UPDATE 1-Swedish Match Q3 tops forecasts, sticks to outlook
October 29th, 2008 | by admin |* Pretax profit 747 mln crowns, well ahead of 671 mln forecast * Keeps outlook for higher underlying sales in 2008 * Cigar sales, hit earlier by economic strains, hold up well * Shares up 5 percent, outperforming blue chip index
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STOCKHOLM, Oct 29 (Reuters) – Tobacco products maker SwedishMatch (SWMA.ST: Quote, Profile, Research, Stock Buzz) posted a bigger-than-expected rise inthird-quarter earnings on Wednesday and stood by a forecast forbetter results this year, giving its shares a 5 percent boost.
Pretax profit came in at 747 million Swedish crowns ($93.4million) versus a year-earlier 655 million and a mean forecastof 671 million in a Reuters poll of analysts.
The firm’s operating margin for wet snuff — a tobaccoproduct sold mainly in the United States and Scandinavia butbanned elsewhere in the European Union — rose to 48.7 percentfrom 45.0 percent, beating an average forecast of 47.4 percent.
“Their performance is robust,” said an analyst, who askednot to be identified.
“Scandinavian snuff continues to be incredibly resilient tothe price rises and that’s driving the margins,” the analystsaid. “Cigars, as expected, were a little bit weak.”
Swedish Match said Scandinavian snuff sales rose 20 percentfrom a year earlier. Its U.S. snuff business had better sales asthe national rollout of its Red Man brand was nearly complete.
“For cigars, sales and operating profit have held up welldespite some softness in deliveries for our U.S. premium cigarbusiness,” Chief Executive Lars Dahlgren said in the statement.
Dahlgren told Reuters he did not expect fourth-quarter snuffmargins to be as high as in the third quarter. Lower-margin U.S.operation is set to make up a bigger share of overall businesswhile costs in Scandinavia are going up, he said.
Swedish Match shares at 0900 GMT were up 5.2 percent,modestly outperforming a 3.5 percent gain in the Swedish bluechip index . (Reporting by Veronica Ek and Adam Cox; Editing by QuentinBryar)