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STG Reports Strong Q2 2021, Raises Guidance Again


Scandinavian Tobacco Group A/S (STG), one of the world’s largest cigar companies, has reported its earnings for Q2 2021 and the results are predictably strong.

The company says it generated DKK 2.156 billion ($339 million) in revenue during the second quarter, up 7.5 percent compared to 2020. EBITDA before special items—a measurement of profits—was DKK 606 million ($95.29 million), an increase of 20.8 percent. It represents an EBIDTA margin of 28.1 percent, which increased from 23.3 percent during the same quarter last year.

Additionally, the company’s free cash flow for the quarter was DKK 434 million ($68.24 million).

  Q3 2020 Q4 2020 Q1 2021 Q2 2021
Net Sales 2.231 billion 1.992 billion 1.883 billion 2.156 billion
EBITDA before special Items 614 million 397 million 527 million 606 million
Free Cash Flow 609 million 238 million 89 million 434 million

STG is the parent company of Cigars International, General Cigar Co., Thompson Cigar, Forged Cigar Co., Agio, and other businesses throughout the U.S. and international markets.

“We deliver a strong quarterly performance with growth in both net sales and EBITDA driven by strong sales of handmade cigars in the US and a favorable mix,” said Niels Frederiksen, ceo of STG, in a statement. “We expect continued high demand for handmade cigars for the rest of the year and we are raising our financial expectations for 2021 to reflect that. Additionally, we continue to implement our ‘Rolling towards 2025’ strategy and show good progress on the transformation of the company”.

STG says that its revenue for the first six months increased by 9.8 percent to DKK 4.039 billion ($635.1 million) and that its EBITDA before special items was DKK 1.113 billion ($178.15 million), an increase of 32.6 percent compared to last year.

That being said, STG expects the third quarter to be more challenging as it believes that the current sales boon for cigars will taper off. The company has repeatedly said that it believed the high sales would continue in the first half of 2021, but begin to taper in the second half of the year. Today’s statement reiterates the position:

The current high consumption of handmade cigars in the US combined with a strong market mix have driven the extraordinarily strong net sales growth during the first half of 2021. Growth is still expected to taper off during the second half of the year as year-on-year comparisons are more difficult especially in the third quarter and as the market mix is expected to normalize somewhat. However, the full year is now expected to be stronger than previously anticipated, although the risks remain higher than normal due to COVID-19.

STG is once again raising its guidance, the second time it has done so this year. The newly revised guidance is as follows:

  • EBITDA: Organic growth in the range of 16%-20% (12%-18%)
  • Free cash flow before acquisitions: In the range of DKK 1.0-1.3 billion (no change)
  • Adjusted Earnings Per Share >35% increase (>25% increase)

STG’s stock, which is traded on the NASDAQ Copenhagen, fell 1.74 percent today to DKK 129.90. That being said, the strong cigar sales have had a positive impact on the company’s stock, which is up more than 30 percent in the last year.

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