Feb. 22 (Bloomberg) -- Swedish Match AB, Europe’s largest maker of smokeless tobacco products, posted a 27 percent drop in fourth-quarter pretax profit, matching analysts’ estimates, and predicted snuff-market growth in Scandinavia and the U.S.
Pretax profit fell to 888 million kronor ($134 million) from 1.22 billion kronor a year earlier, when earnings included a one-time operating gain of 585 million kronor, and compared with the average estimate of 887 million kronor in a Bloomberg survey of 10 analysts’ estimates.
“For the full year 2012, we expect continued growth in revenues and comparable operating profit led by a solid development for snus and snuff and other tobacco products,” the Stockholm-based company said in a statement today.
Swedish Match expects both the Scandinavian snus market and the U.S. market for moist snuff to continue to grow in volume terms this year, the seller of Red Man and Timber Wolf chewing tobacco said in the statement. Snus is finely ground tobacco that doesn’t require spitting, unlike traditional smokeless tobacco. Traditional snuff is more popular in the U.S., and the market there is five times larger than the Scandinavian market for snus, according to the company.
The operating margin for snus and snuff fell to 45.9 percent from 48.1 percent a year earlier, missing the average estimate of 47.6 percent in a survey of 19 analysts by SME Direkt.
Fourth-quarter net income fell 34 percent to 705 million kronor from 1.07 billion kronor a year earlier. That compared with the 724 million-krona estimate of analysts surveyed by Bloomberg. The company proposed an increase of dividend to 6.50 kronor a share for 2011 from 5.50 kronor a year earlier, compared with a Bloomberg estimate of 6.20 kronor.
Swedish Match’s shares were trading up 5.6 kronor, or 2.3 percent, at 11 a.m. in Stockholm, valuing the company at about 53 billion kronor.
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