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Scandinavian Tobacco Group: Interim report, 1 January - 30 June 2022


Company Announcement
No. 52/2022

                                                                                                       Copenhagen, 24 August 2022

Interim report, 1 January - 30 June 2022

Scandinavian Tobacco Group A/S reports Q2 results and revises full-year guidance for organic EBITDA growth

For the second quarter of 2022 Scandinavian Tobacco Group delivered 2% negative organic net sales growth and 15% negative organic EBITDA growth against a strong second quarter last year. The productivity in our supply chain has temporarily been lower than expected resulting in lower production volumes and higher costs. We do see improvements in the second half of the year, but the delay will impact full-year net sales and costs negatively.

Q2 Highlights

  • Net sales were DKK 2,278 million (DKK 2,156 million) with -1.8% organic growth.
  • EBITDA before special items was DKK 544 million (DKK 606 million) with -14.6% organic growth. The EBITDA margin was 23.9% (28.1%).
  • Exchange rate developments increased net sales by DKK 150 million and EBITDA before special items by DKK 26 million.
  • Adjusted Earnings Per Share (EPS) were DKK 3.6 (DKK 4.1).
  • Free cash flow before acquisitions was DKK 143 million (DKK 434 million).
  • Return on Invested Capital was 13.6% (12.3%).
  • In the first 6 months of 2022, net sales decreased by 1.7% organically to DKK 4,215 million (DKK 4,039 million), EBITDA before special items decreased by 9.0% organically to DKK 1,076 million (DKK 1,133 million) and free cash flow before acquisitions was at DKK 272 million (DKK 523 million).

We assess the challenges in the supply chain, which are the primary reason for revising the guidance, to be of a temporary nature and not structural. We are making progress, but it is taking longer than expected due to a combination of external and internal factors. The level of the production backlog has not been reduced as planned and was almost DKK 150 million by the end of July. However, as the improvements kick in combined with pricing initiatives across the product categories and easier year-on-year comparisons, we expect to return to EBITDA growth in the second half of the year.

During the summer, we have also seen consumers in the US, especially within handmade cigars, become more cautious on the back of the macro-economic development and our market mix is returning quickly to pre-pandemic trends. Pricing across most product categories has been strong in the quarter partly offsetting increasing cost inflation, but the promotion pressure in the online business continues at a high level.

CEO Niels Frederiksen: “2022 has turned out to be a difficult year for Scandinavian Tobacco Group and we have had to adjust our full-year expectation for organic EBITDA growth. This development is disappointing and is primarily driven by temporary challenges in our supply chain and to a lesser extent by more cautious consumer behaviour especially in the important US handmade cigar market. Still, we maintain our financial expectations of delivering strong cash-flows and positive EPS growth for 2022 and we continue to implement our Rolling Towards 2025 strategy. The acquisition of Room101 as well as the continued expansion of our retail footprint in the US are good examples of this. Overall, we remain confident in the strength of our underlying business and our cash flows”.

Financial Guidance 2022

We are making progress in improving productivity in our supply-chain and we expect to see improvements in the second half of the year, but the delay will impact full-year net sales and costs negatively.   Furthermore, as we have seen signs of, especially US consumers becoming more cautious, we have revised our full-year Group sales outlook.

Based on these changes, the full-year guidance for 2022 is revised to:

  • EBITDA: Organic growth in the range -4% to 0% (from 0% to 6%)
  • Free cash flow before acquisitions in the range DKK 1.1-1.4 billion (unchanged)
  • Adjusted EPS >5% increase (unchanged)

The guidance for adjusted EPS has been maintained reflecting the lower EBITDA guidance and the recent increase in the USD versus DKK.

For the second half of 2022 we expect organic net sales growth and organic EBITDA growth to resume particularly in the fourth quarter. Organic net sales growth is expected to be driven by accelerating growth in Europe Branded and about zero growth in North America Online & Retail. We continue to see negative growth in North America Branded & RoW due to the strong Covid-19 impacts last year. Furthermore, a lower OPEX-ratio is expected to support a return to organic EBITDA growth in the second half of the year.

For further information, please contact:
Torben Sand, Head of Investor Relations, phone +45 5084 7222 or

A conference call will be held on 25 August 2022 at 10.00 CEST. Dial-in information and an accompanying presentation will be available at around 09:00 CEST.


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