Top Takeaways:
- Sales Flat: Q2 net sales were DKK 2.4 billion ($384 million), down 0.2%, with organic sales off 4.1%.
- Margins Under Pressure: EBITDA margin fell to 21.1% from 24.5% a year earlier.
- Guidance Reaffirmed: STG kept its 2025 outlook despite tariffs, FX headwinds, and the end of U.S. ZYN distribution.
Scandinavian Tobacco Group A/S (STG) reported flat sales and a sharper earnings margin squeeze in the second quarter, but said it remains on track to meet full-year financial targets.
The Copenhagen-based company posted net sales of DKK 2.4 billion ($384 million) for the quarter, down 0.2% year-on-year. Organic sales fell 4.1%, hurt by the discontinued U.S. distribution of ZYN nicotine pouches, lower contract manufacturing volumes, and weaker accessories sales in Australia.
Handmade and machine-rolled cigars, along with STG’s nicotine pouch brand XQS, which grew double digits, helped offset the decline.
EBITDA before special items dropped to DKK 499 million ($79.8 million), reflecting a 21.1% margin, compared with 24.5% a year earlier. Management cited tariffs, FX swings, and a weaker product mix as the main drags on profitability.
Chief Executive Niels Frederiksen said the company is focused on delivering its strategy despite market turbulence. “Tariffs and the discontinuation of ZYN in the U.S. have weighed on results, but we continue to see solid progress in handmade cigars, machine-rolled cigars, and in our XQS pouch brand,” he said.
Frederiksen added that the recently acquired Mac Baren business is integrating well and that STG remains committed to its long-term plan.
The group reaffirmed its 2025 guidance, forecasting net sales of DKK 9.1–9.5 billion ($1.46–1.52 billion), an EBITDA margin of 18–22%, and free cash flow of DKK 0.8–1.0 billion ($128–160 million). Adjusted earnings per share are expected to land between DKK 10 and 13.
STG cautioned that U.S. consumer demand and pricing for handmade cigars remain key variables for the second half, along with continued currency volatility. A weaker U.S. dollar has already cut into reported revenue growth, though margins are expected to stay relatively stable.
