Swedish Match Profits Rise on U.S. Cigar Sales

STOCKHOLM -- Fourth quarter profits for Swedish Match received a boost from the uptick in cheap cigar sales in the United States and, overall, profits for that business rose for 2010. The news sent shares of the snuff and cigar manufacturer up.

As reported by Reuters, analysts said results were overall strong and the firm's shares experienced a 6.9 percent increase to 199.70 crowns ($31.24), outperforming the blue-chip Stockholm index. UBS analyst David Hallden said core profit, sales, positive one-offs and dividend were slightly higher than expected. "I would have liked to see a stronger snuff margin but such a broad strength overall outweighs that," he said. "Shares have come down a bit ahead of the report but this is better than feared, so it's a bit of a relief [rally]."

The U.S. mass market cigar business posted a 49 percent spike in sales in the quarter and has shown rapid growth over the past several quarters. In addition, the company -- which counts Sweden, Norway and the United States as its main markets -- said it expects the main markets for its key product snuff (or snus) to continue to grow in 2011, according to the news organization. "Snuff looks good, which is important. The U.S. mass market cigars stand out with better volumes than expected," said ABG Sundal Collier analyst Andreas Lundberg.

Chief executive Lars Dahlgren, however, told Reuters marketing costs may cause snuff margins to dip in 2011.