Key Takeaways
- 2025 revenue was 9.036 billion Danish kroner (about $1.407 billion), with organic growth of -1.8%;
- EBITDA before special items was 1.791 billion Danish kroner (about $278 million), down 13.9% year over year, with an EBITDA margin of 19.8%;
- The company did not meet its Q3-updated guidance for revenue and free cash flow before acquisitions;
- The company cited tariffs, the rollout of a new ERP (SAP) system in Europe affecting inventory availability and receivables, and “fierce price competition” in retail;
- 2026 guidance: net sales growth at constant currencies of +/-2%, and free cash flow before acquisitions of 950 million–1.2 billion Danish kroner (about $148–$187 million).
2Firsts, March 5, 2026
According to halfwheel, Scandinavian Tobacco Group (Scandinavian Tobacco Group, STG) released its 2025 results, with overall performance weaker than in 2024. The company lowered its full-year guidance twice in 2025: once following U.S. President Donald Trump’s April 2025 tariffs, and again in November as part of its third-quarter (Q3) announcement. Ultimately, due to a weak fourth quarter (Q4), some metrics fell short of the revised targets.
STG’s key 2025 figures included:
- Revenue was 9.036 billion Danish kroner (about $1.407 billion), with organic growth of -1.8%;
- EBITDA before special items was 1.791 billion Danish kroner (about $278 million), down 13.9% year over year;
- The EBITDA margin was 19.8%, down from 22.6% in 2024;
- Free cash flow before acquisitions was 595 million Danish kroner (about $92.7 million), down 36.1% year over year;
- Adjusted earnings per share (EPS) were 10.8 Danish kroner (about $1.68), down 21.17%;
- Return on invested capital (ROIC) was 7.9%, down from 9.4% in 2024.
The company said it missed its Q3-updated guidance for revenue and free cash flow before acquisitions, while EPS and ROIC were within the ranges it had provided.
On the reasons, STG cited multiple factors: Trump’s tariffs; the implementation of a new ERP system in Europe that increased receivables; “fierce price competition” in its retail cigar business; and weaker U.S. consumer sentiment.
In a company statement, CEO Niels Frederiksen and chairman Henrik Brandt said that in 2025 the global market for handmade cigars remained dominated by U.S. consumption, and the company estimated U.S. consumption declined at a “mid-single-digit percentage” rate. The company said it delivered unchanged net sales from the category by expanding its presence across retail and online distribution channels, as well as through strategic price increases in its branded business. For machine-rolled cigars, the company estimated the total market declined by 1%–2% in Europe, and said it lost market share in 2025 as it struggled with inventory availability due to the implementation of its global SAP solution.
The report noted that STG has long said it believes the handmade cigar business in the U.S. will contract at a rate of about 1% per year, a trend that was temporarily upended during the COVID-19 pandemic when sales boomed.
The company also highlighted that it returned nearly 6 billion Danish kroner (about $935 million) to shareholders under its five-year “Rolling Towards 2025” plan, and said it hopes to deliver more under “Focus2030,” its new five-year plan. Under Focus2030, STG’s financial ambition includes improving ROIC from “about 8%” in 2025 to “more than 11%” in 2030, through an incremental increase of operating profit and free cash flow generation exceeding 1.2 billion Danish kroner (about $187 million), as well as through a disciplined capital deployment strategy. It also said acquisitions and divestment of less core assets will be continuously evaluated, assuming these potential transactions support its strategy and financial ambitions.
On business structure, the report said the company stated that machine-made cigars and smoking tobacco represent roughly 50% of its net sales, while handmade cigars are about 35%. In its North America online and retail business, 88% of retail sales come from online and catalog channels, while 12% come from face-to-face stores. The company said retail sales decreased by 7.5%, and noted this seemed to have been impacted by the loss of a Zyn distribution agreement in mid-2024, while also saying its brick-and-mortar retail business continues to grow. The company said it currently has 15 stores and would like to grow that number to 25 by 2030.
For 2026 guidance, STG switched to disclosing “Net Sales Growth at Constant Currencies” as a percentage: net sales growth at constant currencies of +/-2%; EBITDA margin before special items in the range of 13%–14.5%; free cash flow before acquisitions of 950 million–1.2 billion Danish kroner (about $148–$187 million); and earnings per share of 9–11 Danish kroner (about $1.40–$1.71).
Cover image source: halfwheel
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