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Cigars
Stronger market presence by product launches
As the world’s second largest producer of cigars and cigarillos in sales value, and the largest premium cigar manufacturer in the US, Swedish Match provides the ultimate in taste and quality in every segment of the worldwide cigar market. With its full range of high quality cigar products, both occasional cigar smokers and cigar aficionados will find the right cigar in the Swedish Match assortment.
  • Sales increased by 6 percent in local currencies
  • Cigars International and Bogaert acquired
  • European cigar volumes negatively impacted by smoking bans
    • Operational highlights
    Financial development
    Group sales for the full year were 3,411 MSEK (3,407), while operating profit was 737 MSEK (770). In local currencies, sales increased by 6 percent, while operating profit increased by 2 percent, primarily attributable to acquired businesses.
    In the US, sales grew by 7 percent in local currency. The American market represents 62 percent of total Swedish Match cigar sales. Cigars International Inc. was acquired in September 2007 and provided a positive contribution to both the sales and operating profit. Excluding the sales from Cigars International Inc., US cigar sales were down marginally in local currency.
    About one third of Swedish Match cigar sales are in Europe. Sales outside of the US grew by 3 percent. This includes 6 months of sales from the recently acquired company Bogaert, which is especially strong in Benelux, France, and Germany.
    Market
    Swedish Match estimates that the global market amounts to approximately 15 billion cigars, with North America and Western Europe being the two largest markets, accounting for more than 90 percent of global cigar sales. Hand-rolled premium cigars account for less than 3 percent of global volume but account for more than 25 percent of the total sales value.
    The premium hand-rolled cigar market in the US is estimated by Swedish Match to amount to 320 million cigars in 2007, fluctuating from year to year, but generally growing at between one to two percent per year in volume terms. Premium cigars are produced mainly in Latin America and the Caribbean with about two-thirds of this production estimated to be sold in the US. Outside the US, other important premium cigar markets are Spain, France and the UK.
    OPERATING PROFIT
    737 MSEK
    KEY DATA, MSEK 2007 2006 2005*
    Sales 3,411 3,407 3,283
    Operating profit 737 770 613
    Operating margin, % 22 23 19
    Investments in      
    property, plant and      
    equipment 99 90 90
    Average operating      
    capital 5,235 4,977 4,596
    Average number of      
    employees 8,715 8,915 8,529
    * Operating capital for 2005 has not been restated in accordance with the new definition of net debt and includes net pension liabilities.