Scandinavian Tobacco Group A/S: Full-year report, 1 January - 31 December 2023

Company Announcement
No. 12/2024

                                                                                                       Copenhagen, 5 March 2024

Full-year report, 1 January - 31 December 2023

Scandinavian Tobacco Group Reports Full Year 2023 Results and Proposes DKK 8.4 in Dividend Per Share
 

For the full year of 2023, Scandinavian Tobacco Group A/S ("the Group” or "Scandinavian Tobacco Group”) delivered net sales of DKK 8.7 billion, an EBITDA margin of 24.1%, a free cash flow before acquisitions of DKK 1.1 billion and an adjusted EPS of DKK 14.4. The financial results were in line with expectations for the year.

For the fourth quarter of 2023, net sales were DKK 2.3 billion with an EBITDA margin before special items at 22.7%. Organic growth of 5% for net sales was driven by the Group’s Growth Enablers, which in the fourth quarter accounted for close to 10% of Group net sales, as well as an improved performance in the machine-rolled cigar business in Europe. The EBITDA margin was as expected, impacted by increased investments.   

For the full year of 2024, net sales and EBITDA margin before special items are expected in the range of DKK 8.8-9.1 billion and 22-24%, respectively with free cash flow before acquisition expected in the range of DKK 0.8-1.0 billion reflecting that, we will actively pursue the multiple opportunities of expansion by further increasing our investments to deliver long term sustainable net sales and profit growth.

Q4 Highlights

• Net sales of DKK 2,275 million (DKK 2,185 million) with 5% organic growth.
• EBITDA before special items was DKK 517 million (DKK 563 million) with an EBITDA margin of 22.7% (25.8%).
• Adjusted Earnings Per Share (EPS) were DKK 3.6 (DKK 4.4).
• Free cash flow before acquisitions was DKK 452 million (DKK 530 million).
• Return on Invested Capital (ROIC) was 11.4% (14.3%).
• For the full year of 2023, organic net sales growth was 0.3% with net sales at DKK 8,731 million (DKK 8,762 million), and the EBITDA margin was 24.1% (25.9%) with free cash flow before acquisitions at DKK 1,053 million (DKK 1,264 million).

CEO Niels Frederiksen: " Despite a challenging consumer environment STG delivered solid results for 2023 due to the commitment and performance of our employees across the globe. We continued to execute well on our strategy with two acquisitions, and I am particularly happy to see the progress in our Growth Enablers, where we saw healthy growth in international handmade cigars, retail expansion and Next Generation Products. As we move into 2024, we are increasing our investments in the Growth Enablers and we expect 2024 to be a year of growth for STG.”  

Capital Allocation

At the Annual General Meeting on 4 April 2024, the Board of Directors will propose an increase in the ordinary dividend of 2% to DKK 8.40 per share complementing the up to DKK 850 million share buy-back programme, which was launched in November 2023.

Financial Guidance 2024

The Group reported net sales are expected in the range of DKK 8.8-9.1 billion (2023: DKK 8.7 billion). All three commercial divisions are expected to deliver growth in net sales compared to 2023 with the highest growth in Europe Branded driven by increasing sales of NGPs and pricing in the core categories. The Growth Enablers are expected to increase to a level of 10% of Group net sales in 2024.

The EBITDA margin before special items is expected in the range of 22-24% (2023: 24.1%). The margin is being diluted by increased investments in our Growth Enablers. Cost Inflation and mix changes are partly offset by price increases and continued cost optimisations which will benefit coming years.

The largest uncertainties for net sales and the EBITDA margin remain changes in consumer behaviour and in market and/or product mix as well as unexpected cost inflation.

Free cash flow before acquisitions is expected in the range of DKK 0.8-1.0 billion and will be impacted by up to DKK 300 million in special investments.

• Net sales in the range of DKK 8.8-9.1 billion
• EBITDA margin before special items in the range of 22%-24%
• Free cash flow before acquisitions in the range DKK 0.8-1.0 billion
• Adjusted EPS in the range of DKK 12.5-14.5

The Annual Report for 2023 is available for download at: investor.st-group.com.

For further information, please contact:
Torben Sand, Head of IR & Communication, phone +45 5084 7222 or torben.sand@st-group.com
Eliza Dabbagh, IR and Communication, phone +45 5080 7619 or eliza.michael@st-group.com

A conference call will be held on 6 March 2024 at 10.00 CEST. Dial-in information and an accompanying presentation will be available at investor.st-group.com/investor around 09:00 CEST.

Attachments

• STG Annual Report 2023
• Interim report Q4 2023