|Oct-Dec Oct-Dec Full-year Full-year|
|Sales||3,457||3,500 12,911 13,311|
|Income before tax||853||642||3 167||2 696|
|Net income incl.|
|Earnings per share, SEK 2.18||1.47||8.12||5.61|
|Earnings per share, SEK|
|Equity per share, SEK|
|31 Dec 2006||8.34|
|31 Dec 2005||16.60|
|Questions and answers|
|Swedish Match’s earnings for full-year 2006 were presented on February 14. At a subsequent telephone conference, Group Management answered questions from bank and brokerage analysts who track the company.|
|ELISE BADDOIR, GOLDMAN SACHS:
Please comment on the rising costs for cigars during the quarter?
|SVEN HINDRIKES, CEO:
There was a shift toward smaller and less expensive cigars with lower margins in Europe. In addition, we had restructuring expenses of 2 MEUR and somewhat higher marketing costs. However, we expect that the earnings in the past quarter will not be repeated in 2007, but retain our outlook announced earlier of an operating margin of 21-23 percent for full-year 2007.
|HENRIK FRÖJD, KAUPTHING BANK:
You state that you will increase the marketing and selling expenses for snuff. Can you give us any figures for these cost increases?
That was a more general comment. We intend to be somewhat more aggressive on our existing snuff markets in Sweden and the US, mainly to grow in the US, as well as to retain our market share and volumes on the Swedish market.
|ERIK BLOOMQUIST, JP MORGAN:
Will the tax increase have varying sales effects on different types of snus?
|LARS DAHLGREN, CFO:
It is too early to draw any conclusions for specific snus products, but we know that sales of loose snus are being hit harder than portion-packed. We are not seeing any decline in low-price snus as a result of the tax hike.
|DAVID IRELAND, ABN AMRO:
Can you comment on what type of cigar acquisition you are seeking?
We are looking for operations complementing our existing cigar business in the US and Europe. We are reviewing different projects of varying size.
|ROGERIO FUJIMORI, CREDIT SUISSE:
”What was the trend for the operating margin for cigars in the US in the fourth quarter and for the year? I would like to know more about the growth for snus in Norway.”
Operating margin in total rose somewhat in 2006 compared with 2005, due partly to changes in product mix and savings attributable to the integration of General Cigar. The margin decline during the fourth quarter is attributable solely to the European market. Norway posted continued solid growth for snus, with volume increase exceeding 10 percent.