Q1 2025 Scandinavian Tobacco Group A/S Earnings Call Transcript
Key Points
- Scandinavian Tobacco Group AS (SNDVF) reported a 1.3% increase in net sales for the first quarter, driven by the acquisition of Mac Baren and strong growth in the nicotine pouch brand XQS.
- The integration of Mac Baren is progressing well, with significant steps taken in the US, including consolidating distribution and streamlining online sales channels.
- The company's retail channel delivered strong double-digit net sales growth, emphasizing the value of investments in this area.
- The free cash flow before acquisitions was significantly stronger than the previous year, driven by changes in working capital.
- The company remains committed to investing in long-term growth opportunities, including strengthening market positions in core categories and expanding nicotine pouch brands into new markets.
- The company adjusted its financial expectations for 2025 due to a weaker US dollar and increased tariffs on imported goods, impacting the handmade cigar business.
- Reported net sales for 2025 are now expected to be lower than previously anticipated, with a revised range of DKK9.1 billion to DKK9.5 billion.
- The EBITDA margin is expected to be negatively impacted by more than 0.5 percentage points due to tariff-related price adjustments.
- Organic growth decreased by almost 9% in the first quarter, with lower sales of handmade cigars and machine-rolled cigars contributing to the decline.
- The company's market share in Europe for machine-rolled cigars has been declining, attributed to both internal challenges and competitive pricing pressures.
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Good morning and welcome to Scandinavian Tobacco Group's webcast for the first quarter results 2025. My name, as said, is Torben Sand and I'm Director of Investor Relations and External Communications; and I am joined by our CEO, Niels Frederiksen; and our CFO, Marianne Rorslev Bock.
Now please turn to slide number 3 for today's webcast agenda. Niels will start the presentation by giving you a brief background on the adjusted financial expectations for 2025 that we communicated to the market yesterday before turning to an overview of the highlights of the quarter and an update on our key strategic achievements.
He will then switch focus to an update on development in our core product categories. Marianne will take over with an overview of the financial performance in our three reporting divisions before turning the focus to key financial developments for the Group, including an update on cash flow, leverage and capital allocation.
After this presentation by management, we
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