Scandinavian Tobacco Group A/S - Interim report, 1 January-30 September 2019

 Company Announcement

No.12 2019

                                                                                                        Copenhagen,14 November 2019

Scandinavian Tobacco Group A/S - Interim report, 1 January-30 September 2019
Scandinavian Tobacco Group delivers organic EBITDA growth of 5.4% and strong cash flow in the third quarter of 2019 Q3 2019 Highlights

• Net sales of DKK 1,846 million (DKK 1,887 million). Organic growth -4.5%
• EBITDA before special items of DKK 446 million (DKK 398 million). Organic growth 5.4%
• EBITDA margin before special items was 24.2% (21.1%). Excluding IFRS 16, the margin improved by 1.9% points
• Free cash flow before acquisitions of DKK 503 million (DKK 327 million)
• Earnings Per Share (EPS) of DKK 1.7 (DKK 2.2). EPS adjusted for special items of DKK 2.6 (DKK 2.4)
• Agreement of the terms and conditions for the acquisition of Royal Agio Cigars

In the third quarter of 2019, Scandinavian Tobacco Group A/S delivered net sales of DKK 1,846 million and EBITDA before special items of DKK 446 million. The quarter delivered positive organic growth in EBITDA of 5.4% with EBITDA margins (excluding IFRS 16) improving by 1.9% driven by Region Smoking Tobacco & Accessories and North America Branded. Organic growth in net sales was negative by 4.5% driven by all divisions. In the first nine months of 2019, the Group reported negative organic net sales growth of 2.4% and organic EBITDA growth of 5.8%, generating a free cash flow before acquisitions of DKK 819 million (DKK 464 million) and an EPS of DKK 4.7 (DKK 5.1). EPS adjusted for special items were DKK 5.9 (DKK 5.4).

CEO of Scandinavian Tobacco Group Niels Frederiksen says: “In the third quarter of the year we deliver organic EBITDA growth of 5.4%, continued margin improvements and a strong free cash flow despite a disappointing development in organic net sales. This follows better than expected progress from our transformational program Fuelling the Growth and continued cash flow focus across our business. During the quarter we were also able to announce our intention to acquire Royal Agio Cigars; a significant step in support of our ambition to become the undisputed leader in cigars and pipe tobacco.”

Financial guidance for 2019
The full-year guidance for free cash flow is revised up and is now about 1 billion from previously >750 million. Special items are expected to be about DKK 200 million. The revised expectation includes transaction costs from the Royal Agio Cigars acquisition of about DKK 20 million, costs for the closure of Scandinavian Tobacco Group Lane Ltd.’s facility in the US of up to DKK 120 million and lower than previously anticipated costs relating to the Fuelling the Growth program. The guidance for organic growth in EBITDA is unchanged.

• >5% organic growth in EBITDA
• Special items of about DKK 200 million
• Free cash flow before acquisitions about 1 billion (previous >DKK 750 million)

In the fourth quarter of 2019, we expect that the development in organic net sales will remain weak.

Conference Call and Webcast A conference call and webcast will be held on 14 November 2019 at 10:00 AM CET. Presentation materials will be available online approximately one hour before the webcast on investor.st-group.com. Dial-in details: Denmark:       +45 3272 8042 The UK:          +44 (0) 844 571 8892 The US:          +1 631 510 7495 Passcode:      3155398 https://edge.media-server.com/mmc/p/duuim98j
For further information, please contact: Investors: Torben Sand, Head of Investor Relations, phone: +45 5084 7222 or torben.sand@st-group.com Media: Simon Mehl Augustesen, Director of Group Communications, phone: +45 5084 7211 or simon.augustesen@st-group.com

Attachment

• Q3 2019 Interim Report