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CIGARS INT'L POWERS SWEDISH MATCH |
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Page 1 of 2  Plus: Where does Swedish Match stand in the U.S. market?
Los Angeles, May 1 – Swedish Match made a major acquisition in 2007 with the purchase of Internet, mail and store retailer Cigars International. They are really happy they did.
In announcing its first-quarter results this week, the company’s financial report noted that:
Cigars International, acquired in September 2007 has showed a strong performance and growth in line with the acquisition plan. Excluding the impact of acquisitions, sales in local currencies were down approximately 25 percent for premium cigars in the U.S. primarily due to lower shipments to national accounts and trade destocking. It is expected that in the coming quarters there will be a return to more normal shipment levels for premium cigars.
Overall, the good results for Cigars International, pushed Swedish Match’s cigar sales totals for the first three months of 2008 to 757 million Swedish Kronor (about $126.7 million U.S.), actually up by about 3 percent over the first quarter of 2007. Discounting the impact of the unfavorable exchange rate with the dollar, sales in local currency rose by a surprising 9 percent in the quarter, again thanks to Cigars International.
Although the U.S. premium cigar market was soft, Swedish Match – the world’s no. 2 seller of premium cigars – still had a pretty strong quarter:
Sales in the U.S. of machine-made cigars went down during the quarter, but the company forecasts “[h]igher shipments are expected for mass market cigars in the U.S. from new product launches going forward.”
In Europe, the acquisition of Bogaert Cigars in 2007 also looks brilliant as sales were flat if its sales are excluded. Swedish Match maintains strong brand presence in Western Europe, especially in France, Spain, Belgium and Finland.
While total cigar sales were slightly higher, profits in the cigar sector were down quite a bit to $18.7 million (converted from Kronor), Swedish Match’s least-profitable quarter in cigars in more than two years and down 32 percent from 2007.
With cigar results were mixed, Swedish Match continued to grow its snuff and snus business, with sales up by 24 percent over the first quarter of 2007 to $137.4 million U.S. Operating profits of $53.2 million led all sectors of the company with the top sellers being Longhorn, Timber Wolf and Red Man.
Swedish Match’s other business units showed mixed results. Pipe tobacco and pipe accessory sales continued to decline and chewing tobacco sales were weaker than in recent years. Sales of matches and lighters were up slightly over the first quarter of 2007.
Overall sales for the company, powered by the increases in snuff/snus sales, were up by 6 percent over the first quarter of 2007 to $471.4 million U.S. (converted from Kronor) and operating profits for the quarter were up slightly to $90.8 million. Those are good results considering the difficulties in the U.S. premium market.
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