For the quarter ended June 30, 2025, company reported net sales of DKK 2.4 billion, down 0.2%
COPENHAGEN: Scandinavian Tobacco Group A/S (STG) reported second-quarter results broadly in line with expectations and reaffirmed its full-year guidance, despite persistent macroeconomic challenges and currency headwinds.
For the quarter ended June 30, 2025, reported net sales stood at DKK 2.4 billion, down 0.2% year-on-year, while organic net sales declined 4.1%. EBITDA before special items reached DKK 499 million, yielding a margin of 21.1%, compared with 24.5% in the same period last year. Adjusted earnings per share fell to DKK 3.3 from DKK 4.1, and free cash flow before acquisitions totaled DKK 119 million.
The company cited continued contraction in handmade cigar consumption and low single-digit declines in machine-rolled cigar volumes across European markets. U.S. consumer sentiment remains uncertain, compounded by retailer inventory adjustments and downtrading trends. The U.S. market accounts for approximately 45% of STG’s net sales.
Since the release of its 2025 financial outlook in May, the U.S. dollar has depreciated nearly 4% against the Danish krone, prompting management to guide toward the lower end of its full-year net sales range of DKK 9.1–9.5 billion. The EBITDA margin is expected to remain within the 18–22% range, supported by pricing initiatives, cost discipline, and integration synergies from the Mac Baren acquisition.
CEO Niels Frederiksen said, “Despite the challenging market environment driven by tariffs and geopolitical unrest, I am pleased that we have remained focused on delivering on our strategic priorities. The Mac Baren integration is on track to create substantial value, our market positions in machine-rolled cigars have stabilized, and the Growth Enablers continue to enhance our net sales performance.”
The nicotine pouch brand XQS continued to post double-digit growth, while the discontinuation of ZYN distribution in the U.S. weighed on organic performance. Excluding ZYN, organic growth was flat. Free cash flow before acquisitions for the first half improved to DKK 275 million, up from DKK 52 million a year earlier.
STG maintained its full-year guidance, projecting adjusted EPS of DKK 10–13 and free cash flow before acquisitions of DKK 0.8–1.0 billion. The company noted that a 10% change in the USD/DKK exchange rate could impact reported net sales by approximately five percentage points, with minimal effect on EBITDA margins.