Swedish Match profits beat expectations

Swedish Match AB said second quarter pretax profits fell to 595 million kronor from 656 million kronor in the same period last year, with last year's figure including a 104 million kronor gain resulting from settlement of a legal case against UST Inc unit US Smokeless Tobacco Co.

Market expectations were for pretax profit of 554 million kronor, according to a survey by SME Direkt.

Sales excluding tobacco tax fell to 3.384 billion kronor from 3.376 billion, while operating profits fell to 637 million kronor from 683 million.

In the first six months of 2005 sales fell for Snuff and for Chewing Tobacco, but were flat or up slightly for the other product groups.

Operating margins fell for Cigars, but rose for all other product areas.

Snuff saw its sales fall 4% to 1.503 billion kronor, while operating profits fell 1% to 711 million kronor . The company said the decrease is mainly due to the US market where lower average prices resulted in lower sales and operating income despite lower marketing expenses.

Sales for Cigars rose 3% to 1.574 billion kronor from 1.533 billion, with operating profits falling 13% to 248 million kronor, hit primarily by restructuring charges.

Among the other product areas, Pipe Tobacco & Accessories saw its operating profits rise 3% to 115 million kronor; Lighters’ operating profits improved 61% to 28 million kronor; and Matches saw its operating results move from a 56 million kronor loss to a 14 million kronor profit.