Swedish Match to boost investment in nicotine pouches after profits grow

By Anna Ringstrom

STOCKHOLM (Reuters) – Tobacco products group Swedish Match said on Wednesday it would increase investment in the United States and Scandinavia for its fast-growing tobacco free nicotine product after a rise in quarterly profits.

The company’s shares were 6% higher at 0947 GMT.

Swedish Match generates the bulk of its profit from its Swedish-style snuff tobacco “snus” which is put under the upper lip and sucked, mostly in pouches.

Its relatively new tobacco-free nicotine pouch segment ZYN is growing rapidly, although it faces stiffer competition in the United States.

Fourth quarter operating profit grew to 1.90 billion crowns ($205 million) from 1.65 billion a year earlier, on 15% sales growth, roughly matching market expectations according to Refinitiv.

“ZYN in the United States drove the strong financial performance, further enhanced by robust developments in Scandinavia as well as for the U.S. traditional smokefree portfolio,” Swedish Match said.

The Smokefree division, which includes ZYN and snus, grew profits in both Scandinavia and the United States despite substantially higher market related investments for ZYN in both geographies.

ZYN however lost market share in the United States from a year earlier.

“Swedish Match plans to further increase investments during 2022 to capitalise on the growth opportunities, especially for nicotine pouches,” it said.

Cigar sales and profits fell due to production constraints in the last three months of the year.

The company reiterated that it expects to complete the spin off and listing of its U.S. cigar business in the second half of 2022 at the earliest, and said transaction related costs would adversely impact group profits this year.

That would see it exit the combustible tobacco products segment having already sold its cigarette business in 1999.

Swedish Match proposed a dividend of 1.86 crowns per share for 2021 paid in two instalments, up from 1.50 crowns and slightly above expectations.

($1 = 9.2601 Swedish crowns)

(Reporting by Anna Ringstrom; editing by Niklas Pollard, Kirsten Donovan)