Scandinavian Tobacco Group: Washed

“Firstly, the sales of handmade cigars to U.S. wholesalers and distributors, what we call our business-to-business market recovered in the third quarter and delivered a low single-digit growth. Secondly, our online sales of handmade cigars were up in the quarter for the first time during the year. And thirdly, sales in our retail stores continue to increase, driven by new store openings, but more recently also a slight positive same-store sales development. Finally, sales to our international markets increased for the first time during the year as the impact of lower shipments to Asian markets, as expected, was temporary. International sales delivered double-digit growth.” - Niels Frederiksen, CEO, STG, Q3’25

Scandinavian Tobacco Group’s Q3’25 results prove mixed, with several points suggesting even greater stresses are being added against the group. This includes a quarterly decline in smoking tobacco after many sequential quarters of growth, the group’s ERP rollout causing supply issues in Europe, and a notable decline in the NAOR segment margin relative to the same quarter last year. However, many figures have become considerably cleaner, as Q3’25 marks the first quarter lapping the initial impact of the Mac Baren acquisition and the discontinuation of US ZYN distribution. Looking deeper, many growth drivers are putting up respectable performances, and, beyond washing away specific current pressures, the sustained execution of each can provide much-needed clarity and enhance the group’s longer-term trajectory.