Scandinavian Tobacco Group A/S Reports Second Quarter 2025 Results and Reaffirms Expectations for Full-Year

Core Viewpoint - Scandinavian Tobacco Group A/S reported a decline in net sales and EBITDA margin for the second quarter of 2025, while reaffirming its full-year expectations despite challenging market conditions [1][5][8]. Financial Performance - Reported net sales for Q2 2025 were DKK 2.4 billion, reflecting an organic net sales growth of -4% [1][7]. - EBITDA before special items was DKK 499 million, with an EBITDA margin of 21.1%, down from 24.5% in the previous year [1][7]. - Free cash flow before acquisitions was DKK 119 million, compared to DKK 177 million in the same quarter last year [7]. - Adjusted EPS for Q2 2025 was DKK 3.3, down from DKK 4.1 year-on-year [7]. Market Dynamics - The addition of the Mac Baren business positively impacted reported net sales, while exchange rate fluctuations had a negative effect [2]. - Organic net sales growth was flat when excluding the discontinuation of ZYN distribution in the US, which contributed to a -3% decline [2]. - The product categories Handmade Cigars and Machine-Rolled Cigars & Smoking Tobacco showed recovery, and the nicotine pouch brand XQS continued to deliver double-digit growth [2]. Strategic Outlook - The EBITDA margin for the first half of 2025 was 18.8%, down from 21.2% in the previous year, influenced by product mix, market conditions, and investments to regain market share [3][5]. - The company aims to deliver free cash flow of DKK 800-1,000 million before acquisitions for the full year [5]. - The financial expectations for the full year 2025 remain unchanged, with reported net sales projected between DKK 9.1-9.5 billion and an EBITDA margin of 18-22% [8].