Company Announcement
No. 24/2024
Copenhagen, 2 May 2024
Interim report, 1 January - 31 March 2024
Scandinavian Tobacco Group reports first quarter 2024 results and
maintains full-year guidance
For the first quarter of 2024 Scandinavian Tobacco Group delivered a 1% decrease in reported net
sales by DKK 1.9 billion with an EBITDA margin before special items at 17.2%. Net sales decreased
2% organically. Organic net sales growth in Handmade Cigars and Next Generation Oral was offset
by decline in machine-rolled cigars & smoking tobacco. The EBITDA margin is impacted by declining
volumes in a seasonally small quarter, mix changes and investments in growth. In the second quarter,
the Group is expected to deliver organic net sales growth and a material improvement in the EBITDA-
margin compared with the first quarter 2024. The full year guidance is maintained.
First Quarter 2024 - Financial Performance
• Net sales of DKK 1,948 million (DKK 1,963 million) with 2% negative organic growth.
• EBITDA before special items was DKK 335 million (DKK 474 million) with an EBITDA margin
of 17.2% (24.1%).
• Adjusted Earnings Per Share (EPS) were DKK 1.8 (DKK 3.2).
• Free cash flow before acquisitions was DKK -126 million (DKK -179 million).
• Return on Invested Capital (ROIC) was 10.4% (13.6%).
• Growth Enablers delivered a high double-digit growth rate and accounted for 11% of Group
net sales.
Key events
• Launch of One Commercial Organisation.
• Opening of Club Macanudo concept stores in Jakarta, Tapei and Louisianaville.
CEO Niels Frederiksen: “Despite a slow start to the year and the first quarter profitability being im-
pacted by mix, cost inflation and investments in growth, we maintain our expectations for the full year.
Entering the second quarter, we expect the net sales development to improve and we expect to see a
more normalized mix, which will impact profitability and cash-flows positively. In the quarter we have
continued to execute our strategy with the opening of three Macanudo concepts stores and invest-
ments in our growth initiatives. Our growth enablers constituted around 11% of net sales in the quar-
ter”.
Capital Allocation
At the Annual General Meeting on 4 April 2024, the proposal for an increase in the ordinary dividend
of 2% to DKK 8.40 per share was approved. A proposal to cancel 1.0 million treasury shares was
also approved. When the cancellation has been completed later in May, the number of issued shares
will be 86.0 million.
2
During the quarter the Group repurchased 1,319,050 treasury shares at a total value of DKK 164 mil-
lion as part of the up to 850 million share buy-back programme which was launched November 2023.
By the end of the first quarter Scandinavian Tobacco Group owned a total of 2,423,951 own treasury
shares, corresponding to 2.79% of the total share capital.
Financial Guidance 2024
The financial guidance 2024 is unchanged.
• Net sales in the range of DKK 8.8-9.1 billion
• EBITDA margin before special items in the range of 22%-24%
• Free cash flow before acquisitions in the range DKK 0.8-1.0 billion
• Adjusted EPS in the range of DKK 12.5-14.5
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 3 May 2024 at 10.00 CEST. Dial-in information and an accompanying
presentation will be available at investor.st-group.com/investor around 09:00 CEST.
3
Key Figures
DKK million
Q1 2024
Q1 2023
FY2023
INCOME STATEMENT
Net sales
1,948
1,963
8,731
Gross profit before special items
881
979
4,204
EBITDA before special items
335
474
2,106
Special items
-30
-27
-92
EBIT
208
358
1,638
Net financial items
1
-54
-31
-177
Profit before tax
159
335
1,491
Income taxes
-34
-76
-308
Net profit
125
260
1,182
BALANCE SHEET
Total assets
16,329
16,194
15,853
Equity
9,522
9,399
9,434
Net interest-bearing debt (NIBD)
4,480
4,416
4,057
Investment in property, plant and equipment
50
48
199
Total capital expenditures
58
80
308
CASH FLOW STATEMENT
Cash flow from operating activities
-71
-103
1,347
Cash flow from investing activities
-92
-590
-875
Free cash flow
-163
-693
472
Free cash flow before acquisitions
-126
-179
1,053
KEY RATIOS
2
Net sales growth
-0.7%
1.3%
-0.4%
Gross margin before special items
45.2%
49.9%
48.2%
EBITDA margin before special items
17.2%
24.1%
24.1%
Effective tax percentage
21.5%
22.5%
20.7%
Equity ratio
58.3%
58.0%
59.5%
Cash conversion
21.5%
2.3%
103.0%
Organic net sales growth
-2.1%
-0.8%
0.3%
Organic EBITDA growth
-29.1%
-12.1%
-5.0%
NIBD / EBITDA before special items
2.3
2.0
1.9
ROIC
10.4%
13.6%
11.4%
ROIC ex. Goodwill
16.4%
22.2%
18.1%
Adjusted earnings per share (DKK)
1.8
3.2
14.4
Basic earnings per share (DKK)
1.5
3.0
13.7
Diluted earnings per share (DKK)
1.5
3.0
13.6
Number of shares issued ('000)
87,000
93,000
87,000
Number of treasury shares ('000)
2,424
6,382
1,105
Number of outstanding shares ('000)
3
85,373
86,831
86,668
Share price at balance date (DKK)
123.80
136.20
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
First Quarter 2024 - Financial performance
In the first quarter of 2024 the Group´s net sales reported in DKK decreased by 1% to DKK 1,948
million. Exchange rates developments impacted net sales negatively by 1%, whilst the acquisitions of
the Alec Bradley and XQS brands impacted net sales positively by close to 2%. The organic growth in
net sales was negative by 2% (see Table 1).
By categories, the Group’s organic net sales performance was driven by positive contributions from
Handmade Cigars and Next Generation Oral, whereas Machine-Rolled Cigars & Smoking Tobacco
delivered negative organic sales growth. By divisions, the net sales performance was driven by a pos-
itive contribution from North America Online & Retail, whereas Europe Branded and North America
Branded and Rest of World declined.
The EBITDA margin (before special items) decreased to 17.2% (24.1%). The EBITDA margin de-
creased compared with the same quarter last year primarily as result of cost increases and changes
in category and market mix including the impact from new categories and the online business´ share
of group net sales increasing compared with last year. Furthermore, investments in the Group’s initia-
tives to strengthen long-term net sales and profit growth impacted margins negatively in the quarter.
Special items were DKK 30 million relating to the Group’s ERP implementation programme and the
reorganisation to One Commercial Organisation. Net profit was DKK 125 million (DKK 260 million) with
Adjusted Earnings Per Share at DKK 1.8 (DKK 3.2).
The Group’s free cash flow before acquisitions was DKK -126 million (DKK -179 million). The devel-
opment is impacted by the operational performance as well as changes in working capital, which was
negative by DKK 252 million compared with a negative DKK 453 million in the first quarter of 2023.
The Group´s leverage ratio was 2.3 times versus 1.9 times by the end of the fourth quarter 2023.
The 12 months rolling Return on Invested Capital (ROIC) decreased to 10.4% versus 11.4% by the
end of 2023 driven by the development in EBIT (12 months rolling). Invested capital was unchanged
compared to 31 December 2023 and stood at DKK 14.3 billion (DKK 14.3 billion).
Divisional split Q1 2024
Net sales and organic growth EBITDA before special items and organic growth
Group net sales and EBITDA Q1 2024
Table 1: Net sales
Table 2: EBITDA before special items
Q1
Q1
Change
DKK million
2024
2023
in %
Net sales
1,948
1,963
-0.7%
Acquisitions
39
Currency development
13
Organic net sales
1,961
2,002
-2.1%
Q1
Q1
Change
DKK million
2024
2023
in %
EBITDA
335
474
-29.3%
Acquisitions
4
Currency development
4
Organic EBITDA
339
478
-29.1%
35%
32%
33%
NA Branded &
RoW
Europe Branded
NA Online &
Retail
59%
21%
20%
DKK 1,948m
-2.1%
DKK 335m
-29.1%
5
Update Strategy and Other Key Events
Growth Enablers
The Growth Enablers comprise of international sales of handmade cigars (outside of the US), retail
stores and Next Generation Oral (including distribution of third-party products).
Cigars International opened two new retail cigar superstores in 2023, both located in Texas, bringing
the total number of superstores in the US to nine. The retail stores are delivering valuable contributions
to the Group´s financial performance and with three additional openings expected in the second half
of 2024, the retail stores have become an important part of the Group’s net sales and growth. Retail
delivered double-digit growth with same-store sales up by about 4%.
International sales of handmade cigars delivered double-digit growth in net sales. 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. During the first quarter of 2024, we have opened two
Club Macanudo concept stores, in Taipei and Jakarta, respectively.
A third Club Macanudo concept store was opened in Louisianaville in the US in March.
Net sales from the Growth Enablers accounted for 11% of Group net sales in the first quarter of 2024
compared with 10% in the fourth quarter 2023 and 8% in the full-year 2023. The Next Generation Oral
portfolio accounted for 5% of Group net sales.
Capital Allocation
During the quarter the Group repurchased 1,319,050 treasury shares at a total value of DKK 164 mil-
lion as part of the up to 850 million share buy-back programme which was launched November 2023.
By the end of the first quarter Scandinavian Tobacco Group owned a total of 2,423,951 own treasury
shares, corresponding to 2.79% of the total share capital.
At the Annual General Meeting on 4 April 2024, the proposal to increase the ordinary dividend to DKK
8.40 per share was approved resulting in a total dividend payment of DKK 731 million.
The capital distribution to shareholders, including the ordinary dividend payment in April, amounts to
DKK 895 million.
A proposal to cancel 1.0 million treasury shares was also approved at the Annual General Meeting.
When the cancellation has been completed later in May, the number of issued shares will be 86.0
million.
6
Financial Guidance 2024
The full-year 2024 expectations remain unchanged compared with the those communicated in relation
to the release of the Annual Report 2023 on 5 March 2024.
The consumption of handmade cigars in the US is expected to remain resilient over time, although
2024 may be another year with consumption declining more than the historic structural decline rate.
The market for handmade cigars has not yet fully stabilised since the exceptional volume growth during
the pandemic and consumers are still adapting to changes in disposable income and higher interest
rates. However, consumption remains well above pre-pandemic levels. However, we expect price in-
creases on our products, continued growth in our online and retail distribution channels as well as in
our international markets will more than offset the decrease in consumption. We expect organic net
sales of handmade cigars to increase compared with last year.
The consumption of machine-rolled cigars and smoking tobacco in our European markets is expected
to develop close to their structural decline rates, though with volatility from quarter to quarter. We have
worked actively to stop the decline in market share in machine-rolled cigars in Europe, but the current
activities are not sufficient. We have decided on a set of additional activities which are currently being
implemented, including a more differentiated pricing strategy. To regain market share remains one of
our highest Group priorities for 2024.
We expect net sales from our own NGO brands will increase by more than 50% driven by market share
expansion and roll-out to new markets.
Based on the above and at current exchange rates, the Group reported net sales are expected in the
range of DKK 8.8-9.1 billion (2023: DKK 8.7 billion). All three commercial divisions are expected to
deliver growth in net sales compared with 2023 with the highest growth in EUB driven by increasing
sales of NGPs and pricing in the core categories. The Growth Enablers are expected to account for at
least 10% of Group net sales in 2024.
The EBITDA margin before special items is expected in the range of 22-24% (2023: 24.1%). The
margin is being diluted by increased investments in our Growth Enablers and machine-rolled cigars in
Europe, cost inflation and mix changes being partly offset by price increases and continued cost opti-
misations which will benefit coming years.
Free cash flow is expected in the range of DKK 0.8-1.0 billion and will be impacted by investments in
the retail expansion in the US, track and trace implementation in the EU and in the ERP-roll-out of up
to DKK 300 million compared with a level of DKK 200 million in 2023. Working capital 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.
Adjusted EPS is expected in the range of DKK 12.5-14.5 including an estimated impact from the cur-
rent share repurchase programme of DKK 0.5.
Given these considerations, guidance for 2024 is:
• Reported net sales in the range of DKK 8.8-9.1 billion.
• EBITDA-margin before special items in the range of 22-24%.
• Free cash flow before acquisitions in the range of DKK 0.8-1.0 billion.
• Adjusted EPS in the range of DKK 12.5-14.5.
In the second quarter, the Group is expected to deliver organic net sales growth and an improvement
in the EBITDA-margin compared with the first quarter of 2024. All three commercial divisions are
7
expected to deliver net sales growth. The expectation for the second quarter assumes continued
strong growth in NAOR, an improvement in the business mix and lower volume decline in machine-
rolled cigars in Europe.
The largest uncertainties for the guidance are changes in consumer behaviour, the market share de-
velopment 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 31 March 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.
8
Sales performance by category
Q1 2024: Net sales distribution and organic growth by category
Table 3: Net sales distribution and or-
ganic growth by category
% of
Group
Organic
Growth
Handmade cigars
37%
4%
MRC and Smoking Tobacco
46%
-12%
Next Generation Oral
5%
>100%
Other
12%
-3%
Group
100%
-2%
Handmade Cigars
Handmade cigars net sales increased in the first quarter of the year by 4% organically driven by stable
volumes and positive pricing. International sales of handmade cigars delivered close to double-digit
volume growth with particular good performance by the Macanudo and Silencio brands. Our US retail
superstores continued to deliver double-digit growth primarily as result of stores openings in 2022 and
2023. Online sales of handmade cigars remained stable with the active consumer base having stabi-
lised. The sales of handmade cigars to external wholesalers and distributors supplying retail in North
America continued to reset following the strong increase in consumption during the pandemic.
The consumption of handmade cigars in the US market is estimated to be down by a mid-single digit
percentage during the first quarter of the year.
Machine-rolled Cigars and Smoking Tobacco
Machine-rolled cigars (MRC) and smoking tobacco (ST) net sales decreased in the first quarter of the
year by 12% organically as result of double-digit volume decrease in both machine-rolled cigars and
pipe tobacco. Fine-cut tobacco delivered growth driven by good performance by Middle East/Africa
and the BREAK brand in Germany. Pricing remains positive in machine-rolled cigars.
The organic development was driven by an almost 15% decrease in MRC with the key European
markets France, the UK and Belgium delivering higher volume decline rates than the average. In our
key European markets, preliminary data indicate the volume market share declined to 28.1% com-
pared with 29.9% in the fourth quarter of 2023. Additionally, Canada contributed negatively to the
performance of machine-rolled cigars with a double-digit volume decline driven by the implementation
of plain packaging, which resulted in phasing of net sales. Pricing remains sound in all MRC markets.
The organic development within Smoking Tobacco was negative by 4% driven by a double-digit vol-
ume decrease in pipe tobacco and a slightly positive development for fine-cut tobacco. Net sales of
fine-cut tobacco were driven by international markets and good volume growth in Germany, where our
brand BREAK continue to take market share.
Next Generation Oral
Next Generation Oral (NGO) net sales more than doubled organically driven by good performance of
the nicotine pouch brand XQS and accounted for 5% of Group net sales in the first quarter. Both
STRÖM and !act delivered positive growth. The strong NGO development relates primarily to the XQS
brand taking market share in Sweden as well as the growth in the distribution of third-party products
in the US. Roll-out of the XQS brand is expected in multiple markets during 2024.
9
Financial performance by division
Europe Branded
Europe Branded delivered an 8% negative organic net sales growth in the first quarter of 2024, while
reported net sales decreased by 4%. Acquisitions impacted net sales by about 4%. Handmade Cigars
and NGOs delivered double-digit organic net sales growth, whereas machine-rolled cigars delivered a
double-digit negative organic net sales growth, despite sound pricing. The volume decline is driven by
the structural market decline rate, market share decline and timing of net sales to the trade. France
and Benelux delivered the largest declines in organic net sales during the quarter.
Total market volumes for machine-rolled cigars in Europe was negative by 5% compared with a 3%
decline for the full year 2023. Despite the higher decline rate in the first quarter the outlook for the
structural development in total market volumes at this point is still perceived to be negative by around
3% annually.
According to preliminary data, the market share index for the key markets in machine-rolled cigars was
28.1% for the first quarter 2024 versus 29.9% for the fourth quarter of 2023. For the full year 2023, the
market share index was 29.9%. The decline in our market share for the first quarter is primarily result
of the performance in France, the UK and Belgium, whereas our positions in Germany, Spain and the
Netherlands were relatively stable versus the fourth quarter 2023.
First Quarter Development, 2020-2024
EBITDA before special items decreased to DKK 85 million (DKK 146 million) with an EBITDA margin
before special items of 13.8% (22.8%). The margin development was impacted by mix changes (cat-
egory and country mix), general cost inflation, higher expenses to support net sales long-term growth
within both our core categories as well as within Next Generation Oral.
North America Branded & RoW
North America Branded & Rest of World delivered a 6% negative organic net sales growth, while
reported net sales decreased by 5% including a positive impact from acquisitions of 2% and a negative
impact from exchange rate developments, primarily the USD, by 1%.
The development was impacted by a double-digit negative volume impact from machine-rolled cigars
primarily in Canada, where volumes were temporarily impacted negatively by new regulation on plain-
packaging. In the US, the decline in the consumption of handmade cigars and inventory adjustments
in the trade continued to result in a higher than traditional volume decline. However, this was offset by
a sound price/mix impact. Net sales of handmade cigars to the international markets continue to de-
velop well, in line with our growth ambitions for the segment.
10%
15%
20%
25%
30%
35%
400
500
600
700
800
Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024
Net sales and EBITDA margin b.s.i.
Net Sales (DKK million) EBITDA margin
10
First Quarter Development, 2020-2024
EBITDA before special items decreased to DKK 212 million (DKK 276 million) with an EBITDA margin
before special items of 31.2% (38.3%). The development in the profitability was primarily result of a
decrease in the gross margin driven by mix changes (machine-rolled cigars in Canada down and fine-
cut in Middle East/Africa up).
North America Online & Retail
North America Online & Retail delivered a 9% organic net sales growth, while the reported net sales
increased by 8% including a slightly negative impact from exchange rates developments.
Organic net sales growth was driven by positive momentum in the online business with stable volumes
and positive pricing as well as double-digit net sales growth in the retail business. Both the expansion
of the retail network, with the opening of two superstores in Conroe and Katy, Texas as well as the
existing superstores contributed to the net sales performance. The third-party distribution of NGO con-
tinued to support net sales growth for the NAOR division.
First Quarter Development, 2020-2024
EBITDA before special items decreased to DKK 81 million (DKK 83 million) with an EBITDA margin
before special items of 12.5% (13.9%). The gross margin decreased by 1%-point to 39.2% driven by
mix changes. Traditionally, the EBITDA-margin in the first quarter is impacted by net sales being the
lowest during the year.
20%
25%
30%
35%
40%
45%
500
600
700
800
900
Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024
Net sales and EBITDA margin b.s.i.
Net Sales (DKK million) EBITDA margin
5%
10%
15%
20%
25%
300
400
500
600
700
800
Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024
Net sales and EBITDA margin b.s.i.
Net Sales (DKK million) EBITDA margin
11
Quarterly Financial Data
2024
2023
DKK million
Q1
Q4
Q3
Q2
Q1
FY
Reported data
Net sales
1,948
2,275
2,269
2,225
1,963
8,731
Gross profit before special items
881
1,089
1,092
1,044
979
4,204
EBITDA before special items
335
517
602
514
474
2,106
Special items
-30
-35
-14
-16
-27
-92
EBIT
208
385
489
406
358
1,638
Net financial items
-54
-79
-44
-22
-31
-177
Profit before tax
159
311
453
392
335
1,491
Income taxes
-34
-43
-102
-88
-76
-308
Net profit
125
268
351
304
260
1,182
Other financial key data
Organic EBITDA growth
-29.1%
-5.7%
-0.1%
-2.9%
-12.1%
-5.0%
Organic net sales growth
-2.1%
5.0%
-1.1%
-1.8%
-0.8%
0.3%
Gross margin before special items
45.2%
47.9%
48.2%
46.9%
49.9%
48.2%
EBITDA margin before special items
17.2%
22.7%
26.5%
23.1%
24.1%
24.1%
Free cash flow before acquisitions
-126
452
622
159
-179
1,053
North America Online & Retail
Net sales
650
738
745
740
602
2,824
Gross profit before special items
255
293
299
290
242
1,124
EBITDA before special items
81
108
129
122
83
443
Net sales growth
8.1%
4.9%
-3.2%
0.4%
5.9%
1.7%
Organic net sales growth
9.2%
10.4%
4.4%
2.7%
1.3%
4.8%
Gross margin before special items
39.2%
39.8%
40.1%
39.2%
40.2%
39.8%
EBITDA margin before special items
12.5%
14.7%
17.4%
16.4%
13.9%
15.7%
North America Branded & RoW
Net sales
681
743
809
773
720
3,044
Gross profit before special items
340
380
435
397
395
1,606
EBITDA before special items
212
242
321
265
276
1,104
Net sales growth
-5.4%
-1.0%
-4.9%
-5.7%
-6.9%
-4.7%
Organic net sales growth
-6.1%
-1.4%
-2.6%
-6.1%
-9.2%
-4.7%
Gross margin before special items
50.0%
51.1%
53.8%
51.3%
55.1%
52.8%
EBITDA margin before special items
31.2%
32.6%
39.7%
34.2%
38.3%
36.3%
Europe Branded
Net sales
617
794
716
712
641
2,863
Gross profit before special items
286
416
359
357
342
1,474
EBITDA before special items
85
196
176
164
146
683
Net sales growth
-3.8%
8.6%
-3.5%
-1.3%
7.6%
2.6%
Organic net sales growth
-7.7%
6.7%
-4.8%
-1.4%
8.3%
1.8%
Gross margin before special items
46.3%
52.4%
50.1%
50.1%
53.2%
51.5%
EBITDA margin before special items
13.8%
24.7%
24.6%
23.1%
22.8%
23.8%
Group costs
EBITDA before special items
-44
-30
-25
-37
-32
-123
12
EXECUTIVE MANAGEMENT
CEO
BOARD OF DIRECTORS
13
CONSOLIDATED STATEMENT OF INCOME
1 JANUARY - 31 MARCH
DKK million
Note
Q1 2024
Q1 2023
INCOME STATEMENT
Net sales
2
Cost of goods sold
2
-1,067.1
-983.7
Gross profit before special items
2
Other external costs
2
-295.7
-262.1
Staff costs
2
-254.3
-243.5
Other income
Earnings before interest, tax, depreciation, amortisation and spe-
cial items (EBITDA before special items)
2
Depreciation and impairment
-53.1
-46.3
Earnings before interest, tax, amortisation and special items
(EBITA before special items)
Amortisation and impairment
-43.9
-41.7
Earnings before interest, tax and special items (EBIT before spe-
cial items)
Special items, costs and impairment
3
-29.8
-27.2
Earnings before interest and tax (EBIT)
Share of profit of associated companies, net of tax
Financial income
Financial costs
-69.2
-88.1
Profit before tax
Income taxes
-34.1
-75.5
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 Statement of Income, when specific conditions are met:
Foreign exchange adjustments on net investments in foreign operations
-108.3
Other comprehensive income for the period, net of tax
-108.3
Total comprehensive income for the period
14
Net sales
In the first quarter of 2024, net sales were DKK 1,948 million (DKK 1,963 million). Adjusted for a neg-
ative exchange rate impact of DKK 12 million and acquisitions of DKK 39 million, the organic growth
in net sales was negative by 2.1%.
Profit
Gross profit before special items for the first quarter of 2024 was DKK 881 million (DKK 979 million)
explained by the development in net sales and a decreasing gross margin before special items to
45.2% (49.9%).
Operating expenses for the first quarter of 2024 increased by 9% compared to same quarter last year
and stood at DKK 550 million (DKK 506 million). The OPEX ratio increased to 28.2% (25.8%).
EBITDA before special items for the first quarter of 2024 amounted to DKK 335 million (DKK 474
million). The development is mainly explained by the lower gross profit and increased OPEX ratio.
Organic EBITDA growth was negative by 29.1%.
EBITDA margin before special items for the first quarter of 2024 was 17.2% (24.1%).
During the quarter DKK 30 million (DKK 27 million) have been expensed as special items, relating to
the ERP implementation project, OneProcess and the reorganisation to One Commercial Organisa-
tion.
Net profit was DKK 125 million (DKK 260 million). Earnings Per Share (EPS) were DKK 1.5 (DKK
3.0). Earnings Per Share adjusted for special items, fair value adjustments and currency
gains/losses, net of tax decreased to DKK 1.8 (DKK 3.2).
First Quarter Development, 2020-2024
10%
14%
18%
22%
26%
30%
1000
1300
1600
1900
2200
2500
Q1 2020 Q1 2021 Q1 2022 Q1 2023 Q1 2024
Net sales and EBITDA margin b.s.i.
Net Sales (DKK million) EBITDA margin
15
CONSOLIDATED BALANCE SHEET
ASSETS
DKK million
31 Mar 2024
31 Mar 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
16
CONSOLIDATED BALANCE SHEET
EQUITY AND LIABILITIES
DKK million
31 Mar 2024
31 Mar 2023
31 Dec 2023
Share capital
Reserve for currency translation
Treasury shares
-305.1
-818.9
-141.4
Retained earnings
Total equity
Borrowings
Deferred income tax liabilities
Pension obligations
Other provisions
Lease liabilities
Other liabilities
Total non-current liabilities
Credit facilities
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 422 million to DKK 4,480 million versus the end of 2023.
The development is mainly explained by additional draw on RCF/credit facilities during Q1 2024. The
leverage ratio (net interest-bearing debt to LTM EBITDA before special items) increased to 2.3x (1.9x
on 31 December 2023).
Return on Invested Capital
The return on invested capital (ROIC) decreased to 10.4% versus 11.4% by the end of 2023, explained
by a DKK 150 million decrease in EBIT (12 months rolling) driven by the operational performance.
Invested capital was unchanged and stood at DKK 14.3 billion (DKK 14.3 billion).
17
CONSOLIDATED CASH FLOW STATEMENT
1 JANUARY - 31 MARCH
DKK million
Q1 2024
Q1 2023
Net profit for the period
Depreciation, amortisation and impairment
Adjustments
Changes in working capital
-252.2
-452.5
Special items, paid
-23.9
-28.2
Cash flow from operating activities before financial items
-2.7
Financial income received
Financial costs paid
-43.6
-56.1
Cash flow from operating activities before tax
-46.5
Tax payments
-83.2
-56.2
Cash flow from operating activities
-71.0
-102.7
Acquisitions
-37.3
-513.6
Investment in intangible assets
-7.6
-32.1
Investment in property, plant and equipment
-49.9
-47.8
Sale of property, plant and equipment
Dividend from associated companies
Cash flow from investing activities
-91.8
-590.1
Free cash flow
-162.8
-692.8
Repayment of lease liabilities
-17.8
-15.8
RCF
Repayment bank loans
-1.0
-1.1
Purchase of treasury shares
-157.6
-103.8
Cash flow from financing activities
-16.8
Net cash flow for the period
-179.6
-34.2
Cash and cash equivalents, net at 1 January
Exchange gains/losses on cash and cash equivalents
-5.6
Net cash flow for the period
-179.6
-34.2
Cash and cash equivalents, net at 31 March
-79.7
-17.6
18
Cash flows
Cash flow from operations before changes in working capital in the first quarter of 2024 was DKK 181
million (DKK 350 million). The development was driven by the operational result and higher tax pay-
ments partly offset by lower net financial costs paid.
Changes in working capital in the first quarter of 2024 had a negative impact on the cash flow by DKK
252 million (negative DKK 453 million) mainly due to increased inventories and lower trade payables
and other liabilities.
Cash flow from investing activities amounted to DKK -92 million (DKK -590 million). The first quarter
of 2023 was impacted by the acquisition of Alec Bradley Cigar business.
Free cash flow before acquisitions in the first quarter of 2024 was negative by DKK 126 million (neg-
ative DKK 179 million). The cash conversion ratio was 21.5% (2.3%).
STATEMENT OF CHANGES IN GROUP EQUITY
1 JANUARY – 31 MARCH 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
investments in foreign operations
Total other comprehensive income
Total comprehensive income for the
period
Transactions with shareholders
Purchase of treasury shares
-163.7
-163.7
Share-based payments
Total transactions with shareholders
-163.7
-160.1
Equity at 31 March 2024
-305.1
Equity
Total shareholders’ equity as at 31 March 2024 amounted to DKK 9,522 million (DKK 9,434 million on
31 December 2023). The equity was positively impacted by profit for the period and impact from foreign
exchange adjustments on net investments in foreign operations, partly offset by share buy-back pro-
gramme. As of 31 March 2024, the equity ratio was 58.3% (59.5% on 31 December 2023).
19
STATEMENT OF CHANGES IN GROUP EQUITY (continued)
1 JANUARY – 31 MARCH 2023
DKK million
Share
capital
Reserve for
currency
translation
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
investments in foreign operations
-108.3
-108.3
Total other comprehensive income
-108.3
-108.3
Total comprehensive income for the
period
-108.3
Transactions with shareholders
Purchase of treasury shares
-95.9
-95.9
Share-based payments
Settlement of vested PSUs
-25.1
Total transactions with shareholders
-70.8
-22.9
-93.7
Equity at 31 March 2023
-818.9
20
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 for the first
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 revised standards and
interpretations.
NOTE 2
SEGMENT INFORMATION AND NET SALES
3M 2024
North
America
Online &
Retail
North
America
Branded
& RoW
Europe
Branded
Group
costs /
not allo-
cated
Total
DKK million
Net sales
650.3
681.2
616.8
-
1,948.3
Cost of goods sold
-395.1
-340.7
-331.3
-
-1,067.1
Gross profit before special items
255.2
340.5
285.5
-
881.2
Staff and other external costs
-174.2
-131.7
-200.6
-43.5
-550.0
Other income
-
3.6
-
-
3.6
EBITDA before special items
81.0
212.4
84.9
-43.5
334.8
Depreciation and impairment
-53.1
-53.1
Amortisation and impairment
-43.9
-43.9
EBIT before special items
-140.5
237.8
Special items, costs and impairment
-29.8
-29.8
EBIT
-170.3
208.0
Share of profit of associated
companies, net of tax
5.1
5.1
Financial income
15.0
15.0
Financial costs
-69.2
-69.2
Profit before tax
-219.4
158.9
21
SEGMENT INFORMATION AND NET SALES (continued)
3M 2023
North
America
Online &
Retail
North
America
Branded
& RoW
Europe
Branded
Group
costs /
not allo-
cated
Total
DKK million
Net sales
601.8
719.8
641.3
-
1,962.9
Cost of goods sold
-360.0
-323.4
-300.3
-
-983.7
Gross profit before special items
241.8
396.4
341.0
-
979.2
Staff and other external costs
-158.4
-116.8
-198.3
-32.1
-505.6
EBITDA before special items
83.4
279.6
142.7
-32.1
473.6
Depreciation and impairment
-46.3
-46.3
Amortisation and impairment
-41.7
-41.7
EBIT before special items
-120.1
385.6
Special items, costs and impairment
-27.2
-27.2
EBIT
-147.3
358.4
Share of profit of associated
companies, net of tax
8.3
8.3
Financial income
56.7
56.7
Financial costs
-88.1
-88.1
Profit before tax
-170.4
335.3
DKK million
3M 2024
3M 2023
Category split, net sales
Handmade cigars
716.2
680.8
Machine-rolled cigars
591.2
696.7
Smoking tobacco
307.2
321.8
Accessories, Contract Manufacturing & other
333.7
263.6
Total net sales
1,948.3
1,962.9
License income and other sales of DKK 24.5 million (DKK 24.9 million) are included in the category 'Accessories,
Contract Manufacturing & other'.
DKK million
3M 2024
3M 2023
Geographical split, net sales
Americas
1,086.2
1,051.9
Europe
768.4
795.6
Rest of World
93.7
115.4
Total net sales
1,948.3
1,962.9
22
NOTE 3
SPECIAL ITEMS
DKK million
3M 2024
3M 2023
One Commercial Organisation
9.1
-
OneProcess
20.7
27.2
Total special items
29.8
27.2