Good First Quarter for Swedish Match

Source from:  Tobacco Reporter 05/04/2009

Swedish Match's sales for the first quarter of 2009, at SEK3,535 million, were 25 per cent up on those of the first quarter of 2008, SEK2,818 million. Currency translations affected the 2009 sales positively by SEK431 million and, in local currencies, sales increased by 10 per cent. Snuff sales during the first quarter increased by 18 per cent to SEK969 million and the operating profit generated by snuff sales increased by 24 per cent to SEK396 million. Scandinavian snus sales were up by 16 per cent while volume sales, measured in numbers of cans, increased by 14 per cent. Snus sales and can volumes in the first quarter of 2008 were unusually low as a result of destocking following excise tax and price increases in January 2008. And as a result of trade destocking related to the increased US federal excise tax and to higher pipeline volume in the previous year for the Red Man moist snuff national rollout, volumes in the US declined by five per cent. But improved average prices offset the volume decline and resulted in snuff sales in North America being increased by one per cent in local currency. Cigar sales increased by 56 per cent during the first quarter to SEK1,179 million and the operating profit generated by cigar sales increased to SEK287 million. US cigar sales grew by 43 per cent in dollar terms, with sales and volume growth for both machine made and premium cigars positively impacted by hoarding activity in anticipation of the federal tax increase. In Europe, cigar sales were said to have declined 'somewhat' in local currencies, while volumes increased. Sales of chewing tobacco were increased by 35 per cent from SEK210 million to SEK284 million; sales of pipe tobacco and accessories were up by three per cent from SEK198 million to SEK204 million; and sales of lights rose by nine per cent from SEK347 million to SEK380 million. "The first quarter delivered a strong performance in both sales and operating profit," said CEO, Lars Dahlgren. "Sales increased for all products lines, and operating profit increased for all product lines except for pipe tobacco and accessories. "Scandinavian snus volumes grew considerably, aided by the fact that there was no destocking effect in Sweden in 2009 unlike the first quarter of 2008. "In the US the increase of federal excise taxes effective April 1 affected trade buying patterns, with on the one hand trade loading of machine made as well as premium cigars, but on the other hand sharp destocking of snuff towards the end of the quarter. "The result of this unusual stocking situation was a stronger than average performance for cigar sales and margins, and a weaker than normal performance for snuff sales and margins." Enditem