World’s largest producers of cigars and cigarillos
Swedish Match is one of the world’s largest producers of cigars and cigarillos. Swedish Match offers a full range of different cigars and brands. Well known brands include Macanudo, La Gloria Cubana, White Owl, Garcia y Vega, La Paz, Hajenius, Hollandia, Justus van Maurik, Willem II and Salsa. The US is the largest cigar market in the world. Swedish Match has a leading position in the premium segment and is well established in the segment for machine made cigars. After the US, the most important cigar markets are in Europe, where Swedish Match is well represented in most countries. The largest markets for Swedish Match in sales terms in Europe are France, Benelux, Finland and Spain.
During the second quarter, sales were 1,129 MSEK (905), and operating profit amounted to 281 MSEK (183). In local currencies, sales in the second quarter were flat compared to the same period of the previous year, while operating profit increased by 22 percent. Operating margin was 24.9 percent (20.2).
During the second quarter, US premium cigar sales, which includes Internet and mail order, were down less than 1 percent from the previous year in local currency. During the first quarter of 2009 substantial hoarding of premium cigars occurred in connection with the federal excise tax increases. Much of this hoarding was reversed during the second quarter. Sales of mass market cigars in the US were negatively impacted by the first quarter hoarding as well, but the year on year volume decline of 6 percent in the second quarter was better than expected, mainly as a result of the strong performance of the “foil fresh” packaged small cigars. In anticipation of sharper volume declines, costs were reduced to below normal levels in the second quarter, which in combination with price increases resulted in a sharp increase of the operating profit and margin in this product area. Cigar sales in Europe declined somewhat in local currencies as a result of mix effects and lower volumes, particularly in France, Belgium, and the Netherlands.
For cigars in total, sales for the first six months amounted to 2,305 MSEK (1,659), while operating profit was 567 MSEK (294). In local currencies sales increased by 10 percent versus the previous year, while operating profit increased by 52 percent.
