STG Has a Good Year Despite A Drop In Handmade Cigar Sales
Scandinavian Tobacco Group A/S, the Danish tobacco giant that makes and markets a wide variety of cigars, and the company behind the world’s largest Internet cigar retailer, posted a strong financial year. Sales were up and profits climbed in the double digits, despite a decrease in volume for handmade cigars.
STG, which is headquartered in Søborg, Denmark, reported 6.9 billion Danish kroner ($1.01 billion) in total revenues, a 2 percent gain over the DKK 6.8 billion ($1 billion) posted in 2018. Net profits for the company jumped by 12.3 percent, climbing to DKK 748 million ($112 million), up from DKK 666 million (99.7 million) in 2018. The company is one of the cigar world’s largest concerns, with more than 7,000 employees.
“In 2019, we saw strong financial performance across our four divisions,” said Niels Frederiksen, CEO of Scandinavian Tobacco Group. “During the year we also took significant steps in shaping the future of Scandinavian Tobacco Group by announcing our biggest acquisition in recent history; namely Royal Agio Cigars.”
STG completed its $235 million acquisition of Royal Agio Cigars on January 2. Royal Agio was a family-owned company from the Netherlands with annual sales of $146 million, fueled by a large machine-made cigar business and lead brands Panter and Mehari’s, with a far smaller handmade business, crafting such cigars as Balmoral in the Dominican Republic. Royal Agio had sales in fiscal 2019 of 131 million euros ($146.5 million), with 75 percent of sales coming from Europe, particularly , the Netherlands, , Spain and Italy. It was founded in 1904.
In a statement, STG said 2019 sales “were negatively impacted by declining sales of handmade cigars.” STG’s large handmade portfolio, controlled by subsidiary General Cigar, includes such well-known brands as acquired in 2018 for $62 million in cash.
