Swedish Match Aims for Global Smoke-Free Leadership

Source from:  Tobacco Reporter 10/28/2010

The value of Swedish Match's sales of Scandinavian snus (pasteurized) and US snuff (fermented) during the three months to the end of September, at SEK1,174 million, were increased by 7.4 per cent on those of the three months to the end of September 2009. The value of Scandinavian snus sales was said to have been up by about nine per cent while volumes, measured by the number of cans, were up by "somewhat less" than two percent. Sales volumes increased in Sweden and Norway, as well as in Travel Retail. In the US, the value of sales of snuff in local currency increased by about six per cent, while volumes were up by about five per cent. The value of the company's cigar sales, at SEK1,137 million, was up by 6.8 per cent, sales of lights were up by 0.7 per cent to SEK391 million, and sales of chewing tobacco were down by 1.8 per cent to SEK275 million. Meanwhile, the value of SM's sales of snus and snuff during the nine months to the end of September, at SEK3,344 million, was up by 6.2 per cent on those of the nine months to the end of September 2009. Scandinavian volumes increased by "somewhat less" than three per cent with volume growth in Sweden, Norway and Travel Retail. US volumes declined by about two per cent. Although Swedish Match's retail sales volumes, as measured by Nielsen, for the year to date period through October 2, increased by 1.5 per cent, this resulted in a decline in market share as the growth of the total market during the same period was 10.0 per cent according to Nielsen. The value of the company's cigar sales during the nine months to the end of September, at SEK3,225 million, was down by 4.3 per cent on that of the nine months to the end of September 2009. Sales of lights were up by 1.4 per cent to SEK1,168 million, and sales of chewing tobacco were down by 7.3 per cent to SEK814 million. Swedish Match's total sales during the three months to the end of September, at SEK3,823 million, were about six per cent up on those of the three months to the end of September 2009. In local currencies, sales increased by about seven per cent, with growth in all product areas except chewing tobacco. Operating profit increased by about 20 per cent to SEK1,049 million; or, including depreciation and amortization on assets held for sale, it increased by about 16 per cent to SEK1,017 million. In local currencies, operating profit, including depreciation and amortization on assets held for sale, increased by about 17 per cent. Earnings per share (EPS) (basic) increased by 27.7 per cent to SEK3.23. "I am pleased to report that Swedish Match today posted its best ever quarterly underlying operating profit, reaching SEK1,017 million," said CEO, Lars Dahlgren. "In the snus and snuff product area, we achieved solid gains in sales for Scandinavian snus, with volume growth in Sweden, Norway, and Travel Retail. In the US, third quarter moist snuff sales and volumes were higher than last year. "Our investments for growth in the smoke-free business continue, and we see positive signs from recent new product activity in Scandinavia as well as in the US. "On October 1, we completed the transaction with the Scandinavian Tobacco Group (STG) to create a new company, with a focus on cigars, combining the cigar and pipe tobacco businesses of Swedish Match (excluding US mass market cigars and our minority stake in Arnold André) with the cigar, pipe tobacco, and fine cut tobacco businesses of STG. "With the Swedish Match 49 percent holding in the new STG, and with our joint venture with Philip Morris International for snus outside of Scandinavia and the US, we are very well positioned to capture the global growth opportunities that lie ahead. "Our group strategy is to position Swedish Match as the global smoke-free leader, to leverage our strong platforms in other tobacco products (US mass market cigars and chewing tobacco), to maximize long term profitability, to continue our operational excellence for Lights, and through active ownership, to realize the potential of STG." Enditem