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.