Scandinavian Tobacco Group (STG) CMD 2025 summary

Strategic direction and priorities

• Launched Focus 2030 strategy to become the global leader in cigars by 2030, emphasizing consumer centricity, portfolio simplification, and investment in people, data, and digitalization.

• Three strategic priorities: stabilize machine-rolled cigars, accelerate handmade cigars, and grow nicotine pouches, with a focus on value chain optimization and market share gains.

• Portfolio simplification underway, focusing on four power brands in each major category and reducing SKUs by 50% in machine-rolled cigars and smoking tobacco.

• Investments concentrated in high-growth areas, especially U.S. handmade cigars and European nicotine pouches, with retail expansion and digital transformation as key enablers.

• Commitment to a more consumer-centric, data-driven, and digitally enabled organization.

Financial guidance and capital allocation

• Ambition to achieve at least 11% ROIC, low single-digit EBIT CAGR, and DKK 1.2 billion in free cash flow by 2030, with 2025 targets of DKK 9.1-9.2 billion net sales and EBITDA margin of 19.5-20.5%.

• New payout ratio-based dividend policy (40%-60%), with flexibility based on leverage and performance; share buybacks remain a priority.

• CapEx expected at DKK 300-400 million annually, with lower investment in 2026 to prioritize deleveraging to 2.5x.

• DKK 200 million cost improvement program planned, targeting all cost lines, with details to follow.

• Retail expansion in handmade cigars and growth in nicotine pouches underpin financial targets.

Business developments and operational changes

• Machine-rolled cigars: focus on stabilizing supply, simplifying portfolio, and regaining 2 percentage points of market share in core European markets.

• Handmade cigars: aim to grow U.S. market share from 13% to 15% by focusing on four power brands, production optimization, and expanding retail footprint.

• Nicotine pouches: XQS is the core brand, targeting Sweden and the U.K., with ambitions to reach over DKK 400 million in net sales in 2025 and 20% market share in Sweden by 2030.

• Ongoing evaluation of insourcing nicotine pouch production, but current focus is on commercial growth and market expansion.

• Divestments of non-core businesses and continued selective acquisitions planned, with all transactions required to be ROIC enhancing.