Fourth quarter and full year in summary
Sales and results
Sales and results for the fourth quarter
In local currencies, sales increased by 5 percent compared to the same period previous year. Reported sales for the fourth quarter increased to 3,527 MSEK (3,457) with currency translation negatively affecting the sales comparison by 92 MSEK.
For snuff, reported sales increased by 2 percent during the fourth quarter to 981 MSEK (963) and operating profit declined by 5 percent to 441 MSEK (462). Operating margin was 45.0 percent (48.0). The positive impact from hoarding due to excise tax increases for snus in Sweden were significantly lower in 2007 than in 2006. Launch costs related to Red Man moist snuff in the US affected the operating margins for the total product group negatively. Improved price levels, higher volumes to Norway and tax free compensated for lower volumes in Sweden. North European Division snus sales were flat with prior year. North American snuff sales increased by 20 percent in local currency. The underlying operating margin improved when excluding the impact of lower hoarding and the launch costs related to Red Man moist snuff.
Sales of cigars in the fourth quarter were 928 MSEK (857), while operating profit improved to 195 MSEK (168). In local currencies sales increased by 15 percent, primarily coming from businesses acquired during 2007. Operating margin for cigars was 21.0 percent (19.6). Prior year operating margin was negatively affected by reorganization costs in Europe.
Group operating profit for the fourth quarter amounted to 1,062 MSEK (811). During the fourth quarter, a gain on the sale of head office buildings in Stockholm contributed 267 MSEK to operating profit. Currency translation has affected the operating profit comparison negatively by 20 MSEK.
Operating margin for the fourth quarter amounted to 30.1 percent compared to 23.5 percent for the fourth quarter 2006. Excluding the gain on the sale of the Stockholm office buildings, operating margin in the fourth quarter amounted to 22.5 percent.
EPS (basic) for the fourth quarter was 3.04 SEK (2.19). EPS (diluted) for the fourth quarter was 3.04 SEK (2.18).
Sales and results full year 2007
Sales for the full year amounted to 12,551 MSEK (12,911). In local currencies sales increased by 1 percent. Operating profit*, excluding larger one time items, amounted to 2,730 MSEK (3,137). The lower operating profit is mainly due to lower Scandinavian snuff volumes in the beginning of the year, higher marketing investments as well as currency translation effects. Currency translation has affected the operating profit comparison negatively by 117 MSEK.
Group operating margin for the full year was 23.9 percent (25.4). Group operating margin excluding larger one time items* was 21.8 percent (24.3).
The reported tax rate for the Group for the full year was 22.8 percent (26.4).
EPS (basic) for the full year was 7.82 SEK (8.13). Diluted EPS amounted to 7.80 SEK (8.10).
The Board proposes an increased dividend to 3:50 SEK (2:50).
* Excluding a gain of 267 MSEK from the sale of head office buildings in Stockholm in 2007 and a pension plan curtailment gain of 148 MSEK in 2006
| Summary of Consolidated Income Statement |
|
|
|
| |
October–December |
Full year |
| MSEK |
2007 |
2006 |
2007 |
2006 |
| Sales |
3,527 |
3,457 |
12,551 |
12,911 |
| Operating profit excl. larger one time items |
795 |
811 |
2,730 |
3,137 |
| Operating profit |
1,062 |
811 |
2,997 |
3,285 |
| profit before income tax |
976 |
854 |
2,662 |
3,173 |
| Net profit for the period |
791 |
603 |
2,056 |
2,335 |
| Earnings per share (SEK) |
3.04 |
2.19 |
7.82 |
8.13 |
CEO Sven Hindrikes:
2007 has been a successful year for Swedish Match. Strategically focus has been on strengthening the platform for growth through investments in brands, new products and category leadership to develop and defend our market positions. The fourth quarter showed an all time high in Group sales supported by the strong development in product areas snuff/snus and cigars. Hoarding effects, following significant excise tax increases in Sweden and negative currency translation effects, distorted comparisons for Group operating profit. The Scandinavian snus market showed further
positive developments despite the lower volumes in Sweden. The uS moist snuff market showed strong development and Swedish Match continued to gain market share during 2007. In cigars, the recently acquired businesses in Europe and the uS contributed to sales in the fourth quarter. The other product areas demonstrated a stable development in sales and margins and contributed positively to the strong cash generation. Swedish Match ends the year in a good position and a continued positive development is foreseen for 2008. underlying sales and operating profit are expected to improve compared to 2007”.
| Sales by product area |
October–December |
|
Full year |
|
| MSEK |
2007 |
2006 |
Change % |
2007 |
2006 |
Change % |
| Snuff |
981 |
963 |
2 |
3,289 |
3,363 |
–2 |
| Cigars |
928 |
857 |
8 |
3,411 |
3,407 |
0 |
| Chewing tobacco |
222 |
240 |
–8 |
956 |
1,063 |
–10 |
| pipe tobacco & accessories |
223 |
226 |
–1 |
851 |
899 |
–5 |
| lights |
405 |
388 |
5 |
1,473 |
1,503 |
–2 |
| Other operations |
769 |
784 |
–2 |
2,571 |
2,677 |
–4 |
| Total |
3,527 |
3,457 |
2 |
12,551 |
12,911 |
–3 |
| Operating profit by product area |
October–December |
|
Full year |
|
| MSEK |
2007 |
2006 |
Change % |
2007 |
2006 |
Change % |
| Snuff |
441 |
462 |
–5 |
1,366 |
1,614 |
–15 |
| Cigars |
195 |
168 |
16 |
737 |
770 |
–4 |
| Chewing tobacco |
75 |
76 |
–1 |
312 |
338 |
–8 |
| pipe tobacco & accessories |
58 |
63 |
–9 |
201 |
265 |
–24 |
| lights |
67 |
51 |
31 |
252 |
249 |
1 |
| Other operations |
–41 |
–9 |
|
–137 |
–99 |
|
| Subtotal |
795 |
811 |
–2 |
2,730 |
3,137 |
–13 |
| Larger one time items |
|
|
|
|
|
|
| pension curtailment gain |
– |
– |
|
– |
148 |
|
| Capital gain from sale of real estate |
267 |
– |
|
267 |
– |
|
| Total |
1,062 |
811 |
31 |
2,997 |
3,285 |
–9 |
| Operating margin by product area |
October–December |
Full year |
|
| Percent |
2007 |
2006 |
2007 |
2006 |
| Snuff |
45.0 |
48.0 |
41.5 |
48.0 |
| Cigars |
21.0 |
19.6 |
21.6 |
22.6 |
| Chewing tobacco |
34.1 |
31.7 |
32.7 |
31.8 |
| pipe tobacco & accessories |
25.9 |
28.0 |
23.6 |
29.5 |
| lights |
16.4 |
13.1 |
17.1 |
16.6 |
| Group* |
22.5 |
23.5 |
21.8 |
24.3 |
| * Excluding larger one time items |
|
|
|
|
| EBITDA by product area |
October–December |
|
Full year |
|
| MSEK |
2007 |
2006 |
Change % |
2007 |
2006 |
Change % |
| Snuff |
477 |
497 |
–4 |
1,511 |
1,751 |
–14 |
| Cigars |
238 |
211 |
13 |
920 |
944 |
–3 |
| Chewing tobacco |
78 |
78 |
–1 |
330 |
357 |
–8 |
| pipe tobacco & accessories |
66 |
68 |
–4 |
235 |
300 |
–22 |
| lights |
78 |
72 |
9 |
299 |
317 |
–6 |
| Other operations |
–40 |
–5 |
|
–129 |
–85 |
|
| Total |
897 |
922 |
–3 |
3,166 |
3,583 |
–12 |
| EBITDA margin by product area |
October–December |
Full year |
|
| Percent |
2007 |
2006 |
2007 |
2006 |
| Snuff |
48.7 |
51.7 |
45.9 |
52.1 |
| Cigars |
25.6 |
24.6 |
27.0 |
27.7 |
| Chewing tobacco |
35.1 |
32.6 |
34.5 |
33.6 |
| pipe tobacco & accessories |
29.6 |
30.2 |
27.6 |
33.4 |
| lights |
19.3 |
18.6 |
20.3 |
21.1 |
| Group |
25.4 |
26.7 |
25.2 |
27.8 |
Consolidated Income Statement in summary
