Company Announcement
No. 11/2025

Copenhagen, 20 May 2025

Interim report, 1 January - 31 March 2025

Scandinavian Tobacco Group A/S Reports First Quarter 2025 Results and Adjusts Expectations for Full Year 2025.
 

Scandinavian Tobacco Group´s reported net sales for the first quarter 2025 increased 1.3% to DKK 2.0 billion with a negative organic net sales growth of 8.8%. EBITDA before special items decreased 5.3% to DKK 317 million with an EBITDA margin of 16.1%. Free cash flow before acquisitions was DKK 156 million and the adjusted EPS were DKK 1.5.

The reported net sales growth was driven primarily by the addition of the Mac Baren business and high double-digit growth in our XQS nicotine pouch brand. Organic net sales decline was impacted by lower consumption of handmade cigar sales in the US and by discontinuation of online distribution of ZYN in the US. Temporary supply issues related to the go-live of SAP in our European factories phased some machine-rolled cigar sales from the first to later quarters.

The EBITDA margin decreased 1%-points compared with the first quarter of last year. The decline is driven by a combination of product and market mix, investments in re-gaining market shares in machine-rolled cigars in key European markets as well as the expansion of our nicotine pouch business.  

First Quarter 2025

• Reported net sales increased by 1.3% to DKK 2.0 billion (DKK 1.9 billion)
• Organic net sales growth was -8.8%

• Growth Enablers accounted for 10% of Group net sales

• EBITDA before special items was DKK 317 million (DKK 335 million)
• EBITDA margin was 16.1% (17.2%)
• Adjusted EPS were DKK 1.5 (DKK 1.8)
• Free cash flow before acquisitions was DKK 156 million (DKK -126 million).

• Return on Invested Capital (ROIC) was 8.8% (10.3%).

Adjusting the expectations for full year 2025

As consequence of the recent changes in U.S. international trade policy - announced in April and resulting in increased tariffs of currently 10% on imported goods - and due to the translation effect from a lower U.S. dollar exchange rate, Scandinavian Tobacco Group is adjusting its financial expectations for the full year 2025. Despite a weak first quarter, the underlying business trends, as communicated in the March results announcement, remain largely unchanged. However, uncertainty related to US consumer sentiment, down trading and retailer decisions on inventory has increased.

The U.S. market accounts for approximately 45% of the Group’s net sales. Since the release of the 2025 financial outlook on 6 March, the U.S. dollar has depreciated by nearly 5% against the Danish krone. This negative translation effect on reported figures is partially offset by price adjustments introduced in response to the tariff increases.

The Group now expects reported net sales for 2025 to be in the range of DKK 9.1–9.5 billion, adjusted from the previous range of DKK 9.2–9.7 billion.

The Group’s EBITDA margin is expected to be negatively impacted by slightly more than half a percentage point solely due to the tariff related price increases which will impact both cost prices and retail prices. To reflect the impact of this and to maintain full flexibility to protect our market shares and develop our business, the range for the full-year EBITDA margin expectation has been widened and revised to a range of 18-22%.

Free cash flow is now projected at DKK 0.8–1.0 billion and has been narrowed from the previous range of DKK 0.8–1.1 billion. The adjustment to the upper end of the range reflects the lower EBITDA outlook, while the unchanged lower end of the range underscores the Group’s commitment to preserving cash flow throughout the year. The free cash flow for the full year is still expected to be impacted by capex investments of up to DKK 300 million including factory consolidations, OneProcess investments and the opening of two new retail super stores in the US. Special cash items paid is expected at about DKK 200 million, primarily relating to the Mac Baren integration and roll-out of our SAP 4/Hana ERP solution.

Adjusted Earnings Per Share has been revised downward by DKK 1.0 to reflect the adjusted EBITDA expectation and is now expected in the range of DKK 10-13 per share.

Given these considerations our adjusted expectations for 2025 are:

Reported net sales                                  DKK 9.1-9.5 billion         (from 9.2-9.7 billion)
EBITDA margin before special items       18-22%                         (from 20-23%)
Free cash flow before acquisitions          DKK 0.8-1.0 billion         (from 0.8-1.1 billion)
Adjusted EPS                                          DKK 10-13                    (from 11-14)

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.

CEO Niels Frederiksen: “We are adjusting our full year expectations to reflect the impact of a weaker USD and increasing tariffs on imported goods to the US. Although consumer sentiment is affected negatively the underlying business trends remain largely unchanged and our focus is on navigating this period of increased uncertainty best possible with the main priority being to protect and enhance market shares and protect cash flow. The wider guidance range on the EBITDA margin provides us with the necessary flexibility to make the right long-term business decisions. We are making good progress with the integration of Mac Baren and in the development of our updated strategy”.  

For further information, please contact:
Torben Sand, Director of IR & Communication, phone +45 5084 7222, torben.sand@st-group.com.
Eliza Dabbagh, IR & Communications, phone +45 5080 7619, eliza.michael@st-group.com.