STG Reports Q3 2025 Results: Handmade Cigar Growth but Overall Revenue Declines
STG posts mixed Q3 2025 results, with handmade cigar sales rising but overall revenue falling due to currency pressure and market shifts.
STG Sees Mixed Performance in Q3 2025
Scandinavian Tobacco Group (STG), the world’s largest handmade cigar company, has released its financial results for the third quarter of 2025. The headline numbers show a slight decline compared to the same period last year. Despite this, the handmade cigar category continued to perform well, especially in North America.
Key Figures for Q3 2025
STG reported revenue of DKK 2.357 billion, a 3 percent drop from Q3 2024. Organic net sales growth improved to 0.3 percent, up from –0.1 percent a year ago. The EBITDA margin before special items slipped from 23.4 percent to 22 percent. Adjusted earnings per share reached DKK 3.4, down from DKK 4.1 last year. Free cash flow before acquisitions fell to DKK 173 million, compared to DKK 275 million in Q3 2024.
The company attributed much of the decline to exchange rate headwinds. STG highlighted that handmade cigar sales in North America delivered high single-digit organic growth through its General Cigar Co. and Forged Cigar Co. divisions. Handmade cigars accounted for 37 percent of total quarterly sales.
Retail Performance and Market Pressures
Exchange rates weighed heavily on STG’s online and retail business, led by Cigars International. A negative currency impact of 6 percent offset the division’s organic growth of 4 percent, resulting in an overall decline of 3 percent. Brick-and-mortar stores posted double-digit increases, while online and catalogue channels fell by 4 percent. STG cited rising competition and shifting consumer behaviour as key drivers.
Cigars International recently introduced free shipping on all orders, though this was not referenced in the Q3 report.
CEO Commentary and Strategic Outlook
Chief executive Niels Frederiksen noted signs of sales stabilisation but pointed to margin pressure driven by product mix and an aggressive promotional environment. He also acknowledged challenges in machine-rolled cigars linked to the rollout of STG’s global SAP system.
Frederiksen said he looked forward to presenting the company’s new five-year strategy on 20 November. He emphasised STG’s aim to deliver meaningful long-term value across all stakeholder groups.
Performance Trends Across Quarters
Recent quarterly results show stable but pressured performance:
2025 Q3: Net sales DKK 2,357m | EBITDA DKK 519m | FCF DKK 173m
2025 Q2: Net sales DKK 2,361m | EBITDA DKK 499m | FCF DKK 119m
2025 Q1: Net sales DKK 1,974m | EBITDA DKK 317m | FCF DKK 156m
2024 Q4: Net sales DKK 2,458m | EBITDA DKK 596m | FCF DKK 600m
2024 Q3: Net sales DKK 2,431m | EBITDA DKK 568m | FCF DKK 275m
2024 Q2: Net sales DKK 2,366m | EBITDA DKK 580m | FCF DKK 177m
These numbers indicate resilience across the handmade cigar category but ongoing volatility in retail channels and machine-rolled cigar volumes.
STG’s Portfolio and Market Position
STG, publicly traded on NASDAQ Copenhagen, owns one of the largest premium cigar portfolios in the world. Its brands include Cohiba, La Gloria Cubana, Partagas, CAO, Macanudo, Alec Bradley, Room101 and Toraño. The company also operates leading retailers such as Cigars International, Cigar.com, Cigarbid.com, Thompson Cigar and Cigora. Outside handmade cigars, STG remains a major force in machine-made cigars, pipe tobacco, roll-your-own products and nicotine pouches.
Updated Guidance for 2025
STG revised its outlook for the year. The company now expects net sales between DKK 9.1 and 9.2 billion. The EBITDA margin guidance tightened to 19.5–20.5 percent. Free cash flow before acquisitions remains unchanged at DKK 0.8–1 billion. Adjusted EPS has been updated to DKK 10–12.
