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Scandinavian Tobacco Group Announces New Financial Reporting Structure

Company Announcement

No. 6/2019

 


                                                                                        Copenhagen, 7 May 2019

Scandinavian Tobacco Group Announces New Financial Reporting Structure


On October 23, 2018, Scandinavian Tobacco Group A/S launched Fuelling the Growth, a transformational program with a new organisational structure with four new commercial divisions. To align financial reporting with the new organisational structure and ensure consistency with internal management reporting, the Group´s external reporting structure has been revised and will from the 2019 first quarter results present figures at divisional level rather than category level. Comparative figures have been restated to reflect the new reporting structure. The four new divisions are:


North America Online & Retail (NAO&R) includes direct to consumer sales of all product categories sold via the online, catalogue and retail channel in North America. The division holds the overall Group responsibility for sales and marketing activities of all products and sales within the division.


In 2018 North America Online & Retail accounted for 31% of Group net sales, 25% of gross profit and 24% of EBITDA. In 2018 handmade cigars accounted for 84% of divisional net sales.


North America Branded (NAB) includes sales of all product categories to wholesalers and distributors that supply retail in North America. The division holds the overall Group responsibility for product development, sales and marketing activities of all products and sales within the division.


In 2018 North America Branded accounted for 19% of Group net sales, 22% of gross profit and 19% of EBITDA. In 2018 handmade cigars accounted for 42% of divisional net sales and machine-made cigars for 27%.


Region Machine-Made Cigars (MMC) includes sales of all product categories to wholesalers and distributors that supply retail. Machine-made cigars make up the majority of divisional net sales and also dominates sales in the main markets in the division, which are France, Belgium, the UK, Spain and the Netherlands. The division holds the overall Group responsibility for product development, sales and marketing activities of machine-made cigars outside North America.


In 2018 Region MMC accounted for 25% of Group net sales, 26% of gross profit and 23% of EBITDA. In 2018 machine-made cigars accounted for 79% of divisional net sales.


Region Smoking Tobacco & Accessories (ST&A)  includes sales of all product categories to wholesalers and distributors that supply retail. Main markets are Australia, Germany, Denmark and Norway. The division holds the overall Group responsibility for product development, sales and marketing activities of smoking tobacco (pipe tobacco and fine-cut tobacco) and accessories outside North America.


In 2018 Region ST&A accounted for 25% of Group net sales, 27% of gross profit and 42% of EBITDA. In 2018 smoking tobacco, machine-made cigars and accessories & contract manufacturing respectively accounted for 35%, 33% and 30% of divisional net sales.


Operating expenses that are not directly inherent in the divisions are to some extent allocated to the division based on allocation keys defined by activities or other relevant component. Certain costs relating to Group functions are managed on Group level. These items are not included in the reportable divisions and therefore reported as 'Group costs'. In 2018 Group costs was DKK 169 million (DKK 96 million before special items).


Organic growth in net sales will be disclosed by each of the four divisions and volume and price/mix impact will be disclosed for handmade cigars within the divisions North America Online & Retail (84% of divisional net sales in 2018) as well as for North America Branded (42% of divisional net sales) and for machine-made cigars within the division Region MMC (79% of divisional net sales).


Historical Data

Following the new reporting structure, divisional quarterly data for Q1 2017-Q4 2018 are included in this company announcement. The historical data include net sales, gross profit, EBITDA, organic growth in net sales as well as gross margins and EBITDA-margins before special items. Furthermore, historical data for the above mentioned break-down of organic growth in net sales by volume and price/mix impact are also included.

   

 

The 2019 first quarter results will be announced May 23, 2019.


For further information, please contact:

For investor enquiries: Torben Sand, Head of Investor Relations,

phone: +45 5084 7222 or torbensand@st-group.com
For media enquiries: Simon Mehl Augustesen, Director of Group Communications,

phone: +45 5084 7211 or simon.augustesen@st-group.com

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company-announcement-6-2019.pdf