Core Insights - Philip Morris' Zyn US volumes for Q2 fell slightly below expectations, leading to a decline in stock price and presenting a potential buying opportunity [1] Company Performance - The underperformance of Zyn volumes in the US has been a significant factor affecting Philip Morris' stock [1] Investment Opportunity - The decline in stock price due to the Q2 results is viewed as an opportunity for investors to buy into Philip Morris [1]

Core Insights - Scandinavian Tobacco Group A/S published its interim report for the period of April 1 to June 30, 2025, on August 27, 2025 [1]. Company Information - The interim report and related company announcements are accessible on the Scandinavian Tobacco Group's investor relations website [1]. - Contact information for the Investor Relations team includes Torben Sand, Director of IR & Communication, and Eliza Dabbagh, IR & Communications [2].

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].

Company Overview - Imperial Brands is one of the oldest tobacco companies globally, based in the United Kingdom, with a diverse portfolio that includes both traditional cigarettes and new product offerings [1]. Investment Focus - The company is appealing to individual investors who seek value in sectors that are often overlooked by the market, such as oil & gas, metals, and mining, particularly in emerging markets [1]. - Investors are particularly interested in companies that demonstrate sustained free cash flows, low leverage, and sustainable debt levels, especially those undergoing distress but with high recovery potential [1]. Shareholder Value - The company maintains a solid pro-shareholder attitude, exemplified by consistent buyback programs and dividend distributions over time [1].

Core Insights - Philip Morris International Inc. (PM) is experiencing significant growth in smoke-free products, which are becoming a crucial part of its long-term transformation strategy, potentially offsetting declines in traditional cigarette sales [1][3][4] Smoke-Free Product Performance - Smoke-free products, including IQOS, ZYN, and VEEV, saw a shipment volume increase of 11.8%, resulting in a 15.2% rise in net revenues and a 23.3% increase in gross profit year over year [1][8] - Smoke-free products now account for 41% of total revenues and 42% of gross profit, indicating a strong shift in the company's revenue structure [1][3] - Management anticipates smoke-free volumes to grow by 12-14% for the full year, while cigarette volumes are expected to decline by approximately 2% [2] Cigarette Sales Overview - Cigarette shipments decreased by 1.5% to 155.2 billion units, primarily due to weaknesses in markets like Turkey and Indonesia [2][8] - Despite the decline in shipment volumes, combustibles still generated $6 billion in quarterly revenues, reflecting a 2.1% year-over-year increase [2][8] Competitive Landscape - Altria Group, Inc. (MO) is focusing on its on! nicotine pouch brand, which saw a 26.5% increase in shipments to 52.1 million cans, capturing an 8.7% retail share in the U.S. oral tobacco market [5] - Turning Point Brands, Inc. (TPB) reported a nearly eightfold increase in Modern Oral sales to $30.1 million, raising its revenue target for 2025 to $100-$110 million [6] Financial Metrics - Philip Morris shares have increased by 6.1% over the past month, compared to an industry growth of 11.3% [7] - The company is trading at a forward price-to-earnings ratio of 20.7X, higher than the industry average of 15.69X [9] - The Zacks Consensus Estimate projects year-over-year earnings growth of 14.2% for 2025 and 11.9% for 2026 [10]

Core Insights - Altria Group, Inc. demonstrated resilience in its smokeable products segment with adjusted operating companies income (OCI) margins expanding by 2.9 percentage points to 64.5% in Q2 2025, and a 3.5 percentage point increase for the first half of the year, also reaching 64.5% [1][7] Financial Performance - The margin improvement was primarily driven by a strong net price realization of 10% in Q2 and 10.4% for the first half, which helped offset volume declines [2][3] - Lower per-unit settlement charges and reduced operating costs contributed to further efficiency gains, allowing Altria to generate greater profitability from a smaller sales base despite a 10.2% decline in domestic cigarette shipment volumes in Q2 [2][3][7] Competitive Landscape - Philip Morris International Inc. reported organic net revenue growth of 6.8% and organic adjusted operating income growth of 14.9% in Q2 2025, driven by higher combustible tobacco pricing and favorable volume/mix from smoke-free products [4] - Turning Point Brands, Inc. showed margin resilience with a consolidated gross margin increase of 310 basis points to 57.1%, supported by a favorable product mix [5] Stock Performance and Valuation - Altria's shares have gained 14.2% in the past month, outperforming the industry's growth of 9.2% [6] - The company trades at a forward price-to-earnings ratio of 12.18X, lower than the industry average of 15.4X [8] Earnings Estimates - The Zacks Consensus Estimate for Altria's earnings per share for 2025 and 2026 has increased by 2 cents each in the past 30 days to $5.39 and $5.55, respectively [9]

Group 1 - Altria owns Philip Morris USA, the maker of Marlboro cigarettes, and John Middleton, the manufacturer of Black & Mild cigars [1] - The company's smoke-free portfolio includes U.S. Smokeless Tobacco Company, which produces Copenhagen and Skoal, as well as Helix Innovations, known for on! oral nicotine pouches [1]

Summary of Key Points from the Conference Call Industry Overview - The focus is on the **US consumer sector**, particularly consumer stocks within the S&P 500, which have shown resilience despite economic challenges such as inflation and tight monetary policy [1][2][3]. Core Insights and Arguments 1. **Consumer Resilience**: US consumers continue to spend due to a tight labor market, which has remained strong since COVID, despite inflation and waning confidence [1][13]. 2. **Q2 Earnings Performance**: Q2 earnings reports indicate better-than-expected demand and pricing power, with a notable theme of broadening revenue beats. However, guidance remains conservative due to tariff risks [2][25]. 3. **Income Disparity Impact**: The US has a high share of low-income workers, which has made low-income consumers more vulnerable. This has led to an underweight position in Consumer Staples, which are more affected by inflation [3][52]. 4. **Long-term Consumption Trends**: Healthcare spending has increased significantly and is expected to continue growing. The shift from goods to services is influenced by various factors, including globalization and economic conditions [4][44]. 5. **Cyclical vs. Defensive Sectors**: An overweight position on cyclical sectors has been maintained, but potential mass layoffs and recession risks could shift this stance towards a more defensive orientation [5]. Additional Important Insights 1. **Consumer Behavior**: There is a noticeable trend of consumers trading down to lower-priced items, particularly among lower-income households, while luxury spending shows signs of improvement [33][90]. 2. **Tariff Effects**: Companies are beginning to feel the impact of tariffs, with expectations that the full effects will be felt in the second half of the year [34][90]. 3. **Spending Expectations**: Big-ticket spending expectations have decreased year-over-year in several categories, indicating potential caution among consumers [94]. 4. **Credit and Savings Health**: Despite rising credit card delinquencies, overall household balance sheets remain healthy, with liquid assets elevated relative to liabilities [56][60]. 5. **Market Dynamics**: Consumer stocks are highly idiosyncratic, influenced more by brand equity and management than by macroeconomic factors [20]. Conclusion The US consumer sector is navigating a complex landscape characterized by resilience amid inflationary pressures, shifting consumer behaviors, and varying impacts across income levels. The insights from Q2 earnings and ongoing trends suggest a cautious but potentially optimistic outlook for certain segments of consumer stocks, particularly those that can adapt to changing consumer preferences and economic conditions.

Core Insights - Stoker's has launched a new 1.2-ounce can of its Fine Cut Wintergreen, expanding its moist smokeless tobacco (MST) portfolio and catering to both existing fans and new consumers [1][2][3] Product Launch Details - The Fine Cut Wintergreen was previously available only in 12-ounce tubs and is now offered in a compact can format, enhancing convenience and freshness for consumers [2][4] - The new can format is expected to drive trial purchases and meet consumer demand, with stores carrying both cans and tubs seeing MST sales increase by three to five times compared to those that do not [3] Retail and Distribution Strategy - The Fine Cut Wintergreen can will be available in select retail stores and will continue to roll out nationwide throughout 2025, targeting both independent and chain retailers [4] - The launch aims to fill a gap in the MST lineup and provide outstanding value and performance at retail [3] Company Background - Stoker's has a heritage dating back to 1940 and holds the No. 2 position in the chewing tobacco category, being one of the fastest-growing brands in the moist snuff segment [5] - The brand is manufactured and distributed by Turning Point Brands (NYSE: TPB), which is known for its branded consumer products [5]

Company Overview - Philip Morris International (PM) is an American company with operational headquarters in Switzerland, originally founded in 1847 in London as a tobacco shop [1] Investment Philosophy - The company focuses on identifying undervalued and promising stocks, emphasizing a balance between risk and reward [1] - It is believed that the best investment ideas are often the simplest, with a contrarian approach being favored [1]