Scandinavian Tobacco Group Raises 2026 EPS Outlook to 9.5-11.5 Kroner
Key Facts
On November 11, Scandinavian Tobacco Group raised its adjusted earnings per share outlook for 2026 to a range of 9.5-11.5 Danish kroner, from 9.0-11.0 kroner, and raised its EBIT margin outlook before special items to 14.0%-15.5% from 13.0%-14.5%. The company said in its announcement that the update reflects financial performance year to date, along with customs and other duty refunds that exceeded expectations. The higher earnings outlook comes as its annual sales growth forecast narrowed to a range of -2% to 0%, compared with a previous range of -2% to +2%. Reported third-quarter sales were 2,434 million kroner, up 3% from the corresponding period, while EBITDA before special items rose 18% to 610 million kroner. The results show a mix of improved profitability and pressure on the sales growth outlook, with refunds contributing to margins.
EBITDA margin before special items was 21.8% in the first nine months, up 190 basis points from the corresponding period in 2025; the increase included a 120 basis-point effect from duty refunds. EBIT margin before special items was 16.1%, up 110 basis points year on year. The company said a change in the amortization of brands reduced EBIT margin by 50 basis points, partly offset by the positive effect of refunds. These figures show that duty refunds supported margins, while an accounting factor related to brand amortization limited the improvement in EBIT margin. In the third quarter, sales rose from 2,357 million kroner in 2025 to 2,434 million, and EBITDA before special items increased from 519 million to 610 million kroner.
By segment in the first nine months, organic sales of handmade cigars grew 4%, while organic sales of machine-made cigars and smoking tobacco were flat. The CEO said handmade cigars continued to grow and that the group delivered underlying margin stability and strong cash generation in the third quarter. He added that completing the sale of the fine-cut tobacco brands BREAK and Moro restored the group's financial flexibility. The sale is central to the financial changes cited by the CEO, alongside operating results and refunds that lifted the earnings outlook. The first-half report had recorded organic growth of 6% for handmade cigars, against a 4% decline for machine-made cigars and smoking tobacco, while free cash flow before acquisitions was 422 million kroner, compared with 275 million in the first half of 2025.
The company said the improvement in underlying margin was mainly linked to a timing effect in the third quarter in the machine-made cigars and smoking tobacco segment, and that this effect is expected to reverse negatively in the fourth-quarter results. The expected reversal limits the significance of the quarterly margin improvement as an indicator of the pace of performance for the rest of the year. Meanwhile, the group expects leverage to be around two times at the end of 2026, compared with 2.7 times at the end of the third quarter. The company links the financial flexibility following the completion of the BREAK and Moro sale with its expectation of lower leverage by year-end. Reported first-half sales were 4.2 billion kroner, with a negative currency effect of 3%, while sales growth at constant exchange rates was -0.3%.
The group will present its results on a conference call on November 12, 2026, at 10:00 Central European Time. The call follows the announcement of higher earnings per share and EBIT margin outlooks and an update to the annual sales growth range. The results will also be the focus of the company's presentation at the scheduled time, according to its announcement. The company said the positive timing effect on some third-quarter results is expected to reverse in the fourth quarter. The call is expected to put these developments in context as the group presents its results.