Q2 2026 Scandinavian Tobacco Group A/S Earnings Call Transcript
Key Points
- Scandinavian Tobacco Group AS (SNDVF) reported a stabilization in organic net sales for its combined tobacco categories (handmade cigars, machine-rolled cigars, and smoking tobacco) in the first half of 2026, with improved gross margins.
- The company's handmade cigar business delivered solid mid-single-digit organic growth, driven by its power brand strategy (Cohiba, Macanudo, CAO, Alec Bradley) and market share gains in the US.
- The nicotine pouch brand XQS continued to gain market share in Sweden, growing from less than 11% at the start of 2025 to almost 14% in Q2 2026, with positive early indications from the launch of Mint and Menthol products.
- The divestment of fine cut brands Break and Moro to Japan Tobacco for EUR 176 million will strengthen strategic and financial flexibility, reducing the leverage ratio to below the 2.5x target.
- Free cash flow before acquisitions improved significantly to $422 million in the first half, up nearly $150 million year-over-year, supporting the full-year guidance of $950 million to $1.2 billion.
- The company is on track to deliver on its full-year 2026 expectations, with the US handmade cigar market trending slightly better than anticipated.
- Scandinavian Tobacco Group AS (SNDVF) experienced an exceptionally rare quality issue with tobacco used in its Signature premium cigar product, impacting sales and market share primarily in France, with effects expected to persist into Q3.
- Organic net sales for machine-rolled cigars and smoking tobacco declined by 4% in the first half, reflecting volume and market share losses in machine-rolled cigars.
- The Europe Branded division continued to see organic net sales decline, impacted by a total market decline of about 4% in key European markets and the quality issue in France.
- The EBIT margin before special items was unchanged year-over-year, with increased trademark amortization (38 million kroner) negatively impacting results by 0.9 percentage points.
- The nicotine pouch business reported negative organic growth of 5% for the first half, driven by inventory adjustments and portfolio streamlining, despite a positive 8% growth in Q2.
- The company expects the EBIT margin for 2026 to decline to 13%-14.5% from 14.9% in 2025, reflecting continued investments in the Focus 2030 strategy and a challenging second-half comparison.
Good day and thank you for standing by. Welcome to the Scandinavian Tobacco Group Q2 Results 2026 Conference Call.
At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To whistle your question, please press *1 and 1 again. Alternatively, you may submit your question via the webcast.
Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Torben Sand. Please go ahead.
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Thank you. Good morning to everyone on the call and thank you for joining us today. My name is Seth Torben Sand and I am Director of Investor Relations and External Communications. And I am today joined by our CEO, Mints Frederickson, and our CFO,
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