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Handmade cigar sales up at STG

31 Aug 2018. Cigar maker Scandinavian Tobacco Group (STG) said in its half-year results that handmade cigars and ‘other’ products had driven an overall rise in net sales at the Group while sales of machine-made cigars, pipe tobacco and fine-cut tobacco all decreased for the second quarter and the six-month period.

In the second quarter, at DKK 1.78 billion (EUR 238.7 million), net sales at the Group were up 6.4 per cent over Q1 2017 results. At DKK 3.065 billion, net sales for the six-month period were stable, up 0.4 per cent.

Net sales of the company’s handmade cigars increased for both the second quarter and the first half, driven by the company’s acquisition of Thompson Cigars. For the second quarter, net sales of handmade cigars were up 27 per cent, at DKK 661 million (EUR 88.6 million). For the six-month period, at DKK 1.032 billion (EUR 138.4 million), net sales for the category were up 12 per cent over the DKK 920 million reported for the comparable period in 2017. Organic growth in net sales for the category, adjusted for the Thompson Cigars acquisition and negative exchange rate impact of around 6 per cent, were up 6.9 per cent and 6.8 per cent for the first quarter and half-year respectively.

Net sales of machine-made cigars were down 3 per cent in the second quarter, at DKK 618 million. For the first half, net sales of DKK 1.090 billion for the machine-made cigars category were down 6 per cent. The company said organic net sales growth for the category, adjusted for exchange rate developments and import duties in certain markets, were down 1.8 per cent over the six-month period.

At DKK 228 million for the first half, net sales for pipe tobacco were down 14 per cent and showed negative organic growth of 5.8 per cent.

In the fine-cut tobacco category, net sales of DKK 141 million in the first quarter were down 5 per cent. For the six-month period, at DKK 247 million, net sales of fine-cut were down 10 per cent. The Group said organic net sales results for the six months were down 4.2 per cent on results for the comparable period in 2017.

For the Group’s ‘other’ products category, which includes accessories, contract manufacturing and sales of certain products to third parties, net sales for the first quarter

Chief Executive Officer Niels Frederiksen commented that the Group had shown positive growth rates in its biggest category, handmade cigars. “[…] I’m particularly pleased to see the integration of Thompson Cigars running as planned and to report solid sales growth in Thompson Cigars in the first full quarter after the acquisition. Also, the strong momentum in our ‘other’ category continued while we in the machine-made cigars category still see declining volumes driven by the new excise structures in France,” Frederiksen commented.