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.



EU to uphold export ban on Swedish snus

The European Commission plans to ban the flavoured snus that has becoming increasingly popular in Sweden in recent years, according to the final version of its proposed tobacco directive presented on Wednesday, which also calls for the current ban on snus exports to remain in place.

EU to uphold export ban on Swedish snus

“We are not banning smoking, we are making it less attractive,” EU Health Commissioner Tonio Borg said at a press conference in Brussels.

“Tobacco should look like tobacco and it should taste like tobacco,” he added.

He gave, as an example, cigarettes with added aromas such as orange and vanilla.

“This proposal ensures that attractive packaging and flavourings are not used as a marketing strategy,” Borg told assembled reporters.

Many Swedish snus manufacturers have added aromas in recent years. General brand snus has bergamot orange flavouring while Göteborgs Rapé has a taste of juniper berries.

Other new types of snus have been introduced recently which feature different types of mint, liquorice and eucalyptus flavours.

Borg also explained that there will be no easing of the export ban that Swedish snus producers have faced in the entire union since Sweden joined in the early 1990s.

For Swedish snus manufactuers, the Commission’s decision, while expected, nevertheless came as a disappointment.

“We regret that the current ban on snus exports is going to remain in place,” Patrik Hildingsson, spokesman with Swedish Match, told The Local.

Hildingsson said that it was “sad” that the Commission could so easily skirt core principles of the EU meant to ensure non-discrimination of products made and sold in members states.

“The Commission is picking winners and losers in the market,” he said, calling the extension of the snus export ban a “one-sided trade ban”.

“Other snus manufacturers in Europe are able to export to Sweden, but we can’t export to the rest of Europe,” said Hildingsson.

Snus is no laughing matter for Swedes, and as late as last week Trade Minister Ewa Björling threatened Brussels with “all out war” if they tried to ban it from Sweden.

She said the Commission must take medical research into consideration.

Some medical experts say the use of snus, which is placed under the top lip, explains the relatively low lung cancer rate of Swedish men who might otherwise be smoking cigarettes.

Borg, however, seemed to disagree.

“It is well known that snus has a negative impact on health. And the risk that snus is only the first step of tobacco consumption is significant,” he said at Wednesday’s press conference.

The new rules are meant to replace the Commission’s last tobacco directive from 2001. Directives entail that members states have to make sure that national law mirrors the guidelines set out in them.

It will have to be voted through by the European Parliament.

TT/David Landes

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