EU CONSUMER STAPLES: Scandinavian Tobacco: 3Q Results
(STGDC; Baa3/NR/NR)
We still downgrade risk - Moody's has been lenient thus far but earnings fall is causing it to re-lever and stay above target. There is 1.25% coupon step-up as protection (eff. Sept 2026 if downgraded today). On sales front there was sequential improvement in most areas ex. Europe.
- 3Q sales DKK2.4b (€320m), organic +0.3% (YTD -4%). Net of FX -3% (YTD -1%)
- Handmade Cigars +6% (YTD flat), Machine Rolled -4% (YTD -2%), small next-gen exposure +23% (YTD -28%, on Zyn distribution stopping in US)
- Europe (mostly machine rolled) -3% (YTD -3%), NA & RoW flat (YTD -4%), NA online & retail stores +4% (YTD -5%)
Machine-Rolled in Europe market share at 26.2%, -1.7ppt y/y and -3.5ppt from 2023
- adj. Gross margin 44.6% (-170bps) - in-line with YTD fall
- adj. EBITDA DKK519m, -9% y/y on a 22.0% margin (-140bps)
- YTD 1.3b, -10% on a 19.9% margin (-210bps). Adj. items total 146m (vs. 131m LY)
- YTD FCF it reports at DKK 444m (vs. -235m LY or 327m ex. acq. spend)
- Net of lease payments, FCF 384m vs. annual dividend paid in 2Q totalling DKK670m. But FCF seasonal into 3 & 4Q (~400-600m in 4Q likely)
- Net debt 5.6b (€750m), down from 5.8b last year
- levered 2.9x, unch on earnings fall. Target <2.5x.
FY Guidance narrowed:
- sales DKK 9.1-9.2b vs. 9.2b LY (prev. 9.1-9.5b)
- adj. EBITDA margin 19.5-20.5% vs. 22.6% LY (prev. 18-22%)
- FCF (ex. leases = ~0.1b) DKK 0.8-1.0b vs. 0.9b LY (ex. acq)
- one-off cash items exp. DKK 0.2b
- Leverage slightly below 3Q level (2.9x) vs. 2.6x LY
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US: Trump Oval Office Announcement Underway Shortly
US President Donald Trump is shortly due to deliver an announcement in the White House Oval Office. LIVESTREAM The announcement is expected to relate to drug pricing and could follow a similar template to a recent pledge from Pfizer.
- The announcement will be Trump's first press remarks since a market-moving Truth Social statement earlier today in which Trump suggested calling off a meeting with Chinese President Xi Jinping and raising tariffs on China in response to new export controls from Beijing on rare earths. See earlier bullets here and here.
RATINGS: Moody's Completes Periodic Review Of Belgium, No Rating Action
No ratings actions for Belgium from Moody's, which is quoted in a press release on Bloomberg: "Moody's Ratings (Moody's) has completed a periodic review of the ratings of Belgium and other ratings that are associated with this issuer. The review was conducted through a rating committee held on 2 October 2025 in which we reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), and recent developments. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future."
- There had been some speculation there could be a ratings action - MNI wrote Thursday: "* Moody's on Belgium (Current rating Aa3, Outlook Negative): We expect Moody's to maintain their current stance in the absence of 2026 budget details."
MACRO ANALYSIS: US Macro Week Ahead: No CPI, But Plenty Of Pre-Blackout FedSpeak
Below is the week’s data schedule, with MNI’s annotation of whether or not data will be postponed.
- As we went to press, the Fed announced that next week's Industrial Production data will be postponed (was due to be published next Friday Oct 17) as the data “incorporate a range of data from other government agencies, the publication of which has been delayed as a result of the federal government shutdown.”
- We won’t be getting September CPI as scheduled on Oct 15, but at least the BLS announced it will publish the data on Oct 24.
- As such next week we’ll be looking at some under-covered data points, including the Redbook weekly and Chicago Fed’s CARTS retail sales data (in lieu of the Census Bureau retail sales report), with a little more focus than usual on regional Fed manufacturing indices (NY, Philadelphia).
- Once again, the dearth of tier-one data leaves Fed commentary in focus ahead of the pre-FOMC blackout period: highlights for us are Philadelphia Fed President Paulson making her first comments on monetary policy on Monday since being appointed in the summer, while as always Chair Powell bears watching on Tuesday (we also hear from Bowman, Waller, Collins, Miran, Schmid, and Musalem).
- Additionally we get the latest Beige Book which was already key given the FOMC was already increasingly focused on anecdotal information as it attempts to navigate murky economic waters.
