SCANDINAVIAN TOBACCO GROUP CONTINUES TO GROW ITS LEADERSHIP IN CIGARS AND PIPE TOBACCO

• Net sales for the full year were 5,925 MDKK (5,978). In local currencies net sales grew by 0.5%.
• EBITDA was 1,175 MDKK (1,301). In local currencies EBITDA decreased by 8.3% mainly due to a planned one-off stock reduction at the distributor in France.
• In local currencies, net sales grew in all categories except for machine-made cigars and in all regions outside Northern and Western Europe.
• Outlook: Based on its planned activities, management expects continued growth in net sales in local currencies during 2014 which supports the ambition to deliver improved earnings (see Annual Report 2013, page 14).

Anders Colding Friis, CEO of Scandinavian Tobacco Group, says:

“2013 was a challenging year for our industry. Total markets declined in especially our core markets in Northern and Western Europe. Despite this, we have managed to grow our net sales by 0.5%.

I am very pleased that we continue to grow in Northern America and Southern Europe and even achieve double-digit growth in our markets outside Europe and Northern America. In Australia and Canada we grew significantly despite heavily regulated market conditions. We grew in all categories except machine-made cigars. Little cigars and our catalogue and internet sales in the US delivered double-digit growth rates; pipe tobacco and fine cut delivered high growth rates as well. Overall, we have improved our market position and share of markets and categories since the launch of our strategy in 2011.

We invest in the future.This will continue. We have developed a unique portfolio of more than 200 brands, including truly iconic ones such as Café Crème and Macanudo that are benchmark brands in their categories. In the US, we continue to strengthen Cohiba’s luxury positioning through the collaboration with the rapper Shawn ‘Jay Z’ Carter to introduce the super-premium cigar called Cohiba Comador. Meanwhile, we pursue break-through innovations and product developments that attract smokers from other categories.”

Following the merger between Scandinavian Tobacco Group and the main part of Swedish Match’s cigar and pipe tobacco business in 2010, Scandinavian Tobacco Group has transformed its supply chain layout and invested an amount in the three-digit million range.

• The Group’s 6-2-4 project closes down two factories while rebuilding the Group’s remaining four (the Netherlands, Belgium, Denmark and Indonesia) in its supply chain for machine-made cigars. The project progresses ahead of schedule and is expected to complete in the first half of 2014.
• In fine cut, Scandinavian Tobacco Group builds a new factory for expanded tobacco. The factory in Holstebro, Denmark, brings the production of expanded tobacco in-house and is expected to be completed in late 2014. Expanded fine-cut tobacco is one of the fastest growing segments within the tobacco industry.

For further information please contact: CEO, Anders Colding Friis or Director of Group Communications, Kaspar Bach Habersaat, kaspar.bach@st-group.com or phone +45 7220 7152.