Company Announcement
No. 23/2021
Copenhagen, 5 May 2021
Interim report, 1 January - 31 March 2021
Scandinavian Tobacco Group A/S reports strong Q1 results and
raises full year guidance
For the first quarter of 2021, Scandinavian Tobacco Group delivered a stronger than expected or-
ganic growth in net sales and EBITDA. The results were driven by a continued high demand in hand-
made cigars in the US, synergies from the integration of Agio Cigars and the transformational pro-
gramme Fuelling the Growth. Additionally, the results were positively impacted by timing of orders
between quarters.
Q1 Highlights
• Net sales were DKK 1,883 million (DKK 1,756 million) with 12.5% organic growth.
• EBITDA before special items was DKK 527 million (DKK 326 million) with 49.1% organic
growth. The EBITDA margin was 28.0% (18.5%).
• Adjusted Earnings Per Share (EPS) were DKK 3.4 (DKK 1.6).
• Free cash flow before acquisitions was DKK 89 million (DKK 122 million).
• Return on Invested Capital was 10.7% (7.5%).
• The integration of Agio Cigars is ahead of plan. Expected cost savings revised up.
Demand and consumer behaviour remain positively impacted by the COVID-19 pandemic with high
consumption of handmade cigars and smoking tobacco products in the US. The integration of Agio
Cigars is running ahead of schedule and is now expected to deliver about DKK 100 million in syner-
gies for the year and about DKK 250 million run-rate by the end of 2022. The combined market
shares for machine-rolled cigars in key European markets continue to develop satisfactorily.
The COVID-19 pandemic is creating significant uncertainty for Scandinavian Tobacco Group in the
second half of the year. Consumption of handmade cigars and purchasing patterns between online
and brick & mortar retail stores in the US cannot be forecasted with the normal level of accuracy.
Both are factors with significant impact on the Group’s performance. Consequently, a range is intro-
duced for the expected organic EBITDA performance as well as the cash flow before acquisitions.
The financial outlook for 2021 has been revised:
• EBITDA: Organic growth in the range of 12%-18% (>7%)
• Free cash flow before acquisitions: In the range of DKK 1.0-1.3 billion (>DKK 1.0 billion)
• Adjusted Earnings Per Share >25% increase (>10% increase)
CEO Niels Frederiksen: “Despite the continued challenges and uncertainty created by the COVID-19
pandemic, our business continues to do well. For the first quarter of the year we can present strong
growth in both net sales and EBITDA. I am particularly pleased to see that numerous initiatives
2
across the organization are resulting in strong net sales, growing market shares as well as increased
operational performance and efficiency.”
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 6 May 2021 at 10.00 CEST. Dial-in information and an accompanying
presentation will be available at investor.st-group.com around 09:00 CEST.
3
Key Figures
DKK million
3M 2021
3M 2020
Year 2020
INCOME STATEMENT
Net sales
1
1,883
1,756
8,006
Gross profit before special items
1
955
781
3,712
EBITDA before special items
527
326
1,826
Special items
-17
-155
-435
EBIT
419
66
986
Net financial items
2
-12
-43
-53
Profit before tax
414
26
951
Income taxes
-90
-6
-274
Net profit
324
21
678
BALANCE SHEET
Total assets
14,547
15,388
13,996
Equity
8,799
8,545
8,372
Net interest-bearing debt (NIBD)
3,390
4,444
3,274
Investment in property, plant and equipment
42
32
157
Total capital expenditures
46
35
201
CASH FLOW STATEMENT
Cash flow from operating activities
132
154
1,585
Cash flow from investing activities
-43
-1,593
-1,752
Free cash flow
89
-1,438
-166
Free cash flow before acquisitions
89
122
1,394
KEY RATIOS
3
Net sales growth
7.2%
22.8%
19.2%
Gross margin before special items
1
50.7%
44.5%
46.4%
EBITDA margin before special items
1
28.0%
18.5%
22.8%
Effective tax percentage
21.7%
21.5%
28.7%
Equity ratio
60.5%
55.5%
59.8%
Cash conversion
46.3%
102.3%
135.4%
Organic net sales growth
12.5%
5.3%
6.6%
Organic EBITDA growth
49.1%
23.9%
14.0%
NIBD / EBITDA before special items
1.7
2.8
1.8
ROIC
10.7%
7.5%
7.7%
ROIC ex. Goodwill
17.7%
12.4%
12.7%
Adjusted earnings per share (DKK)
3.4
1.6
9.8
Basic earnings per share (DKK)
3.3
0.2
6.8
Diluted earnings per share (DKK)
3.3
0.2
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. See note 1 for restatement of historical net sales and gross profit figures and related ratios.
2. Excl. share of profit of associated companies.
3. See definition/explanation of financial ratios in note 5.8 in the Annual Report 2020.
4
Business overview Q1 2021
The Group delivered a stronger than expected financial performance in the first quarter with 12.5%
organic growth in net sales to DKK 1,883 million. Reported growth in net sales was 7% with exchange
rate developments impacting negatively by 5%. The performance was driven by a continued strong
growth in North America Online & Retail and a strong growth in North America Branded & Rest of
World. This was partly offset by a negative organic growth in Europe Branded. The quarter was as
expected positively impacted by timing of orders between quarters..
Earnings and profitability improved significantly compared with the first quarter of 2020 driven by a
strong organic net sales performance as a consequence of increased volumes and improved pricing
as well as increased cost efficiency supported by the integration of Agio Cigars and Fuelling the Growth
initiatives. EBITDA before special items was DKK 527 million with 49% organic growth entailing an
EBITDA margin before special items of 28.0%. Special items came to DKK -17 million (DKK -155
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 89 million (DKK 122 million) driven by the
operational performance partly offset by a negative impact from working capital. The Group´s leverage
ratio was 1.7x.
The overall consumption of tobacco products remains high with sales of handmade cigars in the US
being particularly strong, as the overall smoking opportunities have increased.
Divisional split Q1 2021
Net sales EBITDA before special items
Group net sales and EBITDA Q1 2021
Table 1: Net sales
Table 2: EBITDA
Q1
Q1
Change
DKK million
2021
2020
in %
Net sales
1
1,883
1,756
7.2%
Currency development
92
Organic net sales
1,975
1,756
12.5%
Q1
Q1
Change
DKK million
2021
2020
in %
EBITDA b.s.i.
527
326
61.8%
Acquisitions
39
Currency development
17
Organic EBITDA
544
365
49.1%
1. See note 1 for restatement of historical net sales figures and related ratios.
37%
33%
30%
NA Branded & RoW
Europe Branded
NA Online & Retail
50%
32%
18%
+7.2%
DKK 1,883m
+61.8%
DKK 527m
5
Rolling towards 2025
Integration of Agio Cigars
The integration of Agio Cigars is progressing ahead of plan. The commercial integration was com-
pleted in 2020 and the combined like-for-like market shares have started to improve in most markets.
The next phase of the integration plan, integration of the production facilities is expected to be imple-
mented during 2021 with the closure of two production facilities in The Netherlands planned for end of
2021. The expectation for total net synergies by the end of 2022 has been revised up by DKK 25
million to an estimated DKK 250 million and with cost savings in 2021 of about DKK 100 million com-
pared with previously DKK 225 million and DKK 70-80 million, respectively.
Special costs in relation to the integration of Agio Cigars of DKK 5 million have been expensed in the
first quarter. The expectation is maintained that total special costs until end of 2022 will be at the level
of DKK 450 million with cash impact and DKK 105 million in non-cash impairments. The latter were
expensed last year.
Our financial ambitions
In the first quarter of 2021 the EBITDA margin improved to 28.0% (18.5%) driven by the stronger net
sales performance including savings from the integration of Agio Cigars and Fuelling the Growth and
a DKK 39 million negative fair value adjustment in the first quarter of 2020.
The return on invested capital (ROIC) improved to 10.7% (7.5%) with a DKK 415 million improvement
in EBIT (12 months rolling) driven by the operational performance and based on an invested capital of
DKK 12.6 billion (DKK 12.3 billion).
Capital allocation
In the quarter, the Group completed the DKK 300 million share buy-back programme launched in
August 2020 and initiated a new programme at a total value of up to DKK 600 million. The purpose of
the share buy-back is to adjust the capital structure and meet obligations in relation to the Group’s
share-based incentive programme. The new DKK 600 million share buy-back programme is a one-
year programme, it was initiated 11 March 2021 and is executed as a Safe Harbour program. Under
the new programme the Group bought back 412,430 shares at a market value of DKK 51 million in the
first quarter of 2021.
6
Financial guidance for 2021
Scandinavian Tobacco Group has had a strong start to 2021 and upgrades the guidance for 2021 as
both net sales and synergies from the acquisition of Agio Cigars exceed expectations. However, un-
certainty remains high and the COVID19 pandemic continues to impact business performance in
most of our markets and is expected to have implications for consumer behaviour and overall to-
bacco consumption also during the coming quarters. The visibility of the market development re-
mains low with some societies opening up while others reintroduce restrictions. We are unable to
predict consumer behavior and consumption with the normal level of accuracy and hence we see
scenarios where performance remains strong across all three divisions and we also see scenarios,
where some divisions could be more negatively impacted by faster than anticipated demand
changes.
Given these circumstances and based on the financial performance in the first quarter of the 2021
we have raised the guidance and introduced a range for our expected organic EBITDA growth and
free cash flow performance and revise our guidance accordingly.
• EBITDA: Organic growth in the range of 12%-18% (from > 7%)
• Free cash flow before acquisitions in the range of DKK 1.0-1.3 billion (from >DKK 1.0 billion)
• Adjusted EPS >25% increase (from >10% 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, also in the second half of the year, impacting both North America Online & Re-
tail and North America Branded & Rest of World. Furthermore, a gradual normalisation of the Euro-
pean markets is assumed with a continued opening of societies positively impacting volumes in Eu-
rope Branded.
The low end of the guidance range assumes that net sales for the Group equalizes 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 additional synergies from
the integration of Agio Cigars of about DKK 100 million (previously about DKK 70-80 million) and the
full year effect of Fuelling the Growth.
The guidance range for free cash flow before acquisitions is based on the expectations for EBITDA.
The free cash flow before acquisitions is still expected to be impacted by relatively high investments
in production footprint and digitalisation initiatives with total capex expected at DKK 370 million (DKK
410 million) as well as a slightly negative impact from working capital including, the previously com-
municated timing impact from payables in the level of DKK 150 million. For the full year the expecta-
tions for total capex and working capital movements can be impacted by decisions to delay invest-
ments and to change inventory positions should COVID-19 or the development in consumer demand
across product categories necessitate that.
The guidance of an adjusted EPS of an increase of >25% compared with previously an increase of
>10% (from DKK 9.78) includes a positive impact from share repurchases and a negative impact
from currency developments.
The guidance and assumptions are based on current exchange rates.
7
Annual General Meeting
At the Annual General Meeting held on 14 April 2021, the shareholders approved a dividend of DKK
6.50 per share resulting in a total dividend pay-out of about DKK 625 million. It was also approved to
reduce the share capital by 2,500,000 own shares with a nominal value of DKK 1. When the reduction
has been implemented the number of shares will be 97,500,000. The company will announce when
the reduction of the share capital has been implemented.
The shareholders re-elected Nigel Northridge, Henrik Brandt, Anders Obel, Dianne Neal Blixt, Luc
Missorten, Marlene Forsell and Claus Gregersen as members of the Board of Directors and elected
Henrik Amsinck as new member of the Board of Directors.
The Board of Directors has reappointed Nigel Northridge as Chairman of the Board of Directors, Henrik
Brandt as Vice-chairman and Marlene Forsell as chairman of the Audit Committee.
Events after the reporting period
There are no other events than those mentioned in the above that have occurred after 31 March 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 first quarter of 2021 the North American online channel continued to experience a solid increase
in the number of active customers as well as improved customer retention rates. The modernisation
and upgrades of the online website platforms and marketing initiatives continue and have supported
the performance in the online channel.
The three super stores, which opened in 2020, are performing well despite the challenging conditions
for retail stores that still persist in the US. The new stores delivered month on month growth in the
quarter.
Quarterly development, Q1 2020-Q1 2021
Net sales increased by 15% to DKK 564 million during the quarter composed of a 26% positive organic
net sales growth and a negative exchange rate effect of 11%. The organic development was driven by
a continued positive contribution in the online channel in particular in handmade cigars, though the
rate of volume growth started to slow down in the latter part of the quarter as the 2020-comparison
numbers become tougher.
EBITDA before special items increased by 48% to DKK 99 million with an EBITDA margin before
special items of 17.5% (13.6%). The margin improvement is driven by scale benefits, continued low
promotional and marketing expenses despite an increasing competitive pressure as well as continued
benefits from cost efficiencies and optimisations across the division.
0%
5%
10%
15%
20%
25%
30%
200
300
400
500
600
700
800
900
Q1 2020 Q2 Q3 Q4 Q1 2021
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
Q1 2020 Q2 Q3 Q4 Q1 2021
Quarterly EBITDA b.s.i.
EBITDA (DKK million) EBITDA margin
9
North America Branded & RoW
For the first quarter 2021 organic net sales growth was very strong driven by a continued strong volume
growth in handmade cigars and timing of orders. The consumption of handmade cigars in the US
continues to be positively impacted by COVID-19 restrictions with consumers working more from home
and having more smoking occasions. All product categories have experienced positive organic growth
during the quarter.
Forged Cigar Company, the new national stand-alone cigar distribution network, was launched in Feb-
ruary to strengthen support for the retail channel. The new distribution network was well received by
retailers and was off to a good start.
Quarterly development, Q1 2020-Q1 2021
Net sales increased by 17% to DKK 693 million during the quarter composed of a 23% positive organic
net sales growth and a negative exchange rate effect of 6%. The organic development was driven by
a significant increase in volumes of handmade cigars driven by both the online channel and the retail
channel. Smoking tobacco also contributed to the organic growth in net sales primarily driven by US
and Norway. Global Travel Retail is only recovering slowly and remains substantially below the first
quarter of last year. All product categories delivered price increases. About half of the organic growth
was driven by orders being pushed from the fourth quarter of last year into the first quarter of 2021.
EBITDA before special items increased by 56% to DKK 274 million with an EBITDA margin before
special items of 39.5% (29.6%). The margin improvement was realised with an improved gross margin
driven by product mix and pricing as well as an improved OPEX ratio which decreased due to lower
employee, freight and travel expenses and general efficiency improvements.
-10%
-5%
0%
5%
10%
15%
20%
25%
500
550
600
650
700
750
800
Q1 2020 Q2 Q3 Q4 Q1 2021
Quarterly net sales
Net sales (DKK million) Organic sales growth
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
50
100
150
200
250
300
350
400
Q1 2020 Q2 Q3 Q4 Q1 2021
Quarterly EBITDA b.s.i.
EBITDA (DKK million) EBITDA margin
10
Europe Branded
Due to the impacts from COVID-19 the market development for machine-rolled cigars in the first quar-
ter of 2021 varied country by country and the comparison with the first quarter of 2020 being challeng-
ing due to hoarding impacts in the beginning of the pandemic. In the first quarter of 2021 the negative
impacts on our sales performance were most severe in border trading and tourist areas and in markets
like Germany and the Benelux due to the government mandated closures of non-essential retail shops.
The integration of Agio Cigars progresses ahead of plan with the next phases being the integration of
the production facilities. The combined market shares of machine-rolled cigars in the key markets have
been slightly improved since the acquisition. The combined market share in the largest European mar-
kets (France, Belgium, the Netherlands, UK, Germany, Spain and Italy) was 33.3% versus 33.1% in
the full year of 2020 and 32.7% in the first quarter of 2020 with particular solid improvements in France
and Spain.
Quarterly development, Q1 2020-Q1 2021
Net sales decreased by 7% to DKK 626 million during the quarter explained by negative organic net
sales of 7%. The organic development was driven by timing of orders and continued impacts from the
COVID-19 pandemic as well as about 2% negative impact from the termination of a distribution agree-
ment. Timing of orders is expected to impact the second quarter of 2021 positively. Price/mix remains
positive.
EBITDA before special items increased by 69% to DKK 179 million with an EBITDA margin before
special items of 28.5% (15.7%). The increase in margin was driven by savings in relation to the inte-
gration of Agio Cigars, the termination of the distribution agreement, lower sales and marketing ex-
penses due to COVID-19 and comparison to a first quarter 2020 negatively impacted by a DKK 39
million fair value adjustment of inventories.
-10%
-5%
0%
5%
10%
15%
100
200
300
400
500
600
700
800
900
Q1 2020 Q2 Q3 Q4 Q1 2021
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
Q1 2020 Q2 Q3 Q4 Q1 2021
Quarterly EBITDA b.s.i.
EBITDA (DKK million) EBITDA margin
11
Quarterly Financial Data
2021
2020
DKK million
Q1
Q4
Q3
Q2
Q1
12M
Reported data
Net sales
1
1,883
1,922
2,231
2,097
1,756
8,006
Gross profit before special items
1
955
867
1,124
940
781
3,712
EBITDA before special items
527
397
614
489
326
1,826
Special items
-17
-121
-80
-78
-155
-435
EBIT
419
180
436
304
66
986
Net financial items
-12
-15
7
-2
-43
-53
Profit before tax
414
170
450
305
26
951
Income taxes
-90
-122
-94
-52
-6
-274
Net profit
324
48
356
254
21
678
Other financial key data
Organic EBITDA growth
49.1%
-14.6%
32.5%
19.1%
23.9%
14.0%
Organic net sales growth
12.5%
4.2%
12.0%
4.6%
5.3%
6.6%
Gross margin before special items
1
50.7%
45.1%
50.4%
44.8%
44.5%
46.4%
EBITDA margin before special items
1
28.0%
20.7%
27.5%
23.3%
18.5%
22.8%
Free cash flow before acquisitions
89
238
609
425
122
1,394
North America Online & Retail
Net sales
564
639
746
788
489
2,662
Gross profit before special items
231
272
309
310
183
1,075
EBITDA before special items
99
135
151
165
66
517
Net sales growth
15.3%
12.5%
20.5%
24.9%
3.4%
16.2%
Organic net sales growth
26.5%
21.7%
27.0%
22.5%
0.3%
18.9%
Gross margin before special items
41.0%
42.6%
41.5%
39.3%
37.5%
40.4%
EBITDA margin before special items
17.5%
21.1%
20.2%
20.9%
13.6%
19.4%
North America Branded & RoW
Net sales
693
572
734
629
593
2,527
Gross profit before special items
373
240
386
329
286
1,241
EBITDA before special items
274
128
279
230
176
813
Net sales growth
16.8%
-6.9%
12.4%
-1.9%
12.3%
3.8%
Organic net sales growth
22.7%
-8.5%
12.1%
-4.3%
2.2%
0.4%
Gross margin before special items
53.8%
42.0%
52.6%
52.4%
48.1%
49.1%
EBITDA margin before special items
39.5%
22.4%
38.0%
36.7%
29.6%
32.2%
Europe Branded
Net sales
626
712
752
680
673
2,817
Gross profit before special items
351
355
428
301
312
1,397
EBITDA before special items
179
156
213
107
106
581
Net sales growth
-7.0%
37.6%
40.1%
33.1%
57.4%
41.4%
Organic net sales growth
-6.6%
2.1%
-0.4%
-3.0%
12.3%
2.3%
Gross margin before special items
56.0%
49.9%
57.0%
44.2%
46.4%
49.6%
EBITDA margin before special items
28.5%
21.9%
28.3%
15.7%
15.7%
20.6%
Group costs
EBITDA before special items
-24
-21
-28
-13
-23
-85
1. See note 1 for restatement of historical net sales and gross profit figures and related ratios.
12
MANAGEMENT STATEMENT
Gentofte, 5 May 2021
EXECUTIVE MANAGEMENT
Niels Frederiksen
CEO
Marianne Rørslev Bock
CFO
BOARD OF DIRECTORS
Nigel Northridge
CHAIRMAN
Henrik Brandt
VICE-CHAIRMAN
Marlene Forsell
Dianne Neal Blixt
Anders Obel
Luc Missorten
Claus Gregersen
Henrik Amsinck
Hanne Malling
Mogens Olsen
Lindy Larsen
13
STATEMENT OF COMPREHENSIVE INCOME
1 JANUARY - 31 MARCH
CONSOLIDATED INCOME STATEMENT
DKK million
Note
3M 2021
3M 2020
Net sales
1, 2
Cost of goods sold
1, 2
-928.2
-974.6
Gross profit before special items
1, 2
Other external costs
1, 2
-233.0
-247.8
Staff costs
2
-195.0
-207.8
Earnings before interest, tax, depreciation, amortisation and special items
(EBITDA before special items)
2
Depreciation and impairment
-50.3
-60.8
Earnings before interest, tax, amortisation and special items (EBITA before
special items)
Amortisation and impairment
-40.5
-43.3
Earnings before interest, tax and special items (EBIT before special items)
Special items, incl. Impairments, net costs
3
-16.8
-155.4
Earnings before interest and tax (EBIT)
Share of profit of associated companies, net of tax
Financial income
Financial costs
-24.6
-57.6
Profit before tax
Income taxes
-89.9
-5.7
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
-9.9
Tax of cash flow hedges
-0.4
Foreign exchange adjustments on net investments in foreign operations
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
14
Net sales
For the first quarter of 2021, net sales was DKK 1,883 million (DKK 1,756 million). Adjusted for nega-
tive exchange rate impact of DKK 92 million, the organic growth in net sales was positive by 12.5%.
Profit
Gross profit before special items for the first quarter of 2021 was DKK 955 million (DKK 781 million)
driven by the positive organic growth in net sales, a DKK 39 million negative fair value adjustment of
inventories in the first quarter of 2020 and an improving gross margin excluding the fair value adjust-
ment. The gross margin before special items was 50.7% (44.5%) with increasing margins in all three
divisions, North America Online & Retail, North America Branded & RoW, and Europe Branded.
Operating expenses for the first quarter decreased to DKK 428 million (DKK 456 million) driven by the
integration of Agio Cigars and reduced travel activities as a consequence of COVID-19 restrictions.
The OPEX ratio decreased to 22.7% (25.9%) as a consequence of the lower cost base combined with
high sales for the first quarter.
EBITDA before special items for the first quarter of 2021 amounted to DKK 527 million (DKK 326
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 39 million negative fair value adjustment in the first quarter of 2020. Exchange
rate developments impacted negatively by DKK 17 million. Organic EBITDA growth was 49.1%.
EBITDA margin before special items for the first quarter of 2021 was 28.0% (18.5%).
During the quarter DKK 17 million (DKK 155 million) have been expensed as special items. Special
items relating to the integration of Agio Cigars was DKK 5 million (DKK 39 million). DKK 12 million
have been expensed in relation to the production footprint (DKK 6 million). See note 3 for an overview
of special items.
Net profit was DKK 324 million (DKK 21 million). Earnings per share (EPS) were DKK 3.3 (DKK 0.2).
Earnings per share adjusted for special items, fair value adjustments and currency gains/losses on
financial items, net of tax increased to DKK 3.4 (DKK 1.6).
Quarterly development, Q1 2020-Q1 2021
-2%
2%
6%
10%
14%
0
500
1000
1500
2000
2500
Q1 2020 Q2 Q3 Q4 Q1 2021
Quarterly net sales
Net sales (DKK million) Organic sales growth
0%
5%
10%
15%
20%
25%
30%
100
200
300
400
500
600
700
Q1 2020 Q2 Q3 Q4 Q1 2021
Quarterly EBITDA b.s.i.
EBITDA (DKK million) EBITDA margin
15
CONSOLIDATED BALANCE SHEET
ASSETS
DKK million
31 Mar 2021
31 Mar 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
31 Mar 2021
31 Mar 2020
31 Dec 2020
Share capital
Reserve for hedging
-13.3
-22.8
-14.5
Reserve for currency translation
Treasury shares
-369.4
-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
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 31 March 2021 amounted to DKK 8,799 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 ongoing
share buy-back programme. As at 31 March 2021 the equity ratio was 60.5% (59.8% on 31 December
2020).
Net interest-bearing debt
Net interest-bearing debt increased by DKK 116 million to DKK 3,390 million versus the end of 2020.
The development was driven by the positive free cash flow being offset by the purchase of own shares.
The leverage ratio (net interest-bearing debt to LTM EBITDA before special items) decreased to 1.7x
(1.8x at 31 December 2020). The decrease was driven the improvement of LTM EBITDA before spe-
cial items.
Return on Invested Capital
The return on invested capital (ROIC) improved to 10.7% (7.5%) with a DKK 415 million improvement
in EBIT (12 months rolling) driven by the operational performance and based on an invested capital of
DKK 12.6 billion (DKK 12.3 billion).
17
CONSOLIDATED CASH FLOW STATEMENT
1 JANUARY - 31 MARCH
DKK million
3M 2021
3M 2020
Net profit for the period
Depreciation, amortisation and impairment
Adjustments
Changes in working capital
-280.3
-79.6
Special items, paid
-53.2
-21.6
Cash flow from operating activities before financial items
Financial income received
Financial costs paid
-18.2
-91.2
Cash flow from operating activities before tax
Tax payments
-48.1
-71.3
Cash flow from operating activities
Acquisitions
-1,560.1
Investment in intangible assets
-4.5
-2.4
Investment in property, plant and equipment
-41.5
-32.1
Sale of property, plant and equipment
Dividend from associated companies
Cash flow from investing activities
-42.8
-1,592.7
Free cash flow
-1,438.5
Repayment of lease liabilities
-15.9
-19.1
Other financing
-21.5
New external funding
Repayment bank loans
-3,748.0
Dividend payment
-608.3
Purchase of treasury shares
-141.7
Cash flow from financing activities
-40.7
Net cash flow for the period
-464.6
Cash and cash equivalents, net at 1 January
Exchange gains/losses on cash and cash equivalents
-4.4
Net cash flow for the period
-464.6
Cash and cash equivalents, net at 31 March
Cash flows
Cash flow from operations before changes in working capital in the first quarter of 2021 was DKK 412
million (DKK 234 million). The development was driven by the improved operational results.
Working capital in the first quarter of 2021 had a negative impact on the cash flow by DKK 280 million
(DKK 80 million) with a significant impact from a planned higher level of inventories of finished goods
18
including excise and tax stamps. The expected normalisation of the level of liabilities was deferred as
a consequence of inventory-related purchases.
Cash flow from investing activities amounted to DKK -43 million (DKK -1,593 million). The drop is
explained by the acquisition of Agio Cigars in Q1 of 2020.
Free cash flow before acquisitions in the first quarter of 2021 was positive by DKK 89 million (DKK
122 million). The cash conversion ratio was 46% (102%).
19
STATEMENT OF CHANGES IN GROUP EQUITY
1 JANUARY - 31 MARCH 2021
DKK million
Share
capital
Reserve
for hed-
ging
Reserve
for cur-
rency
transla-
tion
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
-0.4
-0.4
Foreign exchange adjustments on net investments in
foreign operations
Total other comprehensive income
Total comprehensive income for the period
Transactions with shareholders
Purchase of treasury shares
-141.7
-141.7
Share-based payments
Total transactions with shareholders
-141.7
-139.7
Equity at 31 March 2021
-13.3
-369.4
20
STATEMENT OF CHANGES IN GROUP EQUITY
1 JANUARY - 31 MARCH 2020
DKK million
Share
capital
Reserve
for hed-
ging
Reserve
for cur-
rency
transla-
tion
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
-9.9
-9.9
Tax of cash flow hedges
Foreign exchange adjustments on net
investments in foreign operations
Total other comprehensive income
-7.7
Total comprehensive income
for the period
-7.7
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
-612.1
-607.9
Equity at 31 March 2020
-22.8
-30.8
21
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.
Reclassification
In the second quarter of 2020 the reportable segments were reduced from four to three segments by
integrating and combining one of the previous segments into two of the other segments as well as
partly reallocations between the segments. As part of this change from four to three reportable seg-
ments (see note 2) certain types of expenses have been realigned between markets within the new
segments. Alignment of the presentation of these expenses, which are now presented as customer
discounts rather than costs, has led to reclassifications between the separate line items in the in-
come statement. The comparison figures have been restated. The impact on the historical figures is
stated below.
DKK million
3M 2020
reported
Reclassi-
fication
3M 2020
restated
Net sales
1,790.8
-35.1
1,755.7
Cost of goods sold
-971.4
-3.2
-974.6
Gross profit before special items
819.4
-38.3
781.1
Other external costs
-286.1
38.3
-247.8
Staff costs
-207.8
-207.8
Earnings before interest, tax, depreciation, amortisation
and special items (EBITDA before special items)
325.5
-
325.5
Gross margin before special items
45.8%
44.5%
EBITDA margin before special items
18.2%
18.5%
22
NOTE 2
SEGMENT INFORMATION AND NET SALES
As part of the integration of Agio Cigars, that changed the organisational structure and moved from
four to three commercial divisions, the reportable segments were as of the second quarter of 2020
changed from four to three.
Comparison figures for segments have been restated.
Operating expenses that are not directly inherent in the divisions are to some extent allocated to the
divisions based on allocation keys defined by activities or other relevant components. Certain costs
relating to Group functions are managed on Group level. These items are not included in the reportable
divisions and therefore reported as 'Group costs'.
Depreciation, amortisation, impairment, special items, share of profit of associated companies, net of
tax and financial items are not allocated to the different segments.
No operating segments have been aggregated to form the reported business segments.
No assets and liabilities are allocated to segments in the internal reporting.
3M 2021
North
Ame-
rica
Online
& Retail
North
America
Bran-
ded &
RoW
Europe
Branded
Group
costs /
not allo-
cated
Total
DKK million
Net sales
564.0
692.8
626.1
-
1,882.9
Cost of goods sold
-333.0
-319.8
-275.4
-
-928.2
Gross profit before special items
231.0
373.0
350.7
-
954.7
Staff and other external costs
-132.5
-99.3
-172.2
-24.0
-428.0
EBITDA before special items
98.5
273.7
178.5
-24.0
526.7
Depreciation and impairment
-50.3
-50.3
Amortisation and impairment
-40.5
-40.5
EBIT before special items
-114.8
435.9
Special items, incl. Impairments, net costs
-16.8
-16.8
EBIT
-131.6
419.1
Share of profit of associated
companies, net of tax
6.6
6.6
Financial income
13.1
13.1
Financial costs
-24.6
-24.6
Profit before tax
-136.5
414.2
23
NOTE 2
SEGMENT INFORMATION AND NET SALES (continued)
3M 2020
North
Ame-
rica
Online
& Retail
North
America
Branded
& RoW
Europe
Branded
Group
costs /
not allo-
cated
Total
DKK million
Net sales
489.3
593.2
673.2
-
1,755.7
Cost of goods sold
-305.9
-307.6
-361.1
-
-974.6
Gross profit before special items
183.4
285.6
312.1
-
781.1
Staff and other external costs
-117.0
-109.8
-206.3
-22.5
-455.6
EBITDA before special items
66.4
175.8
105.8
-22.5
325.5
Depreciation and impairment
-60.8
-60.8
Amortisation and impairment
-43.3
-43.3
EBIT before special items
-126.6
221.4
Special items, incl. impairments, net costs
-155.4
-155.4
EBIT
-282.0
66.0
Share of profit of associated
companies, net of tax
2.9
2.9
Financial income
15.1
15.1
Financial costs
-57.6
-57.6
Profit before tax
-321.6
26.4
DKK million
3M 2021
3M 2020
Category split, net sales
Handmade cigars
649.2
526.9
Machine-rolled cigars
675.4
700.3
Smoking tobacco
279.8
284.3
Accessories and CMA
278.5
244.2
Total net sales
1,882.9
1,755.7
Licence income and other sales of DKK 13.1 million (DKK 10.0 million) are included in the category 'Accesso-
ries and Contract Manufacturing'.
Geographical split, net sales
3M 2021
3M 2020
Americas
978.1
807.3
Europe
800.0
828.5
Rest of World
104.8
119.9
Total net sales
1,882.9
1,755.7
24
NOTE 3
SPECIAL ITEMS
DKK million
3M 2021
3M 2020
Integration and transactions costs (Agio Cigars)
5.1
38.5
Fuelling the Growth program
-
1.2
Production footprint
11.7
6.4
Impairment tangible assets
-
109.3
Total special items
16.8
155.4