Swedish Match Profit Hit by Slow Start to Year for Some Products

Swedish Match AB, (SWMA) a maker of smokeless tobacco products, said a slow start to the year for some products in the U.S. and in Scandinavia contributed to a decline in first-quarter operating profit.

“Significant” spending on growth initiatives for pouches and value packs also affected earnings, which fell 8 percent to 832 million kronor ($126.7 million) excluding one-time items, the Stockholm-based company said in a statement today. Net income rose 11 percent to 740 million kronor, boosted by a gain on the sale of its former head office site.

Swedish Match reiterated that operating profit for its key products snus and snuff will likely drop this year, hurt by a fierce pricing battle in the company’s home market and weighed down by increased expansion spending in the U.S. Snus is a type of moist tobacco placed in pouches under the upper lip.

First-quarter sales increased to 2.98 billion kronor from 2.92 billion kronor, beating the 2.93 billion-kroner average estimate of 13 analysts compiled by Bloomberg.

“In the second quarter, Swedish Match has a very ambitious launch schedule, including products based on a new technology,” Chief Executive Officer Lars Dahlgren said in the statement. By the end of this year, Swedish Match expects to be in 17,000 to 20,000 stores in the U.S., up from 13,000 today.

To contact the reporter on this story: Katarina Gustafsson in Stockholm at kgustafsson@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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