Company Announcement
No. 47/2024
Copenhagen, 22 August 2024
Interim report, 1 January - 30 June 2024
sults and maintains full-year guidance
For the second quarter of 2024 Scandinavian Tobacco Group delivered a 6.3% increase in reported
net sales by DKK 2.4 billion with an EBITDA margin before special items at 24.5%. Net sales increased
4.8% organically driven by Handmade Cigars and Next Generation Products. The decline rate in Ma-
chine-Rolled Cigars & Smoking Tobacco improved compared with the first quarter. The EBITDA mar-
gin is impacted by an improving, yet still negative, volume development, mix changes and investments
in growth. In the second half of the year, the Group is expected to deliver organic net sales growth and
a continued improvement in the EBITDA-margin. The full year guidance is maintained.
Second Quarter 2024 - Financial Performance
• Net sales of DKK 2,366 million (DKK 2,225 million) with 4.8% positive organic growth.
• EBITDA before special items was DKK 580 million (DKK 514 million) with an EBITDA margin
of 24.5% (23.1%).
• Adjusted Earnings Per Share (EPS) were DKK 4.1 (DKK 3.5).
• Free cash flow before acquisitions was DKK 177 million (DKK 159 million).
• Return on Invested Capital (ROIC) was 10.5% (13.1%).
• Growth Enablers delivered a high double-digit growth rate and accounted for 12% of Group
net sales.
• In the first six months of 2024, net sales increased by 3.0% to DKK 4.3 billion (DKK 4.2 bil-
lion), organic net sales growth was 1.5%, the EBITDA margin was 21.2% (23.6%), free cash
flow before acquisitions was DKK 52 million (DKK -20 million) and Adjusted EPS were DKK
5.8 (DKK 6.7).
CEO Niels Frederiksen: “The second quarter financial performance supports our expectation for the
full year. During the past months, we have taken material steps in executing our strategy and to safe-
guard our financial performance in challenging markets. The new commercial structure has been com-
pleted and we have taken additional steps to re-establish our market position in machine-rolled cigars
and to improve our cost agility across the group. Further, the acquisition of Mac Baren strengthens our
smoking tobacco business where the combination with our existing business will deliver meaningful
synergies and good value for our shareholders”.
Acquisition of Mac Baren
With effect from 1 July 2024, Scandinavian Tobacco Group has acquired Mac Baren Tobacco
Company A/S (“Mac Baren”) in a transaction valued at DKK 535 million. Mac Baren is a leading global
smoking tobacco company, which includes a strong portfolio of pipe tobacco brands, fine-cut tobacco
brands and brands within the nicotine pouch category. Mac Baren adds a valuable portfolio of brands
2
within the smoking tobacco category, increases our presence in the nicotine pouch market and
contributes to improved financial results.
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
The full-year financial guidance for 2024 is exclusive of the impact from the acquisition of Mac Baren
Tobacco Company. The financial impact of the acquisition will be communicated as soon as the
integration planning period has been completed, but no later than at the release of the third quarter
interim report, on 12 November 2024.
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 23 August 2024 at 10.00 CEST. Dial-in information and an accom-
panying presentation will be available at investor.st-group.com/investor around 09:00 CEST.
3
Key Figures
DKK million
Q2 2024
Q2 2023
6M 2024
6M 2023
FY2023
INCOME STATEMENT
Net sales
2,366
2,225
4,314
4,188
8,731
Gross profit before special items
1,109
1,044
1,990
2,023
4,204
EBITDA before special items
580
514
915
987
2,106
Special items
-53
-16
-83
-44
-92
EBIT
429
406
637
764
1,638
Net financial items
1
-53
-22
-107
-53
-177
Profit before tax
385
392
544
727
1,491
Income taxes
-88
-88
-122
-164
-308
Net profit
297
304
422
563
1,182
BALANCE SHEET
Total assets
16,428
16,350
15,853
Equity
8,881
8,994
9,434
Net interest-bearing debt (NIBD)
5,364
5,059
4,057
Investment in property, plant and equipment
50
40
100
88
199
Total capital expenditures
74
66
132
146
308
CASH FLOW STATEMENT
Cash flow from operating activities
246
222
175
120
1,347
Cash flow from investing activities
-118
-132
-210
-722
-875
Free cash flow
129
90
-34
-603
472
Free cash flow before acquisitions
177
159
52
-20
1,053
KEY RATIOS
2
Net sales growth
6.3%
-2.3%
3.0%
-0.7%
-0.4%
Gross margin before special items
46.9%
46.9%
46.1%
48.3%
48.2%
EBITDA margin before special items
24.5%
23.1%
21.2%
23.6%
24.1%
Effective tax percentage
22.9%
22.5%
22.5%
22.5%
20.7%
Equity ratio
54.1%
55.0%
59.5%
Cash conversion
96.5%
78.3%
70.4%
42.0%
103.0%
Organic net sales growth
4.8%
-1.8%
1.5%
-1.3%
0.3%
Organic EBITDA growth
11.4%
-2.9%
-8.1%
-7.5%
-5.0%
NIBD / EBITDA before special items
2.6
2.3
1.9
ROIC
10.5%
13.1%
11.4%
ROIC ex. Goodwill
16.6%
21.3%
18.1%
Adjusted earnings per share (DKK)
4.1
3.5
5.8
6.7
14.4
Basic earnings per share (DKK)
3.6
3.5
5.0
6.5
13.7
Diluted earnings per share (DKK)
3.5
3.5
5.0
6.5
13.6
Number of shares issued ('000)
86,000
87,000
87,000
Number of treasury shares ('000)
4,211
382
1,105
Number of outstanding shares ('000)
3
84,354
86,786
86,668
Share price at balance date (DKK)
98.30
113.50
117.30
Dividend per share (DKK)
8.40
Pay-out ratio
61.8%
1. Excl. share of profit of associated companies.
2. See definition/explanation of financial ratios in note 5.8 in the Annual Report 2023.
3. Average number of shares outstanding, including dilutive effect of PSUs.
4
Second Quarter 2024 - Financial performance
In the second quarter of 2024 the Group´s net sales reported in DKK increased by 6.3% to DKK 2,366
million. Exchange rates developments impacted net sales positively by close to 1%, whilst the acqui-
sition of the XQS brands also impacted net sales positively by close to 1%. The organic growth in net
sales was positive by 4.8% (see Table 1).
The Group’s organic net sales performance was driven by positive contributions from the product cat-
egories Handmade Cigars and Next Generation Products, whereas the product category Machine-
Rolled Cigars & Smoking Tobacco delivered negative, albeit compared to the first quarter an improv-
ing, organic net sales performance. Measured by our reporting divisions, the organic net sales perfor-
mance was driven by North America Online & Retail (“NAOR”) and Europe Branded (“EUB”) while
North America Branded & Rest of World (“NABROW”) delivered a negative organic net sales devel-
opment.
The EBITDA margin (before special items) increased to 24.5% (23.1%). The EBITDA margin improved
in all three reporting divisions compared to the second quarter of last year. The improved margin is
primarily driven by the net sales increase in NAOR and EUB and by an improved mix in NABROW.
The OPEX ratio improved to 23.0% in the quarter from 23.8% in the second quarter last year partly
driven by the sales increase and partly by general cost improvements. Investments in the Group’s
initiatives to strengthen long-term net sales and profit growth continue to impact margins negatively.
Special items were DKK 53 million relating to the Group’s ERP implementation programme, One Pro-
cess, the reorganisation to One Commercial Organisation and integration and transaction costs relat-
ing to the Mac Baren acquisition. Net profit was DKK 297 million (DKK 304 million) with Adjusted
Earnings Per Share at DKK 4.1 (DKK 3.5).
Divisional split Q2 2024
Net sales and organic growth EBITDA before special items and organic growth
Group net sales and EBITDA Q2 2024
Table 1: Net sales
Table 2: EBITDA before special items
Q2
Q2
Change
DKK million
2024
2023
in %
Net sales
2,366
2,225
6.3%
Acquisitions
16
Currency development
-18
Organic net sales
2,348
2,241
4.8%
Q2
Q2
Change
DKK million
2024
2023
in %
EBITDA
580
514
13.0%
Acquisitions
1
Currency development
-6
Organic EBITDA
574
515
11.4%
32%
33%
35%%
NA Branded &
RoW
Europe Branded
NA Online &
Retail
44%
31%
25%
DKK 2,366m
4.8%
DKK 580m
+11.4%
5
The Group’s free cash flow before acquisitions was DKK 177 million (DKK 159 million). The develop-
ment is positively impacted by the operational performance as well as changes in working capital,
which was negative by DKK 26 million in the second quarter of 2024 compared with negative DKK 142
million in the second quarter of 2023. The Group´s leverage ratio was 2.6 times versus 1.9 times by
the end 2023 and 2.3 times by the end of the second quarter 2023. Including the impact from Mac
Baren the leverage ratio is expected at about the current by the end of 2024.
The 12 months rolling Return on Invested Capital (ROIC) decreased to 10.5% versus 11.4% by the
end of 2023 driven by the development in EBIT (12 months rolling). Invested capital was almost un-
changed compared to 31 December 2023 and stood at DKK 14.4 billion (DKK 14.3 billion).
Update Strategy and Other Key Events
Acquisition of Mac Baren
With effect from 1 July 2024, Scandinavian Tobacco Group has acquired Mac Baren Tobacco
Company A/S (“Mac Baren”) in a transaction valued at DKK 535 million. The acquisition will be
financed by cash at hand and debt. Mac Baren is a leading global smoking tobacco company, which
includes a strong portfolio of pipe tobacco brands, fine-cut tobacco brands and brands within the
nicotine pouch category with reported annual net sales (April/2024) at DKK 723 million and a reported
EBITDA of DKK 85 million.
Mac Baren will add a valuable portfolio of brands within the smoking tobacco category and expand our
market positions within both pipe tobacco and fine-cut tobacco, Mac Baren will increase our presence
in the nicotine pouch market with both brands and production capabilities and the acquisition will
contribute to improved financial results.
The combination with our existing business is expected to deliver meaningful synergies when fully
integrated and good value for our shareholders. The integration planning is taking place over the
coming months and we will communicate more details no later than 12 November 2024 with the
release of the third quarter interim report.
Growth Enablers
The Growth Enablers comprise of international sales of handmade cigars (outside of the US), retail
stores and Next Generation Products (including distribution of third-party products).
Cigars International opened two new retail superstores in 2023, both located in Texas, bringing the
total number of superstores in the US to nine. The retail stores are accretive to both the EBITDA
margin and to ROIC for the Group 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 5% in the second quarter.
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.
Reported net sales more than tripled for Next Generation Products (NGP) primarily driven by strong
performance of the nicotine pouch brand XQS as well as growth in the distribution of third-party prod-
ucts in the US. XQS was launched in the UK market late in the second quarter and a roll-out of the
6
brand is expected in additional markets during the second half of 2024. The distribution of the third
party NGP products in the US has been paused by the brand owner as of late June and it is uncertain
if and when the distribution will be resumed.
Net sales from the Growth Enablers accounted for 12% of Group net sales in the second quarter of
2024 compared with 11% in the first quarter 2024 and 8% in the full-year 2023. The NGP portfolio
accounted for 6% of Group net sales, with about half delivered by the mentioned third-party distribution
agreement.
Capital Allocation
During the quarter the Group repurchased 2,786,948 treasury shares at a total value of DKK 287
million as part of the up to 850 million share buy-back programme which was launched November
2023. During the first six months of 2024, the Group has repurchased shares at a total value of DKK
451 million.
By the end of the second quarter Scandinavian Tobacco Group owned a total of 4,210,899 own treas-
ury shares, corresponding to 4.9% 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 of DKK 731 million in
April, amounts to DKK 1,182 million during the first six months of 2024.
10 May 2024, 1.0 million treasury shares were cancelled as approved at the Annual General Meeting,
whereby the number of issued shares is 86.0 million.
Financial Guidance 2024
The full-year 2024 expectations remain unchanged and are exclusive of the impact from the acquisition
of Mac Baren Tobacco Company. The financial impact of the acquisition will be communicated as soon
as the integration planning period has been completed, but no later than 12 November 2024 with the
release of the third quarter interim report.
Since the extraordinary growth during the pandemic in 2020 and 2021, the consumption of handmade
cigars in the US have been declining, though volumes remain above the pre-covid levels. Currently,
the market is estimated to contract by a mid-single digit percentage, and it remains uncertain when
the decline rate will stabilise at a lower level. One reason for this uncertainty is the US consumer
behaviour and spending. However, we expect price increases on our products, continued growth in
our online and retail distribution channels as well as in our international markets to more than offset
the decrease in US-based consumption. For 2024, we continue to expect organic net sales of hand-
made cigars to increase compared with last year.
The total market for machine-rolled cigars in our key markets in Europe declined at close to 5% during
the first half of 2024. Consequently, the volume decline in Europe has accelerated compared to previ-
ous years and it remains uncertain whether this is temporary or a new level we must adapt to. Conse-
quently, our actions must be based on up-to-date assessments of the market trends with our initiatives
focused rebuilding our market positions and regain market share in our core markets as well as to
improve our cost agility, should market volumes not improve.
7
We expect net sales from our own NGP brands will increase by more than 50% driven by market share
expansion and roll-out to new markets. Following a launch of XQS in the UK market, the brand is
planned to be introduced the Danish market during the third quarter.
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). North America Online & Retail and Europe
Branded are expected to deliver growth in net sales compared with 2023 while the division North
America Branded & Rest of World now is expected to deliver slightly lower net sales with the expected
recovery in the consumption of handmade cigars in the US being delayed. The Growth Enablers are
expected to account for about 10% of Group net sales in 2024.
The EBITDA margin before special items is expected in the range of 22-24% (2023: 24.1%). The
margin is being diluted by increased investments in the roll-out of XQS to new markets, expansion of
our retail network in the US, investments in regaining market positions in machine-rolled cigars in
Europe as well as product and market mix changes. These factors are partly being offset by price
increases, continued cost optimisations and the expected refund of certain import tax payments.
Free cash flow is expected in the range of DKK 0.8-1.0 billion and are impacted by investments in the
retail expansion in the US, the completed 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 0.7-0.8.
Given these considerations, guidance for 2024 is maintained:
• 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.
For the second half of the year, we expect a continued increase in net sales compared to the second
half of last year with growth in all three commercial divisions. The EBITDA margin is expected to be
lower for the group compared with the second half of last year as result of the continued expansion of
our own NGP business and the comparison to a strong third quarter last year, which primarily was
driven by a favourable mix in NABROW.
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.
8
Events after the reporting period
With effect from 1 July 2024, Scandinavian Tobacco Group acquired Mac Baren Tobacco Company
A/S (“Mac Baren”) in a transaction valued at DKK 535 million. The acquisition is financed by cash at
hand and debt. Mac Baren is a leading global smoking tobacco company, which includes a strong
portfolio of pipe tobacco brands, fine-cut tobacco brands and brands within nicotine pouches with re-
ported annual net sales (April/2024) at DKK 723 million and a reported EBITDA of DKK 85 million.
There are no other events than those mentioned in the above that have occurred after 30 June 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.
9
Sales performance by category
Q2 2024: Net sales distribution and organic growth by category
Table 3: Q2 2024 Net sales distribu-
tion and organic growth by category
% of Group
Organic
Growth
Handmade cigars
37%
3%
MRC and Smoking Tobacco
46%
-2%
Next Generation Products
6%
>100%
Other
11%
10%
Group
100%
5%
Handmade Cigars
Handmade cigars net sales increased in the second quarter of the year by 3% organically and by 4%
in reported net sales. The impact from exchange rates movements and acquisitions have been imma-
terial during the quarter. Reported net sales of handmade cigars in international markets (ex the US)
increased 22% with particular good performance by markets in Southern Europe and Asia. Reported
net sales of handmade cigars in our retail superstores in the US continued its healthy performance by
delivering 15% growth primarily as result of store openings in the previous two years. Reported net
sales of handmade cigars sold online increased by 4%, with a slight decline in the active consumer
file offset by an increase in the average basket size. Reported net sales of handmade cigars to external
wholesalers and distributors supplying retail in North America (within NAB) is primarily impacted by an
estimated overall decline in consumption in the range of 4% to 5%, lower contract-manufacturing sales
as well as inventory adjustments at some customers.
Machine-rolled Cigars and Smoking Tobacco
Machine-rolled cigars (MRC) and smoking tobacco (ST) net sales decreased in the second quarter of
the year by 2% organically and by 7% for the first six months of the year.
For the second quarter, an improved volume decline rate in machine-rolled cigars compared with the
first quarter, a positive organic growth for smoking tobacco in Europe and pricing across all categories
contributed to the improved overall performance compared to a weak first quarter of the year.
The development was driven by a decrease in organic net sales in machine-rolled cigars by more than
5% with European markets like the UK, Belgium, the Nordics, France and the Netherlands delivering
higher than average volume decline rates. In our key European markets, preliminary data indicate the
volume market share stabilised at 27.9% compared with 27.6% in the first quarter of 2024. The initia-
tives we are taking to rebuild market positions will take time to have effect. Pricing remains sound in
all major markets.
The organic development within Smoking Tobacco was positive by 6% driven by a volume increase
for both pipe tobacco and for fine-cut tobacco. Net sales of fine-cut tobacco were driven by interna-
tional markets and good volume growth in Germany, where our brand BREAK continue to take market
share.
10
Next Generation Products
Reported net sales more than tripled for Next Generation Products (NGP) primarily driven by strong
performance of the nicotine pouch brand XQS. Organic growth, i.e. excluding the impact from acqui-
sition of XQS in May 2023, were above 100%. NGP accounted for 6% of Group net sales in the second
quarter. The strong NGP development relates primarily to the XQS brand taking market share in Swe-
den as well as the growth in the distribution of third-party products in the US. XQS was launched in
the UK market late in the second quarter and a roll-out of the brand is expected in additional markets
during the second half of 2024. The distribution of the third party NGP products in the US has been
paused by the brand owner as of late June and it is uncertain if and when the distribution will be
resumed.
Financial performance by division
Europe Branded
Europe Branded delivered an 6.1% positive organic net sales growth in the second quarter of 2024,
while reported net sales increased by 8.8%. Acquisitions impacted net sales by about 2%. Handmade
cigars, smoking tobacco and NGPs delivered double-digit organic net sales growth while the decline
rate in organic net sales for machine-rolled cigars improved to -4%. The development in market shares
for machine rolled cigars remain negative. The volume decline in the category is being partly offset by
pricing.
Total market volumes for machine-rolled cigars in Europe is estimated to be negative by close to 5%
for the second quarter in a row compared with a 3% decline for the full year 2023. According to pre-
liminary data, the market share index for our seven key markets in machine-rolled cigars was 27.9%
for the second quarter 2024 versus 27.6% for the first quarter of 2024. The development for the second
quarter is primarily result of an increasing market share in Spain, a declining market share in the Neth-
erlands, whereas our positions in the other markets were relatively stable versus the first quarter of
the year.
Second Quarter Development, 2020-2024
For the second quarter of 2024, EBITDA before special items increased to DKK 193 million (DKK 164
million) with an EBITDA margin before special items of 24.9% (23.1%). The margin development was
driven by increasing net sales in the quarter. The gross margin was unchanged. The NGP category
continue to dilute the divisional EBITDA margin as result of the ambition to grow market share and the
roll-out to new markets.
For the first six months of 2024 reported net sales decreased to DKK 1,391 million with a negative
organic growth of 0.5%. Gross profit before special items decreased by 3.8% to DKK 673 million and
10%
15%
20%
25%
30%
35%
400
500
600
700
800
Q2 2020 Q2 2021 Q2 2022 Q2 2023 Q2 2024
Net sales and EBITDA margin b.s.i.
Net Sales (DKK million) EBITDA margin
11
the gross margin was 48.4% (51.7%). EBITDA before special items decreased by 10.9% to DKK 276
million with an EBITDA margin of 19.9% (22.9%).
North America Branded & Rest of World
North America Branded & Rest of World delivered a 3.5% negative organic net sales growth in the
second quarter of 2024, while reported net sales decreased by 2.9% including a positive impact from
exchange rate developments.
The development was impacted by a negative volume impact from machine-rolled cigars primarily in
Middle East/Africa. In Canada the volume impact from machine-rolled cigars recovered as expected
following the decline due to the implementation of plain packaging during the first quarter. The market
share in Canada continued to improve during the quarter. Net sales of handmade cigars in the US to
external wholesalers and distributors continued to decline by close to mid-single digit percentage
driven by the overall decline in consumption as well as lower contract manufacturing sales and inven-
tory adjustments at some customers, while net sales to our international markets continue to develop
well, in line with our growth ambitions for the segment.
Second Quarter Development, 2020-2024
EBITDA before special items increased to DKK 275 million (DKK 265 million) with an EBITDA margin
before special items of 36.6% (34.2%). The development in the profitability was primarily result of an
increase in the gross margin driven by mix changes (ex. machine-rolled cigars in Canada) and a lower
OPEX ratio impacted by an expected DKK 16 million refund of certain import tax payments.
For the first six months of 2024 reported net sales decreased to DKK 1,432 million with organic growth
being negative by 4.8%. Gross profit before special items decreased by 7.7% to DKK 731 million and
the gross margin was 51.0% (53.1%). EBITDA before special items decreased by 10.2% to DKK 486
million with an EBITDA margin of 33.9% (36.2%).
North America Online & Retail
North America Online & Retail delivered a 12.1% organic net sales growth in the second quarter of
2024, while the reported net sales increased by 13.6% including a positive impact from exchange rates
developments.
Organic net sales growth was driven by positive momentum in the online business driven by pricing in
handmade cigars and increasing net sales of third-party next generation products. The number of
active customers is slightly down with the volumes of handmade cigars sold being relatively stable and
with the average spending per customer increasing. The distribution of third party NGP products has
been paused by the brand owner and as it is uncertain if and when the distribution will be resumed the
net sales development is expected to be negatively impacted in the division for the second half of the
year.
20%
25%
30%
35%
40%
45%
500
600
700
800
900
Q2 2020 Q2 2021 Q2 2022 Q2 2023 Q2 2024
Net sales and EBITDA margin b.s.i.
Net Sales (DKK million) EBITDA margin
12
The retail business continues to deliver double-digit net sales growth driven by the opening of new
super stores in previous years and a 5% increase in the same-store-sales. Three new stores are ex-
pected to open during the second half of the year
Second Quarter Development, 2020-2024
EBITDA before special items increased to DKK 152 million (DKK 122 million) with an EBITDA margin
before special items of 18.1% (16.4%). The development in the profitability was primarily result of the
increase in net sales as well as general efficiency improvement.
For the first six months of 2024 net sales increased by 11.1% to DKK 1,491 million with an organic
growth of 10.8%. Gross profit before special items increased by 10.3% to DKK 586 million and the
gross margin was 39.3% (39.6%). EBITDA before special items increased by 14.0% to DKK 233 million
with an EBITDA margin of 15.7% (15.3%).
5%
10%
15%
20%
25%
300
400
500
600
700
800
Q2 2020 Q2 2021 Q2 2022 Q2 2023 Q2 2024
Net sales and EBITDA margin b.s.i.
Net Sales (DKK million) EBITDA margin
13
Quarterly Financial Data
2024 2023 2024 2023
DKK million Q2 Q1 Q4 Q3 Q2 6M 6M 12M
Reported data
Net sales 2,366 1,948 2,275 2,269 2,225 4,314 4,188 8,731
Gross profit before special items 1,109 881 1,089 1,092 1,044 1,990 2,023 4,204
EBITDA before special items 580 335 517 602 514 915 987 2,106
Special items -53 -30 -35 -14 -16 -83 -44 -92
EBIT 429 208 385 489 406 637 764 1,638
Net financial items -53 -54 -79 -44 -22 -107 -53 -177
Profit before tax 385 159 311 453 392 544 727 1,491
Income taxes -88 -34 -43 -102 -88 -122 -164 -308
Net profit 297 125 268 351 304 422 563 1,182
Other financial key data
Organic EBITDA grow th 11.4% -29.1% -5.7% -0.1% -2.9% -8.1% -7.5% -5.0%
Organic net sales grow th 4.8% -2.1% 5.0% -1.1% -1.8% 1.5% -1.3% 0.3%
Gross margin before special items 46.9% 45.2% 47.9% 48.2% 46.9% 46.1% 48.3% 48.2%
EBITDA margin before special items 24.5% 17.2% 22.7% 26.5% 23.1% 21.2% 23.6% 24.1%
Free cash flow before acquisitions 177 -126 452 622 159 52 -20 1,053
North America Online & Retail
Net sales 840 650 738 745 740 1,491 1,342 2,824
Gross profit before special items 331 255 293 299 290 586 532 1,124
EBITDA before special items 152 81 108 129 122 233 205 443
Net sales grow th 13.6% 8.1% 4.9% -3.2% 0.4% 11.1% 2.8% 1.7%
Organic net sales grow th 12.1% 9.2% 10.4% 4.4% 2.7% 10.8% 2.1% 4.8%
Gross margin before special items 39.4% 39.2% 39.8% 40.1% 39.2% 39.3% 39.6% 39.8%
EBITDA margin before special items 18.1% 12.5% 14.7% 17.4% 16.4% 15.7% 15.3% 15.7%
North America Branded & RoW
Net sales 751 681 743 809 773 1,432 1,493 3,044
Gross profit before special items 391 340 380 435 397 731 792 1,606
EBITDA before special items 275 211 242 321 265 486 541 1,104
Net sales grow th -2.9% -5.4% -1.0% -4.9% -5.7% -4.1% -6.3% -4.7%
Organic net sales grow th -3.5% -6.1% -1.4% -2.6% -6.1% -4.8% -7.6% -4.7%
Gross margin before special items 52.0% 50.0% 51.1% 53.8% 51.3% 51.0% 53.1% 52.8%
EBITDA margin before special items 36.6% 31.2% 32.6% 39.7% 34.2% 33.9% 36.2% 36.3%
Europe Branded
Net sales 775 617 794 716 712 1,391 1,353 2,863
Gross profit before special items 388 286 416 359 357 673 699 1,474
EBITDA before special items 193 83 196 176 164 276 310 683
Net sales grow th 8.8% -3.8% 8.6% -3.5% -1.3% 2.8% 2.7% 2.6%
Organic net sales grow th 6.1% -7.7% 6.7% -4.8% -1.4% -0.5% 3.0% 1.8%
Gross margin before special items 50.0% 46.3% 52.4% 50.1% 50.1% 48.4% 51.7% 51.5%
EBITDA margin before special items 24.9% 13.8% 24.7% 24.6% 23.1% 19.9% 22.9% 23.8%
Group costs
EBITDA before special items -40 -40 -30 -25 -37 -80 -68 -123
14
EXECUTIVE MANAGEMENT
BOARD OF DIRECTORS
15
CONSOLIDATED STATEMENT OF INCOME
1 JANUARY - 30 JUNE
DKK million
Note
Q2
2024
Q2
2023
6M
2024
6M
2023
INCOME STATEMENT
Net sales
2
Cost of goods sold
2
-2,323.7
-2,164.7
Gross profit before special items
2
Other external costs
2
-288.7
-307.6
-584.4
-569.7
Staff costs
2
-255.8
-222.6
-510.1
-466.1
Other income
Earnings before interest, tax, depreciation, amor-
tisation and special items (EBITDA before spe-
cial items)
2
Depreciation and impairment
-54.1
-48.5
-107.2
-94.8
Earnings before interest, tax, amortisation and
special items (EBITA before special items)
Amortisation and impairment
-44.2
-42.9
-88.1
-84.6
Earnings before interest, tax and special items
(EBIT before special items)
Special items, costs and impairment
3
-52.8
-16.4
-82.6
-43.6
Earnings before interest and tax (EBIT)
Share of profit of associated companies, net of tax
Financial income
Financial costs
-68.6
-65.4
-137.8
-153.5
Profit before tax
Income taxes
-88.3
-88.0
-122.4
-163.5
Net profit for the period
Earnings per share
Basic earnings per share (DKK)
Diluted earnings per share (DKK)
STATEMENT OF COMPREHENSIVE INCOME
Net profit for the period
OTHER COMPREHENSIVE INCOME
Items that will be recycled subsequently to the Consolidated Income Statement, when specific conditions are met:
Foreign exchange adjustments on net investments in
foreign operations
-98.9
Other comprehensive income for the period, net
of tax
-98.9
Total comprehensive income for the period
16
Net sales
In the second quarter of 2024, net sales were DKK 2,366 million (DKK 2,225 million). Adjusted for a
positive exchange rate impact of DKK 18 million and acquisitions of DKK 16 million, the organic growth
in net sales was positive by 4.8%. For the first six months of 2024, net sales came to DKK 4,314 million
(DKK 4,188 million) with organic net sales growth being positive by 1.5%.
Profit
Gross profit before special items for the second quarter of 2024 was DKK 1,109 million (DKK 1,044
million) explained by the development in net sales. Gross margin before special items was unchanged
and came to 46.9% (46.9%).
Operating expenses for the second quarter of 2024 increased by 2.7% compared to same quarter last
year and stood at DKK 545 million (DKK 530 million). The OPEX ratio decreased to 23.0% (23.8%).
EBITDA before special items for the second quarter of 2024 amounted to DKK 580 million (DKK 514
million). The development is mainly explained by the development in net sales and the decreased
OPEX ratio. Organic EBITDA growth was positive by 11.4% (-2.9%).
EBITDA margin before special items for the second quarter of 2024 was 24.5% (23.1%).
During the quarter DKK 53 million (DKK 16 million) have been expensed as special items, relating to
the ERP implementation project, OneProcess, the reorganisation to One Commercial Organisation
and transaction costs for the Mac Baren acquisition.
Net profit was DKK 297 million (DKK 304 million). Earnings Per Share (EPS) were DKK 3.6 (DKK
3.5). Earnings Per Share adjusted for special items, fair value adjustments and currency
gains/losses, net of tax increased to DKK 4.1 (DKK 3.5).
In the first six months of 2024, gross profit before special items was DKK 1,990 million (DKK 2,023
million) with a gross margin of 46.1% (48.3%). EBITDA before special items was DKK 915 million
(DKK 987 million) with an EBITDA margin of 21.2% (23.6%). Special items of DKK 83 million were
expensed (DKK 44 million), net profit was DKK 422 million (DKK 563 million) with an EPS adjusted
for special items, fair value adjustments and currency gains/losses, net of tax at DKK 5.8 (DKK 6.7).
Second Quarter Development, 2020-2024
10%
14%
18%
22%
26%
30%
1000
1300
1600
1900
2200
2500
Q2 2020 Q2 2021 Q2 2022 Q2 2023 Q2 2024
Net sales and EBITDA margin b.s.i.
Net Sales (DKK million) EBITDA margin
17
CONSOLIDATED BALANCE SHEET
ASSETS
DKK million
30 June 2024
30 June 2023
31 Dec 2023
INTANGIBLE ASSETS
Goodwill
Trademarks
IT software
Other intangible assets
Intangible assets under development
Total intangible assets
Property, plant and equipment
Investments in associated companies
Deferred income tax assets
Total non-current assets
Inventories
Trade receivables
Other receivables
Corporate tax
Prepayments
Cash and cash equivalents
Total current assets
Total assets
18
CONSOLIDATED BALANCE SHEET
EQUITY AND LIABILITIES
DKK million
30 June 2024
30 June 2023
31 Dec 2023
Share capital
Reserve for currency translation
Treasury shares
-473.6
-56.2
-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 1,307 million to DKK 5,364 million versus the end of 2023.
The development is mainly explained by additional draw on RCF/credit facilities during the first and
the second quarter of 2024. The leverage ratio (net interest-bearing debt to LTM EBITDA before spe-
cial items) increased to 2.6x (1.9x on 31 December 2023).
Return on Invested Capital
The return on invested capital (ROIC) decreased to 10.5% versus 11.4% by the end of 2023, explained
by a DKK 127 million decrease in EBIT (12 months rolling) driven by the operational performance.
Invested capital was almost unchanged and stood at DKK 14.4 billion (DKK 14.3 billion).
19
CONSOLIDATED CASH FLOW STATEMENT
1 JANUARY - 30 JUNE
DKK million
Q2 2024
Q2 2023
6M2024
6M 2023
Net profit for the period
Depreciation, amortisation and impairment
Adjustments
Changes in working capital
-25.8
-141.5
-278.0
-594.0
Special items, paid
-43.5
-19.0
-67.4
-47.2
Cash flow from operating activities before finan-
cial items
Financial income received
Financial costs paid
-49.9
-36.8
-93.5
-92.9
Cash flow from operating activities before tax
Tax payments
-197.7
-127.8
-280.9
-184.0
Cash flow from operating activities
Acquisitions
-48.6
-68.9
-85.9
-582.5
Investment in intangible assets
-23.9
-26.2
-31.5
-58.3
Investment in property, plant and equipment
-50.3
-40.0
-100.2
-87.8
Sale of property, plant and equipment
Dividend from associated companies
Cash flow from investing activities
-117.8
-132.3
-209.6
-722.4
Free cash flow
-34.3
-602.8
Repayment of lease liabilities
-18.5
-15.9
-36.3
-31.7
RCF
Repayment bank loans
-1.0
-1.1
-2.0
-2.2
Dividend payment
-709.8
-714.6
-709.8
-714.6
Purchase of treasury shares
-275.9
-433.5
-103.8
Cash flow from financing activities
-40.5
-57.3
Net cash flow for the period
-91.6
Cash and cash equivalents, net at 1 April / 1 January
-79.7
-17.6
Exchange gains/losses on cash and cash equiva-
lents
-0.4
-6.0
Net cash flow for the period
-91.6
Cash and cash equivalents, net at 30 June
20
Cash flows
Cash flow from operations before changes in working capital in the second quarter of 2024 was DKK
272 million (DKK 364 million). The development was driven by higher special items payments, higher
tax payments partly and higher net financial costs paid.
Changes in working capital in the second quarter of 2024 had a negative impact on the cash flow by
DKK 26 million (negative DKK 142 million) mainly due to increased level of trade receivables.
Cash flow from investing activities amounted to DKK -118 million (DKK -132 million). The second
quarter of 2024 was impacted by earn-out payments related to previous acquisitions. The second
quarter of 2023 was impacted by the acquisition of XQS.
Free cash flow before acquisitions in the second quarter of 2024 was positive by DKK 177 million
(DKK 159 million). The cash conversion ratio was 97% (78%).
For the first six months of 2024 cash flow from operations before changes in working capital was
DKK 453 million (DKK 714 million). Working capital had a negative impact of DKK 278 million (DKK -
594 million) mainly coming from a higher level of inventories, but also from increased trade receiva-
bles and a lower level of trade payables. Changes in working capital was less negative in the first six
months of 2024 compared to last year, mainly due to a significantly larger negative impact from in-
creased inventories and trade receivables last year. Free cash flow before acquisitions was positive
by DKK 52 million (negative DKK 20 million) and the cash conversion ratio was 70% (42%).
STATEMENT OF CHANGES IN GROUP EQUITY
1 JANUARY - 30 JUNE 2024
DKK million
Share
capital
Reserve
for cur-
rency
translation
Treasury
shares
Retained
earnings
Total
Equity at 1 January 2024
-141.4
Comprehensive income for the period
Net profit for the period
Other comprehensive income
Foreign exchange adjustments on net invest-
ments in foreign operations
Total other comprehensive income
Total comprehensive income for the period
Transactions with shareholders
Capital reduction
-1.0
-117.8
Purchase of treasury shares
-451.0
-451.0
Share-based payments
Dividend paid to shareholders
-730.8
-730.8
Dividend, treasury shares
Total transactions with shareholders
-1.0
-332.2
-826.5
-1,159.7
Equity at 30 June 2024
-473.6
21
Equity
Total shareholders’ equity as at 30 June 2024 amounted to DKK 8,881 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 purchase of treasury
shares and dividend payments to shareholders. As of 30 June 2024, the equity ratio was 54.1% (59.5%
on 31 December 2023).
STATEMENT OF CHANGES IN GROUP EQUITY (continued)
1 JANUARY - 30 JUNE 2023
DKK million
Share
capital
Reserve
for cur-
rency
transla-
tion
Treasury
shares
Retained
earnings
Total
Equity at 1 January 2023
-748.1
Comprehensive income for the period
Net profit for the period
Other comprehensive income
Foreign exchange adjustments on net invest-
ments in foreign operations
-98.9
-98.9
Total other comprehensive income
-98.9
-98.9
Total comprehensive income for the period
-98.9
Transactions with shareholders
Capital reduction
-6.0
-756.7
Purchase of treasury shares
-95.9
-95.9
Share-based payments
Settlement of vested PSUs
-25.1
Settlement in cash of vested PSU's
-7.0
-7.0
Dividend paid to shareholders
-767.3
-767.3
Dividend, treasury shares
Total transactions with shareholders
-6.0
-1,497.7
-811.8
Equity at 30 June 2023
-56.2
22
NOTES
NOTE 1
BASIS OF PREPARATION
This unaudited report has been prepared in accordance with IAS 34 and additional Danish disclosure
requirements for listed companies.
Significant accounting estimates
The estimates made by STG in the determination of the carrying amounts of assets and liabilities are
based on assumptions that are subject to future events. For a description of risks and accounting es-
timates, see the Annual Report for 2023.
Accounting policies
This report has been prepared in accordance with the accounting policies set out in the Annual Re-
port for 2023.
Based on an assessment of new or amended and revised accounting standards and interpretations
(‘IFRS’) issued by the International Accounting Standards Board (IASB) and IFRS, endorsed by the
European Union, effective on or after 1 January 2024, it has been assessed that the application of
these new IFRS has not had a material impact on the Consolidated Financial Statements as per the
end of the second quarter of 2024, and the Group does not anticipate any significant impact on fu-
ture 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
6M 2024
North
America
Online &
Retail
North
America
Branded
& RoW
Europe
Branded
Group
costs /
not allo-
cated
Total
DKK million
Net sales
1,490.6
1,432.0
1,391.5
-
4,314.1
Cost of goods sold
-904.2
-701.0
-718.5
-
-2,323.7
Gross profit before special items
586.4
731.0
673.0
-
1,990.4
Staff and other external costs
-353.0
-264.8
-396.6
-80.1
-1,094.5
Other income
-
19.4
-
-
19.4
EBITDA before special items
233.4
485.6
276.4
-80.1
915.3
Depreciation and impairment
-107.2
-107.2
Amortisation and impairment
-88.1
-88.1
EBIT before special items
-275.4
720.0
Special items, costs and impairment
-82.6
-82.6
EBIT
-358.0
637.4
Share of profit of associated
companies, net of tax
13.4
13.4
Financial income
31.0
31.0
Financial costs
-137.8
-137.8
Profit before tax
-451.4
544.0
23
SEGMENT INFORMATION AND NET SALES (continued)
6M 2023
North
America
Online &
Retail
North
America
Branded
& RoW
Europe
Branded
Group
costs /
not allo-
cated
Total
DKK million
Net sales
1,341.6
1,492.8
1,353.3
-
4,187.7
Cost of goods sold
-809.8
-700.8
-654.1
-
-2,164.7
Gross profit before special items
531.8
792.0
699.2
-
2,023.0
Staff and other external costs
-327.0
-251.3
-389.0
-68.5
-1,035.8
EBITDA before special items
204.8
540.7
310.2
-68.5
987.2
Depreciation and impairment
-94.8
-94.8
Amortisation and impairment
-84.6
-84.6
EBIT before special items
-247.9
807.8
Special items, costs and impairment
-43.6
-43.6
EBIT
-291.5
764.2
Share of profit of associated
companies, net of tax
16.1
16.1
Financial income
57.7
57.7
Financial costs
-111.1
-111.1
Profit before tax
-328.8
726.9
DKK million
6M 2024
6M 2023
Category split, net sales
Handmade cigars
1,602.4
1,534.7
Machine-rolled cigars
1,341.5
1,488.9
Smoking tobacco
642.5
635.2
Accessories, Contract Manufacturing & other
727.7
528.9
Total net sales
4,314.1
4,187.7
License income and other sales of DKK 38.1 million (DKK 40.0 million) are included in the category 'Accessories,
Contract Manufacturing & other'.
DKK million
6M 2024
6M 2023
Geographical split, net sales
Americas
2,426.7
2,290.0
Europe
1,682.8
1,640.4
Rest of World
204.6
257.3
Total net sales
4,314.1
4,187.7
24
NOTE 3
SPECIAL ITEMS
DKK million
6M 2024
6M 2023
Integration and transaction costs (Mac Baren)
6.3
-
One Commercial Organisation
24.0
-
OneProcess
52.3
43.6
Total special items
82.6
43.6
NOTE 4
BUSINESS COMBINATIONS
With effect from 1
st
July 2024, Scandinavian Tobacco Group A/S acquired, all the shares of Mac Baren
Tobacco Company A/S (“Mac Baren”) from Halberg A/S. On a debt and cash free basis (the enterprise
value), the transaction is valued at DKK 535 million. The acquisition is financed by cash at hand and
debt and the total consideration of DKK 535 million has been paid in cash.
Due to the timing of the acquisition no provisional figures are disclosed in the Interim Report. In com-
pliance with IFRS 3 net assets will be recorded based on provisional figures, which are subject to
adjustments within a 12 month period of the acquisition date. The provisional figures can be changed
up until 30 June 2025.
Mac Baren
Mac Baren is a family-owned business founded in 1826 and is a leading global smoking tobacco com-
pany, which includes a strong portfolio of pipe tobacco brands such as Mac Baren, Amphora and
Holger Danske as well as fine-cut tobacco brands like Amsterdamer, Choice and Opal. The company
also produces and sells nicotine pouches with the brands ACE and GRITT.
Mac Baren’s products are sold in 74 countries with the majority of net sales generated in the US,
Denmark and Germany. Other key markets include the UK, France, Spain and Italy. The company is
based in Svendborg, Denmark with production facilities in Denmark and in Richmond, Virginia in the
US. The company has approximately 200 full-time employees.
Mac Baren’s reported annual net sales (April/2024) were DKK 723 million with a reported EBITDA of
DKK 85 million. Nicotine pouches accounted for close to 20% of net sales with a small negative con-
tribution to EBITDA.
Transaction costs
Total transaction costs related to the acquisition amount to DKK 6.3 million and is recognised in “Spe-
cial Items”.