Volatile Environment Weakens STG Quarter

Scandinavian Tobacco Group (STG) posted net sales of DKK2.2 billion ($320.09 million) in the second quarter of 2023, down 2.3 percent from the comparable 2022 quarter. Its EBITDA margin was 23.1 percent, and free cash flow before acquisitions amounted to DKK159 million.

The group reports that it lowered its full-year guidance to net sales between DKK8.7 billion and DKK9 billion following a more volatile than expected trading environment. According to STG, the adjustment reflects ongoing inventory adjustments among customers and distributors, slower regain of market shares in Europe, delays in new store openings in the U.S. and changes in exchange rates.

“On the back of a volatile environment, we had to adjust our guidance even though we are continuing to make good progress on our ambition to grow the size of the company through retail expansion, acquisitions and portfolio diversification,” said STG CEO Niels Frederiksen in a statement.

“In the second quarter, we completed the second acquisition of the year and opened another Cigars International retail superstore. For the remainder of the year, we are focusing on leveraging the current strength of our online business and on building a stronger momentum in our Europe branded business.”

The company expects some recovery in net sales growth for the second half of the year as well as slightly higher free cash flow before acquisitions than in the second half of 2022.