Swedish Match’s (SM) sales during the three months to the end of March, at SEK3,368 million, were up by 12 percent on those of the three months to the end of March 2014, SEK3,014 million.
Operating profit was up by about 18 percent to SEK1,014 million, while operating profit from product areas, which excludes SM’s share of the Scandinavian Tobacco Group’s (STG) net profit, was increased by seven percent to SEK866 million.
Sales and operating profit from product areas were negatively impacted by trade destocking of snus in Scandinavia following excise tax increases on January 1, while operating profit was positively affected by an adjustment of SM’s share of net profit in STG of SEK56 million.
Earnings per share (EPS) were up by 26 percent to SEK3.86, while EPS excluding the STG adjustment were increased by about 17 percent to SEK3.40.
In announcing the first quarter interim report, CEO Lars Dahlgren said that a strong underlying US performance and currency effects had more than offset expected lower results in the Scandinavian snus business. “We successfully gained share in the growing value priced segment in Sweden but volumes in Scandinavia were affected by trade destocking during the quarter,” he said.
“The US represents an important and significant market to Swedish Match. During the first quarter all of our US businesses delivered an impressive performance, which when coupled with the significantly stronger US dollar, was a key factor behind our good growth in operating profit.
“Cigars in the US had a very strong performance with both volume growth and an improved mix…
“Chewing tobacco volumes declined but improved pricing and lower costs more than offset the impact of the lower volumes.
“Our US moist snuff volumes rose five percent driven by strong growth in the pouch and tub segments. Spending behind snus in the US was lower but volumes continued to show a positive trend.”
Dahlgren then turned to SM’s modified risk tobacco product applications currently before the US Food and Drug Administration, selected parts of which were the subject of hearings by the Tobacco Products Scientific Advisory Committee in early April. “We are in many respects pleased with the committee hearings and feel that the scientific evidence discussed supports our modified risk applications for our General snus in the US,” he said. “We expect to hear back from the FDA in the coming months.”