Swedish Match AB profits up a third

Swedish Match AB said first quarter pretax profits rose 34 percent to 696 million kronor as group margins improved, fuelled by a sharp improvement in profitability at the Lights (matches and lighters) division.

Market expectations were for pretax profit of 628 million kronor, according to a survey by SME Direkt.

Sales excluding tobacco tax fell 1 percent to 2.951 billion kronor, but excluding divested businesses, sales rose 5 percent with increases in all product areas except for Other operations.

Operating profits rose 34 percent to 721 million kronor (up 25 percent in local currency), as margins rose to 24.4 percent from 18.1 percent.

The strongest sales growth were recorded at (moist) Snuff and Chewing Tobacco, where sales rose 12 percent and 13 percent respectively.

Operating margins improved for all five of the product areas.

Snuff saw its operating profits rise 18 percent to 380 million kronor, while operating margins improved to 48.5 percent from 46.0 percent, with this year’s results including a positive one-off of 17 million kronor. The company said volumes rose 4 percent in Scandinavia and 24 percent in the US.

Operating profits at Cigars rose 16 percent to 158 million kronor, with operating margins improving to 20.8 percent from 18.6 percent, with sales falling 6 percent in local currency.

Among the other product areas, Pipe Tobacco & Accessories saw its operating profits rise 25 percent to 75 million kronor; Chewing Tobacco’s operating profits improved 20 percent to 83 million kronor on the back of higher average prices and the stronger dollar; and Lights saw its operating results move to a 62 million kronor profit from a 4 million kronor loss, as underlying sales rose 12 percent, driven by the weaker krona.

Last year’s results for Lights included 31 million kronor in restructuring costs.



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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