Profits on the march at Swedish Match

Tobacco company Swedish Match reported pre-tax profits of 791 million kronor ($100 million) for the second quarter on Friday, well above analysts’ expectations.

Profits on the march at Swedish Match

“In the second quarter we delivered the strongest sales performance and, excluding one-time items, highest operating profit ever,” said CEO Lars Dahlgren in a statement.

According to a Reuters survey, analysts had expected the company’s profits to land at 705 million kronor.

The results compare favourably with the 621 million kronor Swedish Match reported for the same period last year.

The company reported sales increases for all its product lines, with sales of snus (wet snuff) products increasing across Scandinavia, and a 21 percent increase in US snuff sales.

Turnover rose from 3.16 billion kronor to 3.67 billion kronor.

“For the full year Swedish Match expects both the snuff market in Scandinavia and in the US to grow. For the second half of the year, Swedish Match expects Group sales and operating profit excluding larger one-time items to exceed prior year,” the company said in a statement.

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Illegal snus operations a growing problem in Sweden

Sweden’s status as the only country in the EU where snus is legal has created a growing underground manufacturing operation, broadcaster SVT reported on Saturday.

Illegal snus operations a growing problem in Sweden
More popular than cigarettes in Sweden, snus is a moist tobacco product either bought loose or in small parcels and placed under the lip. Its export to and sale within other EU countries is banned, and the EU has consistently opted to maintain that restriction, with Sweden granted an exception and allowed to sell the product within its borders.
But demand for snus beyond Sweden’s borders is growing. So too is the number of Swedish operations apparently willing to break the law to meet the demand by producing and selling snus in secret. According to SVT, some snus manufacturers skirt the export ban by running illegal snus sales alongside their legal activities. But the broadcaster said there is also a flourishing black market in which snus is sold under fake labels. 
“The knowledge is here since we have a long history of production. That makes Sweden a good starting point for the production of illegal snus,” Magnus Råsten of the Swedish Economic Crime Authority (Ekobrottsmyndigheten – EBM) told SVT. 
EBM has reported an uptick in illegal snus production in recent years, particularly in Gothenburg. But the agency does not have an overview of how much of the tobacco product is being manufactured and sold illegally. 
“Illegal manufacturing can in some cases be part of serious criminality but there are also manufacturers who are primarily engaged in legal activities,” Råsten said. “In contrast to drugs or weapons, it’s not as risky to get into the snus business because it is not illegal in Sweden. That also makes it harder for us to assess whether the activity is legal.” 
According to Råsten, much of the foreign demand for snus comes from Norway, Finland and Russia.
“There is a market that people want to reach,” he said. “When there is money to be made, criminality often follows.”