 30 SEPTEMBER 2023
DKK million
Share
capital
Reserve
for
currency
transla-
tion
Treasury
shares
Retained
earnings
Total
Equity at 1 January 2023
-748.1
Comprehensive income for the period
Net profit for the period
Other comprehensive income
Foreign exchange adjustments on net invest-
ments in foreign operations
Total other comprehensive income
Total comprehensive income for the period
Transactions with shareholders
Capital reduction
-6.0
-756.7
Purchase of treasury shares
-95.9
-95.9
Share-based payments
Settlement of vested PSUs
-25.1
Settlement in cash of vested PSU's
-7.0
-7.0
Dividend paid to shareholders
-767.3
-767.3
Dividend, treasury shares
-
Total transactions with shareholders
-6.0
-1,496.5
-810.6
Equity at 30 September 2023
-56.2
22
NOTES
NOTE 1
BASIS OF PREPARATION
This unaudited 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 2023.
Accounting policies
This report has been prepared in accordance with the accounting policies set out in the Annual Re-
port for 2023.
Based on an assessment of new or amended and revised accounting standards and interpretations
(‘IFRS’) issued by the International Accounting Standards Board (IASB) and IFRS, endorsed by the
European Union, effective on or after 1 January 2024, it has been assessed that the application of
these new IFRS has not had a material impact on the Consolidated Financial Statements as per the
end of the third quarter of 2024, and the Group does not anticipate any significant impact on future
periods from the adoption of these new IFRS. The Group has adopted all new, amended, and re-
vised standards and interpretations.
NOTE 2
SEGMENT INFORMATION AND NET SALES
9M 2024
North
America
Online &
Retail
North
America
Branded
& RoW
Europe
Branded
Group
costs /
not allo-
cated
Total
DKK million
Net sales
2,233.8
2,269.2
2,241.6
-
6,744.6
Cost of goods sold
-1,357.5
-1,122.6
-1,148.1
-
-3,628.2
Gross profit before special items
876.3
1,146.6
1,093.5
-
3,116.4
Staff and other external costs
-539.9
-391.4
-616.8
-113.1
-1,661.2
Other income
-
27.8
-
-
27.8
EBITDA before special items
336.4
783.0
476.7
-113.1
1,483.0
Depreciation and impairment
-176.1
-176.1
Amortisation and impairment
-137.0
-137.0
EBIT before special items
-426.2
1,169.9
Special items, costs and impairment
-131.4
-131.4
EBIT
-557.6
1,038.5
Share of profit of associated
companies, net of tax
20.9
20.9
Financial income
83.8
83.8
Financial costs
-216.2
-216.2
Profit before tax
-669.1
927.0
23
SEGMENT INFORMATION AND NET SALES (continued)
9M 2023
North
America
Online &
Retail
North
America
Branded
& RoW
Europe
Branded
Group
costs /
not allo-
cated
Total
DKK million
Net sales
2,086.2
2,301.3
2,068.9
-
6,456.4
Cost of goods sold
-1,255.5
-1,074.6
-1,010.9
-
-3,341.0
Gross profit before special items
830.7
1,226.7
1,058.0
-
3,115.4
Staff and other external costs
-496.5
-365.3
-571.4
-93.0
-1,526.2
EBITDA before special items
334.2
861.4
486.6
-93.0
1,589.2
Depreciation and impairment
-147.1
-147.1
Amortisation and impairment
-130.8
-130.8
EBIT before special items
-370.9
1,311.3
Special items, costs and impairment
-57.8
-57.8
EBIT
-428.7
1,253.5
Share of profit of associated
companies, net of tax
24.2
24.2
Financial income
161.4
161.4
Financial costs
-259.2
-259.2
Profit before tax
-502.3
1,179.9
DKK million
9M 2024
9M 2023
Category split, net sales
Handmade cigars
2,468.5
2,409.5
Machine-rolled cigars
2,103.5
2,260.7
Smoking tobacco
1,098.0
925.7
Accessories, Contract Manufacturing & other
1,074.6
860.5
Total net sales
6,744.6
6,456.4
License income and other sales of DKK 64.3 million (DKK 61.4 million) are included in the category 'Accessories,
Contract Manufacturing & other'.
DKK million
9M 2024
9M 2023
Geographical split, net sales
Americas
3,691.1
3,567.1
Europe
2,721.9
2,496.4
Rest of World
331.6
392.9
Total net sales
6,744.6
6,456.4
24
NOTE 3
SPECIAL ITEMS
DKK million
9M 2024
9M 2023
Integration and transaction costs (Mac Baren)
7.0
-
One Commercial Organisation
35.8
-
OneProcess
88.6
57.8
Total special items
131.4
57.8
NOTE 4
BORROWINGS
On 12 September 2024 we issued 5-year senior unsecured notes for a principal amount of EUR 300
million with maturity in September 2029 and with a coupon of 4.875%. The bond is listed on the
regulated market of Euronext Dublin.
The proceeds of the issuance will be used for general corporate purposes, including to refinance cer-
tain existing debt.
Borrowings are recognised in the balance sheet as follows:
DKK million
30 Sep
2024
31 Dec
2023
Non-current liabilities
4,020.5
3,656.7
Current liabilities
1,243.8
-
Total borrowings
5,264.3
3,656.7
Currency
Fixed/
floating
Term/revolving credit
facility/bond/annuity
Maturity
date
30 Sep
2024
31 Dec
2023
USD
Floating
RCF
19/03/2027
732.5
741.9
DKK
Floating
RCF
19/03/2027
975.0
680.0
EUR
Floating
RCF
19/03/2027
74.6
-
EUR
Floating
Term
Multiple
4.2
7.1
EUR
Fixed
Bond
24/09/2025*
843.8
2,227.7
EUR
Fixed
Bond
12/09/2029
2,225.5
-
DKK
Fixed
Term
15/11/2024
400.0
-
USD
Fixed
Annuity
04/12/2034
8.7
-
Total
5,264.3
3,656.7
* Bond was partly repaid during September 2024.
25
NOTE 5
BUSINESS COMBINATIONS
With effect from 1
st
July 2024, Scandinavian Tobacco Group A/S acquired all the shares of Mac Baren
Tobacco Company A/S (“Mac Baren”) from Halberg A/S. The total consideration transferred of DKK
523 million was paid in cash.
The disclosure for the business combination is considered provisional as the figures are based on the
unaudited closing balance of Mac Baren. The provisional figures can be changed up until 30 June
2025.
Mac Baren
Mac Baren is a family-owned business founded in 1826 and is a leading global smoking tobacco com-
pany, which includes a strong portfolio of pipe tobacco brands such as Mac Baren, Amphora and
Holger Danske as well as fine-cut tobacco brands like Amsterdamer, Choice and Opal. The company
also produces and sells nicotine pouches with the brands ACE and GRITT.
Mac Baren’s products are sold in 74 countries with the majority of net sales generated in the US,
Denmark and Germany. Other key markets include the UK, France, Spain and Italy. The company is
based in Svendborg, Denmark with production facilities in Denmark and in Richmond, Virginia in the
US. The company has approximately 200 full-time employees.
Mac Baren’s reported annual net sales (April/2024) were DKK 723 million with a reported EBITDA of
DKK 85 million. Nicotine pouches accounted for close to 20% of net sales with a small negative con-
tribution to EBITDA.
Fair value of acquired net assets
Net assets are provisional and may be adjusted and off-balance sheet items may be recorded within
the 12 months period of the acquisition date in compliance with IFRS 3. Net assets have been adjusted
to comply with the Group's accounting policies and financial reporting requirements.
Transaction costs
Total transaction costs related to the acquisition amount to DKK 7.0 million and is recognised in “Spe-
cial Items”.
26
NOTE 5
BUSINESS COMBINATIONS (continued)
DKK million
Provisional
fair
value at
date of
acquisition
Trademarks
81.6
Other intangible assets
19.9
Property, plant and equipment
78.9
Right-of-use assets
29.9
Deferred income tax assets
35.2
Inventories
271.8
Trade receivables
169.8
Other Receivables
1.3
Corporate tax
1.0
Prepayments
3.1
Total assets
692.5
Deferred income tax liabilities
25.0
Trade payables
86.3
Corporate tax
7.4
Lease liabilities
29.9
Other liabilities
58.3
Total liabilities
206.9
Acquired net assets
485.6
Acquisition (cash flow)
485.6
Cash and cash equivalents in acquired business
37.2
Consideration transferred
522.8