Company Announcement
No. 34/2022
Copenhagen, 19 May 2022
Interim report, 1 January - 31 March 2022
guidance for 2022 and presents revised Sustainability Strategy
For the first quarter of 2022 Scandinavian Tobacco Group delivered 2% negative organic net sales
growth and 3% negative organic EBITDA growth in line with the previously communicated expectations
for the quarter. The guidance for the full year of an organic EBITDA growth in the range of 0-6% is
maintained. The uncertainty related to key assumptions like consumer behaviour, cost inflation and
supply-chain stability remains high. The current share buy-back programme is increased by DKK 300
million to reach up to DKK 1,000 million reflecting the strong financial position of Scandinavian To-
bacco Group.
Consumer demand for handmade cigars in the US remained robust in the quarter though with signs
at the end of the quarter of a return to the structural declining volume trend. Price increases across
most product categories almost offset increasing cost inflation and supported the financial performance
compared with a strong first quarter of 2021.
Q1 Highlights
• Net sales were DKK 1,938 million (DKK 1,883 million) with -1.7% organic growth.
• EBITDA before special items was DKK 532 million (DKK 527 million) with -2.7% organic
growth. The EBITDA margin was 27.4% (28.0%).
• Adjusted Earnings Per Share (EPS) were DKK 3.6 (DKK 3.4).
• Free cash flow before acquisitions was DKK 129 million (DKK 89 million).
• Return on Invested Capital was 14.4% (10.7%).
CEO Niels Frederiksen: “We deliver a satisfactory first quarter result in line with our expectations with
negative organic EBITDA growth against a very strong first quarter last year and a continued strong
cash flow. We continue the execution of our strategy “Rolling Towards 2025” and today we are very
excited to present a revised, more ambitious sustainability strategy which anchors our environmental
and social commitment in the company’s culture”.
Launch of updated Sustainability strategy
Today, we launch an updated, more ambitious, and comprehensive sustainability strategy. In line with
our intention to invest further in sustainability as announced in March, we have now established two
strategic pillars to address climate change and enhance our social commitment in the communities
where we operate. The two pillars are: Net Zero along the Journey of the Leaf and Sustainable Com-
munity Pioneers. We will continue our focus and efforts within Diversity, Equity and Inclusion and Cor-
porate Ethics. Our commitment to the updated Sustainability Strategy is reflected in our revised vision
2
“Be the undisputed and sustainable global leader in cigars” and an estimated investment in 2022 of
up to DKK 20 million.
Financial Guidance 2022 unchanged
• EBITDA: Organic growth in the range 0-6%
• Free cash flow before acquisitions in the range DKK 1.1-1.4 billion
• Adjusted EPS >5% increase
For the second quarter we still expect organic net sales and organic EBITDA growth to be negative,
whereas we expect growth to resume in the second half of the year.
For further information, please contact:
Torben Sand, Head of Investor Relations, phone +45 5084 7222 or torben.sand@st-group.com
A conference call will be held on 20 May 2022 at 10.00 CEST. Dial-in information and an accompany-
ing presentation will be available at investor.st-group.com around 09:00 CEST.
3
Key Figures
DKK million
3M 2022
3M 2021
FY 2021
INCOME STATEMENT
Net sales
1,938
1,883
8,233
Gross profit before special items
1,019
955
4,113
EBITDA before special items
532
527
2,233
Special items
-18
-17
-55
EBIT
427
419
1,814
Net financial items
1
-14
-12
-77
Profit before tax
423
414
1,769
Income taxes
-95
-90
-378
Net profit
328
324
1,391
BALANCE SHEET
Total assets
15,057
14,547
14,584
Equity
9,281
8,799
8,968
Net interest-bearing debt (NIBD)
3,446
3,390
3,266
Investment in property, plant and equipment
54
42
212
Total capital expenditures
67
46
240
CASH FLOW STATEMENT
Cash flow from operating activities
190
132
1,567
Cash flow from investing activities
-61
-43
-178
Free cash flow
129
89
1,389
Free cash flow before acquisitions
129
89
1,393
KEY RATIOS
2
Net sales growth
2.9%
7.2%
2.8%
Gross margin before special items
52.6%
50.7%
50.0%
EBITDA margin before special items
27.4%
28.0%
27.1%
Effective tax percentage
22.5%
21.7%
21.4%
Equity ratio
61.6%
60.5%
61.5%
Cash conversion
51.1%
46.3%
108.6%
Organic net sales growth
-1.7%
12.5%
4.5%
Organic EBITDA growth
-2.7%
49.1%
18.4%
NIBD / EBITDA before special items
1.5
1.7
1.5
ROIC
14.4%
10.7%
14.5%
ROIC ex. Goodwill
24.0%
17.7%
24.3%
Adjusted earnings per share (DKK)
3.6
3.4
14.8
Basic earnings per share (DKK)
3.5
3.3
14.6
Diluted earnings per share (DKK)
3.5
3.3
14.5
Number of shares issued ('000)
97,500
100,000
97,500
Number of treasury shares ('000)
5,231
3,647
4,526
Number of outstanding shares ('000)
3
92,638
97,367
95,689
Share price at balance date (DKK)
143.80
121.70
137.30
Dividend per share (DKK)
7.5
Pay-out ratio
52.6%
1. Excl. share of profit of associated companies.
2. See definition/explanation of financial ratios in note 5.8 in the Annual Report 2021.
3. Average number of shares outstanding, including dilutive effect of PSUs.
4
Business overview Q1 2022
In the first quarter of 2022, the Group delivered a financial performance in line with the expectations
communicated in March. Reported net sales increased by 3% to DKK 1,938 million and organic net
sales decreased by 2%. Exchange rates developments impacted positively by DKK 78 million. The
performance was driven by positive organic net sales growth in North America Branded & Rest of
World and a negative organic net sales growth in Europe Branded and North America Online & Retail
on the back of the very strong performance in 2020 and 2021. The demand for handmade cigars in
the US remained robust in the quarter, though signs of a return to a slightly declining demand has
occurred in the beginning of the second quarter. Pricing remains a key driver across our product cat-
egories to off-set volume declines and an increasing cost pressure.
The gross margin improved compared with the same quarter last year primarily driven by pricing. North
America Branded & RoW and Europe Branded delivered improved gross margins whereas North
America Online & Retail delivered a decreasing gross margin. EBITDA before special items was DKK
532 million with 3% negative organic growth resulting in an EBITDA margin before special items of
27.4%. Special items were DKK -18 million (DKK -17 million) comprising costs for the production foot-
print of DKK 9 million, the ERP project OneProcess of DKK 6 million and the integration of Agio Cigars
of DKK 3 million. See also note 3.
The Group’s free cash flow before acquisitions was DKK 129 million (DKK 89 million) driven by the
operational performance. Changes in working capital were negative at DKK -269 million (DKK -280
million) and special items impacted the cash flow by DKK -40 million (DKK -53 million). The Group’s
leverage ratio was 1.5x.
Divisional split Q1 2022
Net sales EBITDA before special items
Group net sales and EBITDA Q1 2022
Table 1: Net sales
Table 2: EBITDA before special items
Q1
Q1
Change
DKK million
2022
2021
in %
Net sales
1,938
1,883
2.9%
Acquisitions
9
Currency development
-78
Organic net sales
1,860
1,892
-1.7%
Q1
Q1
Change
DKK million
2022
2021
in %
EBITDA
532
527
0.9%
Acquisitions
0
Currency development
-19
Organic EBITDA
513
527
-2.7%
40%
31%
29%
NA Branded & RoW
Europe Branded
NA Online & Retail
59%
28%
13%
+2.9%
DKK 1,938m
+0.9%
DKK 532m
5
Sustainability
Net-zero in our value chain by 2050
Our sustainability journey continues. In 2021, we launched our first sustainability strategy (originally
our CSR strategy) and took the first steps to advance our environmental commitment as we began
measuring our Scope 1 and 2 emissions under the Greenhouse Gas Protocol. In line with our intention
to invest further in sustainability we now launch an updated, more ambitious, and comprehensive sus-
tainability strategy. The sustainability strategy is built into the corporate strategy Rolling Towards 2025.
It is our ambition with the sustainability strategy to craft a better tomorrow by elevating our communities
and anchoring climate action in our corporate culture.
We have established two strategic pillars to address climate change and enhance our social commit-
ment in the communities where we operate: Net Zero along the Journey of the Leaf and Sustainable
Community Pioneers. Extreme weather in many regions underlines the urgency to tackle climate
change now, and with more than 8,500 employees at our manufacturing facilities in Central America,
Sri Lanka and Indonesia, we believe it is our responsibility to pioneer sustainable initiatives to empower
our communities to build better, brighter futures in areas where it matters most. We are confident that
our two strategic focus areas are the right fit for Scandinavian Tobacco Group to create tangible impact
and lasting value for our planet, communities and business.
We will continue our focus and efforts within Diversity, Equity and Inclusion and Corporate Ethics.
With the launch of our enhanced sustainability strategy, we commit to SBTi reduction targets of 1.5 °C
for Scope 1 and 2 this year and to deliver the required emission targets by 2030. Further, we want to
achieve net-zero in our entire value chain including Scope 1, 2 and 3 by the year 2050. To engage in
and elevate the communities where we operate, we focus on three areas: health and well-being, edu-
cation and women’s enablement, under which we will offer health screenings and educational oppor-
tunities, engage in local partnerships and make impactful donations to schools and educational insti-
tutions.
The total expected investment in 2022 is up to DKK 20 million, and we expect that annual expenses
in relation to the ramp-up of our sustainability initiatives will increase as we mature and intensify the
work.
Other updates
Retail expansion
The retail network currently comprises eight retail stores including the new superstore which marked
opening on 20 April 2022 in San Antonio, Texas. The existing stores deliver valuable contributions to
net sales and profits with net sales growth in the first quarter being at a double-digit percentage. We
plan to open another 5-7 cigar superstores in the US in the coming 2-3 years. The retail stores account
for about 7% of net sales in the division North America Online & Retail.
Update on financial key metrics
In the first quarter of 2022 the EBITDA margin decreased slightly to 27.4% (28.0%) as the first quarter
of last year was exceptionally strong with sales and marketing expenses being lower than normal
6
during COVID-19 lockdowns and restrictions. Pricing and savings from the integration of Agio Cigars
off-set general cost inflation.
The ROIC improved to 14.4% versus 10.7% at the first quarter of 2021 with a DKK 483 million im-
provement in EBIT (12 months rolling). The EBIT improvement was driven by the operational perfor-
mance, a decrease in special costs and based on an invested capital of DKK 12.6 billion (DKK 12.6
billion). ROIC measured by the end of 2021 was 14.5%.
Capital allocation
Scandinavian Tobacco Group has during the first quarter of 2022 bought back 963,911 shares at a
market value of DKK 137 million. By the end of February, the DKK 600 million share buy-back pro-
gramme launched 11 March 2021 was completed, and by 10 March a new DKK 700 million programme
was initiated with an expected closure by the end of February 2023.
The Board of Directors has approved an increase of the DKK 700 million share buy-back programme
announced 10 March 2022, by DKK 300 million to a total value of up to DKK 1,000 million. The pro-
gramme is still expected to be closed by the end of February 2023. The purpose of the share buy-back
programme is to adjust the capital structure and meet obligations relating to the Group’s share-based
incentive programme.
Chr. Augustinus Fabrikker Aktieselskab and C.W.Obel A/S will participate on a pro rata basis to the
shares repurchased in the market as from 20 May 2022. See also separate Company Announcement
no 35 as of 19 May 2022 for more details.
Financial guidance for 2022
The financial guidance for 2022 is maintained for organic EBITDA growth, free cash flow before ac-
quisitions and adjusted EPS growth.
Scandinavian Tobacco Group is expected to deliver continued growth in 2022 compared with 2021
even on the backdrop of the past two years exceptionally strong performance and despite uncertainties
related to consumer behaviour, cost developments and supply chain stability remain higher than nor-
mal.
The signs of a normalization for most product categories have grown stronger during the recent months
with the visibility for the full year slowly improving. Currently, additional price adjustments are expected
to compensate for cost inflation. The disruptions in the supply chain remain on track to be markedly
improved by the end of the second quarter, though some issues will run into the 2nd half before being
fully normalized. The geo-political developments continue to imply a higher risk than normal for supply-
chain stability. Organic growth in net sales for the Group is expected to be positive in 2022. Signs of
the consumption of handmade cigars in the US resuming to its long-term declining volume trend about
- 2% per year have been reinforced in recent weeks.
Given these considerations, our guidance for 2022 is:
• EBITDA: Organic growth in the range of 0-6% (unchanged)
• Free cash flow before acquisitions in the range of DKK 1.1-1.4 billion (unchanged)
• Adjusted EPS increase >5% (unchanged)
7
The organic EBITDA growth expectation includes the full-year impact of synergies from the integration
of Agio Cigars, an increase in operating costs relating to the ramp-up of our sustainability initiatives,
increased cyber security initiatives as well as the normalization of certain costs that have been lower
during the COVID-19 period like sales and marketing spending. The development in organic EBITDA
growth also reflects the absence of other income from the refund of certain duty and excise taxes of
DKK 31 million which was realized in 2021 and the loss of net sales and profits following the Russian
invasion of Ukraine.
Organic EBITDA growth is expected to be negative in the second quarter of the year with the perfor-
mance in the comparable quarter in 2021 being above normal. Organic EBITDA growth is expected to
turn positive in the third quarter and fourth quarter as the comparison base normalizes and as the
performance from the business initiatives starts to be reflected in financial numbers.
Based on the projected earnings growth, we expect the Group´s free cash flow before acquisitions to
be in the range of DKK 1.1-1.4 billion. The free cash flow before acquisitions is expected to be impacted
by investments in the retail expansion in the US and the ERP-project One Process, a negative impact
from working capital of up to DKK 200 million (previously about DKK 100 million) as well as a negative
impact from special items of about DKK 200 million.
The adjusted EPS is expected to increase by more than 5% (from DKK 14.8 in 2021) including a
positive impact from the share repurchases of about DKK 1.0 per share and a positive impact from
currency developments.
The financial performance for Scandinavian Tobacco Group for the full year 2022 rests on several key
assumptions:
• The positive impact of the COVID-19 pandemic on demand for handmade cigars in North
America is expected to have peaked, and the demand is expected to resume its long-term
structural volume decline rate of about -2%
• In Europe, we are assuming the product categories to return to their long-term structural de-
velopment
• No major supply-chain disruptions are anticipated during the year
Annual General Meeting
At the Annual General Meeting held on 31 March 2022, the shareholders approved a dividend of DKK
7.50 per share resulting in a total dividend pay-out of about DKK 700 million. It was also approved to
reduce the share capital by 4,500,000 own shares with a nominal value of DKK 1. Following the re-
duction, which was implemented on 4 May 2022, the number of shares is 93,000,000.
The shareholders re-elected Henrik Brandt, Anders Obel, Dianne Neal Blixt, Marlene Forsell, Claus
Gregersen and Henrik Amsinck as members of the Board of Directors. Nigel Northridge and Luc Mis-
sorten decided to retire from the Board of Directors at the Annual General Meeting.
The Board of Directors has appointed Henrik Brandt as Chairman of the Board of Directors and Mar-
lene 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 2022
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 2022, organic net sales continued to be impacted by the channel shift back to
retail from online which occurred during 2021. The North American online channel experienced a 12%
decline in the active customer base versus the all-time-high first quarter 2021 driven by lower traffic
across our various e-commerce platforms.
However, compared to pre-COVID levels in 2019, the active consumer file remains more than 10%
stronger and it is expected that the decline rate will improve in the coming quarters as the comparison
base gradually normalises.
The retail business continues to perform according to plan with solid double-digit organic net sales
growth versus last year. Retail accounts for 7% of net sales in the division. The new superstore in San
Antonio, Texas opened after the close of the quarter on 20 April 2022.
Quarterly development, Q1 2021-Q1 2022
Net sales increased by 1% to DKK 568 million during the quarter composed of a 6% negative organic
net sales growth and an exchange rate effect of 7%. The organic development was driven by a nega-
tive contribution in the online channel being partly offset by a double-digit growth in the retail super-
stores. Net sales were negatively impacted by an increase in promotional activity as a response to an
increasing competitive pressure and mix changes.
EBITDA before special items decreased by 24% to DKK 75 million with an EBITDA margin before
special items of 13.2% (17.5%). The margin development is driven by the decrease in organic net
sales and a normalisation of the promotional spending versus an unusually low spend in the first quar-
ter of 2021 as well as the retail expansion which also impacts negatively with almost half of the stores
being newly opened.
-10%
0%
10%
20%
30%
400
500
600
700
800
Q1 2021 Q2 Q3 Q4 Q1 2022
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 2021 Q2 Q3 Q4 Q1 2022
Quarterly EBITDA b.s.i.
EBITDA (DKK million) EBITDA margin
9
North America Branded & RoW
In the first quarter of 2022 organic net sales growth continued to be strong despite a tough comparison
to the first quarter last year. The performance was driven by the handmade cigar category in the US,
recovery in Global Travel Retail as well as a one-time positive impact from the implementation of a
new distribution set-up in Australia.
The positive volume effect in most product categories since the outbreak of COVID-19 has begun to
return to pre-pandemic levels. The categories smoking tobacco and machine-rolled cigars are normal-
ising and demand for handmade cigars in the US is from its substantial higher than pre-COVID level
beginning to trend back to its long-term volume decline rate of about-2%.
Consequently, as previously communicated North America Branded and Rest of World is expected to
deliver negative organic net sales growth in the second quarter of 2022.
Quarterly development, Q1 2021-Q1 2022
Net sales increased by 12% to DKK 773 million during the quarter composed of a 7% positive organic
net sales growth and a positive exchange rate effect of 5%. The organic development was driven by
continued volume growth and price increases for handmade cigars in the US and a recovery in Global
Travel Retail, which was severely negatively impacted by travel restrictions following the outbreak of
COVID-19. Both machine-rolled cigars in Canada and pipe tobacco in the US experienced decreasing
net sales in the quarter as markets have started to normalise.
EBITDA before special items increased by 20% to DKK 328 million with an EBITDA margin before
special items of 42.4% (39.5%). The margin improvement is the result of an improved gross margin
driven by strong pricing and a positive mix development versus the first quarter of last year. The OPEX
ratio increased to 15.5% (14.3%) as promotional activities were very low last year and as the operating
costs of Forged Cigar Company in the first quarter of 2021 only were impacted from the launch in the
middle of the quarter.
0%
5%
10%
15%
20%
25%
30%
400
475
550
625
700
775
Q1 2021 Q2 Q3 Q4 Q1 2022
Quarterly net sales
Net sales (DKK million) Organic sales growth
25%
30%
35%
40%
45%
50%
150
200
250
300
350
400
Q1 2021 Q2 Q3 Q4 Q1 2022
Quarterly EBITDA b.s.i.
EBITDA (DKK million) EBITDA margin
10
Europe Branded
The consumer demand for machine-rolled cigars in Europe is generally back to pre-Covid trends with
an overall negative volume growth of about 3%. During the first quarter of 2022, the net sales perfor-
mance for Europe Branded reflects the structural volume decline of machine-rolled cigars, though this
is being partly off-set by price increases. France and the UK delivered positive organic net sales growth
while the other key markets delivered negative growth. In France, both volume and price/mix were
positive and in the UK pricing more than compensated for decreasing volumes. The previously men-
tioned supply issue has remarkedly improved, but some issues will run into the 2
nd
half of 2022.
In the first quarter of 2022, the market share index for our key markets declined to 31.5% versus 32.9%
in the first quarter of 2021. The decline in market share is impacted by the mentioned supply situation.
Quarterly development, Q1 2021-Q1 2022
Net sales decreased by 5% to DKK 596 million during the quarter explained by a negative organic net
sales growth of 7% and a positive exchange rate effect of almost 2%. Approximately half of the organic
development was driven by a negative impact from the termination of a distribution agreement as of
April 2021. For machine-rolled cigars, pricing was a key focus area with price/mix impact being up by
more than 4%. Pricing was also positive in the other product categories.
EBITDA before special items decreased by 11% to DKK 159 million with an EBITDA margin before
special items of 26.7% (28.5%). The margin development reflects a normalisation of the sales and
marketing spending and increasing expenses for freight and distribution. Pricing, savings in relation to
the integration of Agio Cigars and a positive impact from product mix could not fully off-set the margin
impact from the higher costs mainly driven by freight and IT services.
-10%
-5%
0%
5%
10%
400
500
600
700
800
Q1 2021 Q2 Q3 Q4 Q1 2022
Quarterly net sales
Net sales (DKK million) Organic sales growth
15%
20%
25%
30%
35%
50
100
150
200
250
Q1 2021 Q2 Q3 Q4 Q1 2022
Quarterly EBITDA b.s.i.
EBITDA (DKK million) EBITDA margin
11
Quarterly Financial Data
2022
DKK million Q1 Q4 Q3 Q2 Q1 12M
Reported data
Net sales 1,938 2,012 2,182 2,156 1,883 8,233
Gross profit before special items 1,019 985 1,102 1,071 955 4,113
EBITDA before special items 532 474 627 606 527 2,233
Special items -18 13 -26 -24 -17 -55
EBIT 427 393 510 492 419 1,814
Net financial items -14 -16 -29 -21 -12 -77
Profit before tax 423 385 489 480 414 1,769
Income taxes -95 -78 -106 -104 -90 -378
Net profit 328 307 383 376 324 1,391
Other financial key data
Organic EBITDA grow th -2.7% 14.2% 0.9% 20.8% 49.1% 18.4%
Organic net sales grow th -1.7% 1.8% -2.2% 7.5% 12.5% 4.5%
Gross margin before special items 52.6% 49.0% 50.5% 49.7% 50.7% 50.0%
EBITDA margin before special items 27.4% 23.5% 28.7% 28.1% 28.0% 27.1%
Free cash flow before acquisitions 129 307 564 434 89 1,393
North America Online & Retail
Net sales 568 658 696 703 564 2,620
Gross profit before special items 227 264 279 277 231 1,050
EBITDA before special items 75 125 113 132 99 470
Net sales grow th 0.8% 2.9% -6.6% -10.8% 15.3% -1.6%
Organic net sales grow th -6.3% -1.2% -5.7% -2.0% 26.5% 2.4%
Gross margin before special items 39.9% 40.1% 40.0% 39.4% 41.0% 40.1%
EBITDA margin before special items 13.2% 19.1% 16.2% 18.8% 17.5% 17.9%
North America Branded & RoW
Net sales 773 656 768 761 693 2,877
Gross profit before special items 448 346 422 422 373 1,562
EBITDA before special items 328 215 335 311 274 1,135
Net sales grow th 11.6% 14.6% 4.7% 21.0% 16.8% 13.8%
Organic net sales grow th 6.6% 10.4% 4.3% 25.6% 22.7% 15.3%
Gross margin before special items 57.9% 52.8% 54.9% 55.4% 53.8% 54.3%
EBITDA margin before special items 42.4% 32.9% 43.7% 40.9% 39.5% 39.5%
Europe Branded
Net sales 596 699 718 692 626 2,735
Gross profit before special items 345 375 402 373 351 1,501
EBITDA before special items 159 171 214 191 179 754
Net sales grow th -4.8% -1.7% -4.6% 1.8% -7.0% -2.9%
Organic net sales grow th -6.6% -2.3% -5.1% 1.7% -6.6% -3.1%
Gross margin before special items 57.8% 53.7% 56.1% 53.8% 56.0% 54.9%
EBITDA margin before special items 26.7% 24.4% 29.8% 27.6% 28.5% 27.6%
Group costs
EBITDA before special items -31 -38 -36 -28 -24 -126
2021
12
MANAGEMENT STATEMENT
EXECUTIVE MANAGEMENT
BOARD OF DIRECTORS
13
STATEMENT OF COMPREHENSIVE INCOME
1 JANUARY - 31 MARCH
CONSOLIDATED INCOME STATEMENT
DKK million
Note
3M 2022
3M 2021
Net sales
1, 2
Cost of goods sold
1, 2
-918.4
-928.2
Gross profit before special items
1, 2
Other external costs
1, 2
-265.4
-233.0
Staff costs
2
-222.4
-195.0
Earnings before interest, tax, depreciation, amortisation
and special items (EBITDA before special items)
2
Depreciation and impairment
-46.0
-50.3
Earnings before interest, tax, amortisation and special
items (EBITA before special items)
Amortisation and impairment
-40.7
-40.5
Earnings before interest, tax and special items (EBIT
before special items)
Special items, costs and impairment
3
-17.7
-16.8
Earnings before interest and tax (EBIT)
Share of profit of associated companies, net of tax
Financial income
Financial costs
-55.7
-24.6
Profit before tax
Income taxes
-95.2
-89.9
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
Tax of cash flow hedges
-1.3
-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 2022, net sales were DKK 1,938 million (DKK 1,883 million). Adjusted for posi-
tive exchange rate impact of DKK 78 million and the acquisition of Moderno Opificio del Sigaro Italiano
of DKK 9 million, the organic growth in net sales was negative by -1.7%.
Profit
Gross profit before special items for the first quarter of 2022 was DKK 1,019 million (DKK 955 million)
driven by an improved gross margin offsetting the negative organic growth in net sales, as well as
positive impact from exchange rates. Gross margin before special items was 52.6% (50.7%) with in-
creasing margins in North America Branded & RoW, and Europe Branded, offset by a decreasing
margin in North America Online & Retail.
Operating expenses for the first quarter increased to DKK 488 million (DKK 428 million) driven by the
inflating freight and utility costs, increased consultancy costs, as well as increased travel activities as
result of diminishing COVID-19 restrictions. The OPEX ratio increased to 25.2% (22.7%) driven by the
higher cost base combined with stable sales for the first quarter.
EBITDA before special items for the first quarter of 2022 amounted to DKK 532 million (DKK 527
million). The development is explained by stable net sales, and positive contributions from the integra-
tion of Agio Cigars and production footprint, securing an improved gross profit margin, being offset by
the increased operating expenses. Exchange rate developments impacted positively by DKK 19 mil-
lion. Organic EBITDA growth was negative by -2.7%.
EBITDA margin before special items for the first quarter of 2022 was 27.4% (28.0%).
During the quarter DKK 18 million (DKK 17 million) have been expensed as special items. Special
items relating to the integration of Agio Cigars was DKK 3 million (DKK 5 million). DKK 9 million have
been expensed in relation to the production footprint (DKK 12 million). Cost expensed in relation to
Project OneProcess was DKK 6 million (DKK nil million). See note 3 for an overview of special items.
Net profit was DKK 328 million (DKK 324 million). Earnings per share (EPS) were DKK 3.5 (DKK
3.3). Earnings per share adjusted for special items, fair value adjustments and currency
gains/losses, net of tax increased to DKK 3.6 (DKK 3.4).
Quarterly development, Q1 2021-Q1 2022
-5%
0%
5%
10%
15%
1,750
1,875
2,000
2,125
2,250
Q1 2021 Q2 Q3 Q4 Q1 2022
Quarterly net sales
Net sales (DKK million) Organic sales growth
15%
20%
25%
30%
35%
300
400
500
600
700
Q1 2021 Q2 Q3 Q4 Q1 2022
Quarterly EBITDA b.s.i.
EBITDA (DKK million) EBITDA margin
15
CONSOLIDATED BALANCE SHEET
ASSETS
DKK million
31 Mar 2022
31 Mar 2021
31 Dec 2021
INTANGIBLE ASSETS
Goodwill
Trademarks
IT software
Other intangible assets
Total intangible assets
PROPERTY, PLANT AND EQUIPMENT
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 2022
31 Mar 2021
31 Dec 2021
Share capital
Reserve for hedging
-2.5
-13.3
-6.9
Reserve for currency translation
Treasury shares
-678.2
-369.4
-570.5
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
Net interest-bearing debt
Net interest-bearing debt increased by DKK 180 million to DKK 3,446 million versus the end of 2021.
The development was primarily driven by the purchase of own shares partly being off-set by the posi-
tive free cash flow from operations. The leverage ratio (net interest-bearing debt to LTM EBITDA be-
fore special items) remained at 1.5x (1.5x at 31 December 2021). The stable leverage was driven by
the improvement of LTM EBITDA before special items offset by a higher net interest-bearing debt.
Return on Invested Capital
The return on invested capital (ROIC) decreased to 14.4% versus 14.5% by the end of 2021 driven by
an increase in invested capital of DKK 170 million totalling DKK 12.6 billion (DKK 12.4 billion), being
partly offset by an improvement of DKK 8 million in EBIT (12 months rolling) driven by the operational
performance.
17
CONSOLIDATED CASH FLOW STATEMENT
1 JANUARY - 31 MARCH
DKK million
3M 2022
3M 2021
Net profit for the period
Depreciation, amortisation and impairment
Adjustments
Changes in working capital
-269.3
-280.3
Special items, paid
-40.2
-53.2
Cash flow from operating activities before financial
items
Financial income received
Financial costs paid
-23.7
-18.2
Cash flow from operating activities before tax
Tax payments
-33.6
-48.1
Cash flow from operating activities
Investment in intangible assets
-12.8
-4.5
Investment in property, plant and equipment
-53.8
-41.5
Sale of property, plant and equipment
Dividend from associated companies
Cash flow from investing activities
-61.2
-42.8
Free cash flow
Repayment of lease liabilities
-14.9
-15.9
Other financing
-21.5
RCF / New external funding
-33.7
Repayment bank loans
-1.2
Purchase of treasury shares
-133.4
-141.7
Cash flow from financing activities
-183.2
-40.7
Net cash flow for the period
-54.0
Cash and cash equivalents, net at 1 January
Exchange gains/losses on cash and cash equivalents
-1.6
Net cash flow for the period
-54.0
Cash and cash equivalents, net at 31 March
Cash flows
Cash flow from operations before changes in working capital in the first quarter of 2022 was DKK 460
million (DKK 412 million). The development was driven by the improved operational results.
Working capital in the first quarter of 2022 had a negative impact on the cash flow by DKK 269 million
(DKK 280 million) with a significant impact from a planned higher level of inventories of finished goods
including excise and tax stamps. Furthermore, sales tied up cash in receivables.
18
Cash flow from investing activities amounted to DKK -61 million (DKK -43 million). The increase was
driven by higher investments in intangible- and tangible assets, primarily driven by production footprint,
One Process and retail expansion.
Free cash flow before acquisitions in the first quarter of 2022 was positive by DKK 129 million (DKK
89 million). The cash conversion ratio was 51% (46%).
19
STATEMENT OF CHANGES IN GROUP EQUITY
1 JANUARY – 31 MARCH 2022
DKK million
Share
capital
Reserve
for
hedging
Reserve
for
currency
translation
Treasury
shares
Retained
earnings
Total
Equity at 1 January 2022
-6.9
-570.5
Comprehensive income for the period
Net profit for the year
-
-
-
-
Other comprehensive income
Cash flow hedges
-
-
-
-
Tax of cash flow hedges
-
-1.3
-
-
-
-1.3
Foreign exchange adjustments on net
investments in foreign operations
-
-
-
-
Total other comprehensive income
Total comprehensive income
for the year
Transactions with shareholders
Purchase of treasury shares
-
-
-
-137.3
-
-137.3
Share-based payments
-
-
-
-
Settlement of vested PSUs
-
-
-
-29.6
Total transactions with shareholders
-107.7
-27.3
-135.0
Equity at 31 March 2022
-2.5
-678.2
Equity
Total shareholders’ equity as at 31 March 2022 amounted to DKK 9,281 million (DKK 8,968 million
on 31 December 2021). The equity was positively impacted by profit for the period and a positive im-
pact from foreign exchange adjustments on net investments in foreign operations partly offset by on-
going share buy-back programme. As at 31 March 2022 the equity ratio was 61.6% (61.5% on 31
December 2021).
At the Annual General Meeting held on 31 March 2022 the shareholders approved to reduce the
share capital by nominally DKK 4,500,000 by cancelling some of the Company’s treasury shares. Af-
ter the reduction, which took place 4 May 2022, the nominal value of the Company’s share capital is
DKK 93,000,000. Please refer to Company Announcement 29/2022.
20
STATEMENT OF CHANGES IN GROUP EQUITY
1 JANUARY – 31 MARCH 2021
DKK million
Share
capital
Reserve
for
hedging
Reserve
for
currency
translation
Treasury
shares
Retained
earnings
Total
Equity at 1 January 2021
-14.5
-227.7
Comprehensive income for the period
Net profit for the year
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 year
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
21
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 2021.
Accounting policies
This report has been prepared in accordance with the accounting policies set out in the Annual Re-
port for 2021.
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 2022, it has been assessed that the application of
these new IFRS has not had a material impact on the Consolidated Financial Statements for the first
quarter of 2022, 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 revised standards and
interpretations.
NOTE 2
SEGMENT INFORMATION AND NET SALES
3M 2022
North
America
Online &
Retail
North
America
Branded
& RoW
Europe
Branded
Group
costs /
not al-
located
Total
DKK million
Net sales
568.5
773.4
595.8
-
1,937.7
Cost of goods sold
-341.5
-325.7
-251.2
-
-918.4
Gross profit before special items
227.0
447.7
344.6
-
1,019.3
Staff and other external costs
-152.0
-119.5
-185.6
-30.7
-487.8
EBITDA before special items
75.0
328.2
159.0
-30.7
531.5
Depreciation and impairment
-46.0
-46.0
Amortisation and impairment
-40.7
-40.7
EBIT before special items
-117.4
444.8
Special items, costs and impairment
-17.7
-17.7
EBIT
-135.1
427.1
Share of profit of associated
companies, net of tax
9.8
9.8
Financial income
42.0
42.0
Financial costs
-55.7
-55.7
Profit before tax
-139.0
423.2
22
NOTE 2
SEGMENT INFORMATION AND NET SALES (continued)
3M 2021
North
America
Online &
Retail
North
America
Branded
& RoW
Europe
Branded
Group
costs /
not al-
located
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, costs and impairment
-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
DKK million
3M 2022
3M 2021
Category split, net sales
Handmade cigars
684.1
649.2
Machine-rolled cigars
660.8
675.4
Smoking tobacco
300.2
279.8
Accessories and CMA
292.6
278.5
Total net sales
1,937.7
1,882.9
Licence income and other sales of DKK 17.5 million (DKK 13.1 million) are included in the category 'Accessories
and Contract Manufacturing'.
DKK million
3M 2022
3M 2021
Geographical split, net sales
Americas
1,013.8
978.1
Europe
760.8
800.0
Rest of World
163.1
104.8
Total net sales
1,937.7
1,882.9
23
NOTE 3
SPECIAL ITEMS
DKK million
3M 2022
3M 2021
Integration and transactions costs (Agio Cigars)
2.6
5.1
Production footprint
8.7
11.7
OneProcess
6.4
-
Total special items
17.7
16.8