Interim Report January - June 2004

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 6-K

 


 

Report of Foreign Issuer

 

Persuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

 

Report on Form 6-K dated July 21, 2004

 


 

Swedish Match AB

(Translation of Registrant’s Name into English)

 


 

Rosenlundsgatan 36

S-118 85 Stockholm, Sweden

(Address of Principal Executive Offices)

 


 

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

 

Form 20-F      X            Form 40-F              

 

(Indicate by check whether the registrant by furnishing the information contained in this Form is also thereby

furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

 

Yes                      No      X    

 

(If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b);82-             )

 


 

Enclosure: Swedish Match Interim Report January – June 2004

 

SIGNATURES

 

Persuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

       

Swedish Match AB

Date: July 21, 2004

  By:  

/s/ Bertil Raihle


       

Bertil Raihle

       

Vice President Corporate Control


LOGO

 

Interim Report

January – June 2004

 

Sales in Swedish crowns increased by 2% and amounted to 6,377 MSEK (6,280). In local currencies, sales were up 5%

 

Operating income excluding item affecting comparability amounted to 988 MSEK (1,069) after a restructuring charge of 160 MSEK

 

A gain from the UST settlement of 1,521 MSEK is reported as an item affecting comparability, including 104 MSEK in the second quarter

 

Net profit for the period amounted to 1,440 MSEK (850)

 

EPS increased to 4.39 SEK (2.52), of which settlement with UST accounts for 2.68 SEK

 

Sales for the first six months increased to 6,377 MSEK (6,280), an increase of 2 percent. In local currency terms, sales were up by 5 percent.

 

Operating income includes restructuring costs of 160 MSEK, of which 85 MSEK has impacted the second quarter. Restructuring costs include 105 MSEK for the match operations in Europe, 29 MSEK for charges related to severance pay etc to the former CEO, 15 MSEK for the closure of a distribution center in Sweden and 11 MSEK relating to restructuring of the cigar operations in Europe. These costs have impacted operating income in accordance with present accounting principles.

 

During the first six months a gain from the settlement with UST of 1,521 MSEK is included as an item affecting comparability, of which 104 MSEK is booked during the second quarter.

 

Excluding the item affecting comparability and the restructuring costs mentioned above, operating income for the first six months reached 1,148 MSEK (1,069), an increase of 7 percent. Operating income was affected by the weaker US dollar and the negative effect from translating subsidiaries’ results into Swedish crowns impacted results by 49 MSEK.

 

For snuff, sales and operating income increased on all major markets. Operating income increased by 9 percent to 717 MSEK and operating margin improved to 45.8 percent (45.3).

 

Sales of cigars increased by 10 percent, to 1,533 MSEK and operating income grew by 41 percent, to 235 MSEK. Strong volume growth for mass market cigars in the US and also for premium cigars in the US contributed to the improved result.

 

1


EPS increased to 4.39 SEK (2.52) of which settlement with UST accounts for 2.68 SEK. EPS for the first six months a year ago was positively affected by one time gains in interest net and taxes.

 

Summary of Consolidated Income Statement

 

     January – June

  

Full
year

2003


MSEK

 

   2004

    2003

  

Sales

   6,377     6,280    13,036

Operating income excluding item affecting comparability

   988 *   1,069    2,224

Operating income including item affecting comparability

   2,509 *   1,069    2,224

Profit before tax

   2,436     1,119    2,174

Net income for the period

   1,440     850    1,558

* After a charge of restructuring costs of 160 MSEK

 

Sales by product area

 

     April - June

    January - June

   

Change

%


   

12 months

ended

Jun 30, -04


   

Full

year

2003


    

Change

%


 

MSEK

 

   2004

    2003

    2004

    2003

          

Snuff

   814     758     1,565     1,447     8     3,113     2,995      4  

Chewing Tobacco

   282     294     536     589     (9 )   1,093     1,146      (5 )

Cigars

   846     751     1,533     1,395     10     3,146     3,008      5  

Pipe Tobacco & Accessories

   214     214     425     428     (1 )   906     909      0  

Matches

   340     343     664     691     (4 )   1,368     1,395      (2 )

Lighters

   145     154     292     305     (4 )   586     599      (2 )

Other operations

   734     760     1,362     1,425     (4 )   2,921     2,984      (2 )
    

 

 

 

 

 

 

  

Total

   3,375     3,274     6,377     6,280     2     13,133     13,036      1  
    

 

 

 

 

 

 

  

Operating income by product area

 

                                    
     April - June

    January - June

   

Change

%


   

12 months

ended

Jun 30, -04


   

Full

year

2003


    

Change

%


 

MSEK

 

   2004

    2003

    2004

    2003

          

Snuff

   364     350     717     655     9     1,448     1,386      4  

Chewing Tobacco

   81     86     154     170     (9 )   320     336      (5 )

Cigars

   131     87     235     167     41     461     393      17  

Pipe Tobacco & Accessories

   44     45     96     91     5     206     201      2  

Matches

   (51 )   31     (81 )   69           (67 )   83         

Lighters

   7     0     14     9     56     19     14      36  

Other operations

   (48 )   (46 )   (147 )   (92 )         (244 )   (189 )       
    

 

 

 

 

 

 

  

Subtotal

   528     553     988     1,069     (8 )   2,143     2,224      (4 )

Items affecting comparability

   104     —       1,521     —             1,521     —           
    

 

 

 

 

 

 

  

Total

   632     553     2,509     1,069     135     3,664     2,224      65  
    

 

 

 

 

 

 

  

 

2


Operating margin by product area

 

     April - June

   January - June

  

12 months

ended

Jun 30, -04


   

Full
year

2003


PERCENT

 

   2004

    2003

   2004

    2003

    

Snuff

   44.7     46.2    45.8     45.3    46.5     46.3

Chewing Tobacco

   28.7     29.3    28.7     28.9    29.3     29.3

Cigars

   15.5     11.6    15.3     12.0    14.7     13.1

Pipe Tobacco & Accessories

   20.6     21.0    22.6     21.3    22.7     22.1

Matches

   (15.0 )   9.0    (12.2 )   10.0    (4.9 )   5.9

Lighters

   4.8     0.0    4.8     3.0    3.2     2.3
    

 
  

 
  

 

Group

   15.6     16.9    15.5     17.0    16.3     17.1
    

 
  

 
  

 

 

Smokeless Tobacco

 

Swedish Match has a broad presence in smokeless tobacco (Snuff and Chewing Tobacco), with significant positions in the Nordic countries, the US, and South Africa. The main organic growth is within the snuff operations in North America and North Europe. The growth is based, among other things, on consumers being influenced by the fact that smokeless tobacco products are increasingly recognized as having significantly lower health consequences than cigarettes.

 

Snuff

 

Swedish Match is the only global producer of snuff, and has a leading position on the Nordic snuff market. In the US, the Company is well positioned in the fast-growing value price segment. Some of the best known brands include General, Ettan, and Grov in Sweden, Timber Wolf in the US and Taxi in South Africa.

 

Sales for the first six months amounted to 1,565 MSEK (1,447), an increase of 8 percent. In Scandinavia, volume grew by 2 percent, and in the US, volume grew by 6 percent, measured in number of cans. Swedish Match total market share in the growing US market amounted to 8.9 percent year-to-date, compared to 9.0 for the same period previous year (Nielsen estimates).

 

Last year, a new brand, Longhorn was introduced on the North American market within the value price segment. The product has been well received on the market, and during the second quarter the launch of Longhorn was expanded to include most states.

 

Operating income improved to 717 MSEK (655), up 9 percent due to higher volume, price increases and productivity improvements, but was negatively affected by currency translation. Operating margin improved to 45.8 percent from 45.3 percent versus year ago.

 

During the second quarter, sales grew by 7 percent versus the previous year, to 814 MSEK, and operating income grew by 4 percent, to 364 MSEK.

 

Chewing Tobacco

 

Chewing tobacco is sold primarily in the North American market. Well known brands include Red Man and Southern Pride. Swedish Match is the leading producer of chewing tobacco in the US. The chewing tobacco segment is characterized by annual volume declines around 5 percent per year. Swedish Match market share in the US is stable at 43 percent (Nielsen estimates).

 

3


Sales for the first six months declined to 536 MSEK (589), or by 9 percent due to the weaker US dollar. Operating income declined by 9 percent to 154 MSEK (170) but was flat in local currency.

 

During the second quarter, sales declined by 4 percent versus the previous year, to 282 MSEK, and operating income declined by 6 percent, to 81 MSEK.

 

In Japan, Swedish Match has been test marketing a gum based chewing tobacco, FIREBREAK® for the past nine months. This product is designed to meet the needs of cigarette smokers looking for a convenient smokeless tobacco alternative.

 

Cigars and Pipe Tobacco

 

Swedish Match is one of the world’s largest cigar and pipe tobacco companies with a broad presence globally. Cigars provide long-term growth opportunities.

 

Cigars

 

Swedish Match is one of the largest producers of cigars and cigarillos in the world and is the second biggest in sales value. The main markets are North America and West Europe. These two markets together make up about 75 percent of the world market for cigars. Swedish Match offers a full range of products worldwide, with both premium and machine made cigars. Well known brands include Macanudo, La Gloria Cubana, White Owl, Garcia y Vega, La Paz, Justus van Maurik, and Wings.

 

Sales for the first six months amounted to 1,533 MSEK (1,395), an increase of 10 percent. Sales in local currency increased by 18 percent.

 

In the US, volumes for mass market cigars increased driven by a number of successful new product launches as well as a growing market. Sales also increased for premium cigars on the North American market. In Europe, volume development differed between countries but with a total volume somewhat ahead of year ago levels.

 

Operating income for the first six months increased by 68 MSEK to 235 MSEK (167), an increase of 41 percent primarily attributable to increased sales in the US, but was negatively affected by the weaker dollar.

 

During the second quarter, sales of cigars grew by 13 percent versus year ago, to 846 MSEK, and operating income grew by 51 percent, to 131 MSEK. Volumes were up versus year ago in both the US and Europe, with the most significant gains coming from the US mass market. Operating income in the second quarter includes costs of 11 MSEK relating to rationalizations in the European cigar operations.

 

Pipe Tobacco and Accessories

 

Swedish Match is one of the largest pipe tobacco companies in the world and the products are marketed worldwide. Well known brands include Borkum Riff, Half and Half, and Boxer. The Company has a significant presence in South Africa, North America and West Europe. The world market for pipe tobacco decreases by 6-10 percent per year, but varies between different markets.

 

4


Sales for the first six months amounted to 425 MSEK (428). Operating income improved to 96 MSEK (91). Operating income was favorably affected by increased prices, efficiency in production and strengthening of the South African Rand offset by lower volumes on most markets.

 

During the second quarter, sales were flat, at 214 MSEK, while operating income declined by 2 percent versus year ago, to 44 MSEK.

 

Lights

 

Swedish Match produces and markets matches and lighters globally. These products are sold in over 140 countries.

 

Matches

 

Swedish Match is number one in the world market for matches. The brands are mostly local, and have leading positions in their home countries. Major brands include Swan, Solstickan, Three Stars, and Redheads.

 

Sales for the first six months amounted to 664 MSEK (691), a decline of 4 percent. Sales volumes declined overall.

 

Operating income declined to a negative 81 MSEK (69), after charges of 105 MSEK relating to the restructuring in match operations in Europe.

 

During the second quarter, sales of matches declined by 1 percent versus year ago, to 340 MSEK, while operating income declined to a negative 51 MSEK (31), of which restructuring costs amounted to 59 MSEK.

 

Lighters

 

Swedish Match produces and distributes disposable lighters and the main brand is Cricket.

 

Sales for the first six months were 292 MSEK (305), a decrease of 4 percent. In local currency terms sales increased somewhat as a result of higher volumes partially offset by lower prices. Operating income grew to 14 MSEK (9) as a result of improved efficiency and cost savings.

 

The lighter business is faced with an intensely competitive situation. Operating margin for export of lighters produced in Europe has decreased as a result of a stronger euro.

 

During the second quarter, sales declined by 6 percent versus year ago, to 145 MSEK, and operating income grew to 7 MSEK (0).

 

Other Operations

 

Other operations include the distribution of tobacco products on the Swedish market, sales and distribution of advertising and other products in Europe, as well as corporate overheads and costs for business development and certain legal expenses. For the first six months, net expenses for other operations were 147 MSEK (expense 92). The result includes charges of 29 MSEK related to severance pay etc. to the former CEO and high legal expenses during the first quarter and during the second quarter expenses of 15 MSEK relating to the closure of a distribution center in Sweden. After the closure Swedish Match will manage the distribution of tobacco products in Sweden from two distribution centers.

 

5


Items affecting comparability

 

Swedish Match in March announced an agreement regarding the resolution of the complaint in Swedish Match North America, Inc. v. U.S. Smokeless Tobacco Company, and its affiliates (UST).

 

According to the settlement, Swedish Match received a cash payment corresponding to 1,417 MSEK, net after special legal expenses, in the first quarter from UST. Further, UST had agreed to cause the transfer of its cigar business to Swedish Match and the transfer went into effect on June 18th and the gain assignable to this part of the settlement amounted to 104 MSEK after special legal expenses.

 

The effect of the settlement with UST is reported as an item affecting comparability amounting to 1,521 MSEK.

 

The net result after tax for the item affecting comparability amounts to 881 MSEK. The tax charge includes, besides American company tax of 39 percent, also withholding tax of 5 percent relating to dividends to the parent company in Sweden.

 

Financing and net financial expense

 

At the close of the period the Group net debt amounted to 1,489 MSEK, as compared to 2,715 MSEK on December 31, 2003, a decrease of 1,226 MSEK.

 

Cash flow from operations, before taxes paid and the effect of changes in operating capital, was 2,761 MSEK compared with 1,433 MSEK a year ago. Tax payments have impacted cash flow from operations by 639 MSEK (255). Cash flow from changes in operating capital was a negative 118 MSEK (47) primarily due to purchase of leaf tobacco in the first quarter as well as certain inventory build-up prior to the vacation period. In total, cash flow from operations was 2,004 MSEK compared with 1,225 MSEK a year ago.

 

During the period shares amounting to 121 MSEK were repurchased, net of sales of treasury shares.

 

Cash and bank balances, including short term investments, amounted to 3,234 MSEK at the end of the period, compared with 2,666 MSEK at the beginning of the year.

 

Net interest expense for the first six months amounted to a negative 81 MSEK (40). Other financial items, net, amounted to an income of 8 MSEK (10). Net interest expense for the six first months year ago included a gain of 120 MSEK from liquidating certain interest rate swaps.

 

Taxes

 

Total tax for the first six months amounted to 971 MSEK (251), corresponding to an average tax rate of 40 percent. The tax rate has increased due to a 42 percent tax burden on the gain from the UST settlement. Furthermore, the tax rate has increased temporarily due to the fact that the restructuring expense for the match operation in Europe are not deemed to be tax deductible. Tax expense for the first six months year ago was favorably impacted by one time items.

 

6


Earnings per share

 

Earnings per share for the first six months amounted to 4.39 (2.52). This includes a gain of 2.68 per share as a result of the UST settlement.

 

Capital expenditure, depreciation and amortization

 

The Group’s direct investments in tangible fixed assets amounted to 220 MSEK (284). Total depreciation and amortization amounted to 330 MSEK (316), of which depreciation on tangible assets amounted to 173 MSEK (164) and amortization of intangible assets amounted to 157 MSEK (152). Amortizations of intangibles are divided into 65 MSEK (53) on trademarks etc. and 92 MSEK (99) on goodwill.

 

Tobacco tax

 

During the past 12 months, total tobacco tax and value-added tax on tobacco tax paid by Swedish Match in Sweden amounted to 10,072 MSEK (10,155).

 

Average number of Group employees

 

The average number of employees in the Group during the first six months was 14,660 compared with 15,115 for the full year 2003. The decrease in number of employees is primarily attributed to the match operations in India.

 

Share structure

 

During the first six months 2,466,500 shares have been repurchased at an average price of 74.59 SEK. As at June 30, 2004 Swedish Match holds 23,927,052 shares in its treasury, corresponding to 6.8 percent of the total amount of shares. Total shares bought back by Swedish Match since the buyback program started have been repurchased at an average price of 47.29 SEK. The number of shares outstanding, net after repurchase, and after the sale of treasury shares, as per June 30, 2004 amounts to 327,469,129. In addition, the Company has call options issued and outstanding on its treasury shares corresponding to 5,264,761 shares exercisable in gradual stages from 2004-2009.

 

At the Annual General Meeting on April 26, 2004 the shareholders voted to authorize the reduction of the share capital by 36 MSEK through cancellation of 15,000,000 shares with transfer to unrestricted reserve. The Board of Directors also received renewed authorization of the mandate to repurchase up to a maximum of 10 percent of all shares in the Company.

 

Other events

 

During the first quarter the sales of the clothing portion of Swedish Match’s advertising products business to New Wave Group AB was completed. The divestment was made at book value and had no impact on earnings and resulted in a cash flow of 117 MSEK to the Company from the sales proceeds and repayment of loans.

 

On June 8th, The European Court of Justice (ECJ) held a hearing related to the ban of certain oral tobacco products (i.e. snus) within the European Union. Two cases originated separately before the High Court in the UK and the Landrat of the Herford Local Authority (a regional administrative court) in Germany, but were each referred to the ECJ to decide on the legality on the EU-ban on sale of snus (oral moist snuff). Due to the similarities in the cases, they were heard together at the ECJ. The Advocate General’s opinion will be presented on September 7th, 2004 and a final judgment is expected before the end of the year.

 

7


In March a judge in New York ruled in favor of the Cuban cigar company Cubatabaco in its lawsuit against General Cigar over trademark ownership of the Cohiba brand in the United States. In June, the 2nd Circuit Court of Appeals granted General Cigar a stay and consequently allowed General Cigar to continue to sell and market the Cohiba brand pending final judgment in the case.

 

Swedish Match has appealed a judgment made against the Company to the High Court of India in which Securities and Exchange Board of India have put before Swedish Match to make a public offer to buy 20 percent of the shares in Wimco Ltd. The price per share should, according to the injunction, not be below 35 rupies plus 15 percent yearly interest from 27 January 2001. The total purchase sum would then amount to about 60 MSEK plus interest. There is a risk that shares bought in Wimco pursuant to such order would be bought at a cost substantially higher than the written downcost of Swedish Match’s shares in Wimco. The judgment from the High Court is expected within the next few months.

 

Accounting principles

 

This interim report has been prepared in accordance with the recommendation RR 20 Interim Reports from the Swedish Financial Accounting Standards Council.

 

New accounting principles 2004

 

As of January 1, 2004 Swedish Match changed its accounting principles for pensions etc. according to the Swedish Financial Accounting Standards Council’s recommendation RR 29, Employee Benefits. The recommendation implies, among other things, that deficits or surpluses in funded defined benefit plans are to be accounted for in the consolidated balance sheet as liabilities or assets, respectively.

 

The transition to the new recommendation led to an increased liability of 257 MSEK, net after deferred taxes, in the consolidated balance sheet, with a corresponding reduction of opening shareholders’ equity. Pursuant to the rules on transition of the recommendation prior year has not been restated.

 

In connection with the change to the new accounting principle on pensions Swedish Match has also changed its definition of operating capital. From January 1, 2004 pension liabilities and pension assets are included in operating capital. Comparable figures for prior year have been restated. After restatement of shareholders’ equity of 257 MSEK according to above all expenses relating to pensions and the change of pension liabilities are included in operating income. The new rules for accounting for pensions have not had a material effect on the results. The changed definition of operating capital results in a decrease of operating capital and higher return.

 

Additional information

 

This report has not been reviewed by the Company’s auditors. The interim report for the first nine months 2004 report will be released October 26.

 

Stockholm, July 21, 2004

 

Sven Hindrikes

President and Chief Executive Officer

 

8


Key data

 

     January - June

  

12 months
ended

June 30, 2004


  

Full year

2003


     2004

   2003

     

Operating margin, %1)

   15.5    17.0    16.3    17.1

Operating capital, MSEK

   8,167    9,213    8,167    8,377

Return on operating capital, %1)

             24.8    24.9

Return on shareholders’ equity, %

             51.8    38.9

Net debt, MSEK

   1,489    3,817    1,489    2,715

Net debt/equity ratio, %

   28.0    89.5    28.0    58.9

Equity/assets ratio, %

   33.1    27.6    33.1    30.5

Investments in tangible assets, MSEK

   220    284    487    551

EBITDA, MSEK1)

   1,404    1,385    2,908    2,889

Share data

                   

Earnings per share, SEK

                   

Basic

   4.39    2.52    6.55    4.68

Diluted

   4.37    2.51    6.52    4.66

Excluding items affecting comparability, diluted

   1.69    2.51    3.84    4.66

Excluding amortization and items affecting comparability, diluted 2)

   2.11    2.90    4.71    5.50

Shareholders’ equity per share, SEK

   14.31    10.90    14.31    12.21

Number of shares outstanding at end of period

   327,469,129    331,163,181    327,469,129    328,333,181

Average number of shares outstanding

   328,361,947    336,700,406    328,832,753    332,679,210

Average number of shares outstanding, diluted

   329,865,181    338,438,926    330,198,708    334,162,492

1) Excluding items affecting comparability
2) Reported net income adjusted for items affecting comparability and amortization (net of taxes) divided by the average number of shares outstanding, diluted

 

Consolidated Income Statement in summary

MSEK

 

     April – June

    January – June

   

Change

%


   

12 months
ended

June 30, -04


   

Full year

2003


   

Change

%


 
     2004

    2003

    2004

    2003

         
Sales, including tobacco tax    5,626     5,531     10,598     10,482     1     21,957     21,841     1  
Less tobacco tax    (2,251 )   (2,257 )   (4,221 )   (4,202 )   0     (8,824 )   (8,805 )   0  
    

 

 

 

 

 

 

 

Sales

   3,375     3,274     6,377     6,280     2     13,133     13,036     1  
Cost of goods sold    (1,870 )   (1,769 )   (3,458 )   (3,386 )   2     (7,175 )   (7,103 )   1  
    

 

 

 

 

 

 

 

Gross profit

   1,505     1,505     2,919     2,894     1     5,958     5,933     0  
Sales and administrative expenses    (893 )   (878 )   (1,773 )   (1,684 )   5     (3,499 )   (3,410 )   3  
Amortization, intangible assets    (84 )   (77 )   (157 )   (152 )   3     (324 )   (319 )   2  
Shares in earnings of associated co.    0     3     (1 )   11           8     20        
    

 

 

 

 

 

 

 

     528     553     988     1,069     (8 )   2,143     2,224     (4 )
Items affecting comparability    104     —       1,521     —             1,521     —          
    

 

 

 

 

 

 

 

Operating income

   632     553     2,509     1,069     135     3,664     2,224     65  
Net interest expense    (39 )   78     (81 )   40           (175 )   (54 )      
Other financial items, net    12     (9 )   8     10           2     4        
    

 

 

 

       

 

     

Net financial items

   (27 )   69     (73 )   50           (173 )   (50 )      
    

 

 

 

       

 

     

Income after financial items

   605     622     2,436     1,119     118     3,491     2,174     61  
Taxes    (239 )   (102 )   (971 )   (251 )         (1,292 )   (572 )      
Minority interests    (17 )   (7 )   (25 )   (18 )         (51 )   (44 )      
    

 

 

 

 

 

 

 

Net income for the period

   349     513     1,440     850     69     2,148     1,558     38  
    

 

 

 

 

 

 

 

Earnings per share, basic, SEK

   1.07     1.53     4.39     2.52           6.55     4.68        

Earnings per share, diluted, SEK

   1.06     1.52     4.37     2.51           6.52     4.66        
    

 

 

 

       

 

     

 

9


Consolidated Balance Sheet in summary

MSEK

 

     June 30, 2004

   Dec 31, 2003

Intangible fixed assets

   3,682    3,648

Tangible fixed assets

   2,884    2,862

Financial fixed assets

   693    616

Current operating assets

   5,564    5,310

Liquid Funds

   3,234    2,666
    
  

Total assets

   16,057    15,102
    
  

Shareholders’ equity

   4,685    4,010

Minority interests

   637    597

Provisions

   2,708    2,119

Long-term loans

   4,357    4,535

Other long-term liabilities

   22    66

Short-term loans

   366    846

Other current liabilities

   3,282    2,929
    
  

Total shareholders’ equity, provisions and liabilities

   16,057    15,102
    
  

 

Change in Shareholders’ equity

 

     January – June

 
MSEK    2004

    2003

 

Shareholders’ equity, opening balance as per December 31

   4,010     4,007  

Effect due to change in accounting principle

   (257 )   —    
    

 

Adjusted shareholders’ equity, opening balance

   3,753     4,007  

Repurchase of own shares

   (184 )   (792 )

Sale of treasury shares

   63     55  

Dividend paid

   (558 )   (535 )

Translation difference for the period

   171     26  

Net income for the period

   1,440     850  
    

 

Total shareholders’ equity at end of period

   4,685     3,611  
    

 

 

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Consolidated Cash Flow Statement in summary

MSEK

 

     June 30, 2004

    June 30, 2003

 

Cash flow from operations before changes in Working Capital

   2,122     1,178  

Cash flow from changes of Working Capital

   (118 )   47  
    

 

Cash flow from operations

   2,004     1,225  

Investments

            

Investments in property, plant and equipment

   (220 )   (284 )

Sales of property, plant and equipment

   29     16  

Investments in intangibles

   (14 )   (19 )

Investments in consolidated companies

   (53 )   (55 )

Investments in other companies

   (4 )   —    

Divestment of business operations

   117     —    

Changes in financial receivables etc.

   14     (9 )
    

 

Cash flow from investments

   (131 )   (351 )

Financing

            

Changes in loans

   (673 )   431  

Dividend paid

   (558 )   (535 )

Repurchase of own shares

   (184 )   (845 )

Sale of treasury shares

   63     55  

Other

   31     137  
    

 

Cash flow from financing

   (1,321 )   (757 )

Cash flow for the period

   552     117  

Liquid funds at the beginning of the period

   2,666     2,016  

Translation difference attributable to liquid funds

   16     (3 )
    

 

Liquid funds at the end of the period

   3,234     2,130  
    

 

 

Quarterly data

MSEK

 

     Q2/02

    Q3/02

    Q4/02

    Q1/03

    Q2/03

    Q3/03

    Q4/03

     Q1/04

     Q2/04

 

Sales, including tobacco tax

   5,981     5,897     5,496     4,951     5,531     5,788     5,571      4,972      5,626  

Less tobacco tax

   (2,448 )   (2,430 )   (2,170 )   (1,945 )   (2,257 )   (2,376 )   (2,227 )    (1,970 )    (2,251 )
    

 

 

 

 

 

 

  

  

Sales

   3,533     3,467     3,326     3,006     3,274     3,412     3,344      3,002      3,375  

Cost of goods sold

   (1,921 )   (1,939 )   (1,826 )   (1,617 )   (1,769 )   (1,833 )   (1,884 )    (1,588 )    (1,870 )
    

 

 

 

 

 

 

  

  

Gross profit

   1,612     1,528     1,500     1,389     1,505     1,579     1,460      1,414      1,505  

Sales and administrative expenses

   (891 )   (835 )   (853 )   (806 )   (878 )   (881 )   (845 )    (880 )    (893 )

Amortization of intangible assets

   (87 )   (79 )   (78 )   (75 )   (77 )   (77 )   (90 )    (73 )    (84 )

Shares in earnings of associated co.

   6     6     5     8     3     3     6      (1 )    0  
    

 

 

 

 

 

 

  

  

     640     620     574     516     553     624     531      460      528  

Items affecting comparability

   —       (68 )   —       —       —       —       —        1,417      104  
    

 

 

 

 

 

 

  

  

Operating income

   640     552     574     516     553     624     531      1,877      632  

Net interest expense

   (69 )   (59 )   (37 )   (38 )   78     (50 )   (44 )    (42 )    (39 )

Other financial items, net

   (2 )   (1 )   (6 )   19     (9 )   (5 )   (1 )    (4 )    12  
    

 

 

 

 

 

 

  

  

Net financial items

   (71 )   (60 )   (43 )   (19 )   69     (55 )   (45 )    (46 )    (27 )
    

 

 

 

 

 

 

  

  

Income after financial items

   569     492     531     497     622     569     486      1,831      605  

Income taxes

   (182 )   (157 )   (138 )   (149 )   (102 )   (176 )   (145 )    (732 )    (239 )

Minority interests

   (18 )   (15 )   (14 )   (11 )   (7 )   (15 )   (11 )    (8 )    (17 )
    

 

 

 

 

 

 

  

  

Net income for the period

   369     320     379     337     513     378     330      1,091      349  
    

 

 

 

 

 

 

  

  

 

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Sales by product area

MSEK

 

     Q2/02

   Q3/02

   Q4/02

   Q1/03

   Q2/03

   Q3/03

   Q4/03

   Q1/04

   Q2/04

Snuff

   711    707    698    689    758    776    772    751    814

Chewing Tobacco

   367    312    310    295    294    291    266    254    282

Cigars

   871    864    805    644    751    826    787    687    846

Pipe Tobacco & Accessories

   211    217    225    214    214    228    253    211    214

Matches

   421    387    380    348    343    340    364    324    340

Lighters

   184    165    165    151    154    149    145    147    145

Other operations

   768    815    743    665    760    802    757    628    734
    
  
  
  
  
  
  
  
  

Total

   3,533    3,467    3,326    3,006    3,274    3,412    3,344    3,002    3,375
    
  
  
  
  
  
  
  
  

 

Operating income by product area

MSEK

 

     Q2/02

    Q3/02

    Q4/02

    Q1/03

    Q2/03

    Q3/03

    Q4/03

     Q1/04

     Q2/04

 

Snuff

   313     320     310     305     350     372     359      353      364  

Chewing Tobacco

   105     100     95     84     86     94     72      73      81  

Cigars

   149     140     111     80     87     129     97      104      131  

Pipe Tobacco & Accessories

   36     41     45     46     45     54     56      52      44  

Matches

   59     53     44     38     31     9     5      (30 )    (51 )

Lighters

   23     17     14     9     0     6     (1 )    7      7  

Other operations

   (45 )   (51 )   (45 )   (46 )   (46 )   (40 )   (57 )    (99 )    (48 )
    

 

 

 

 

 

 

  

  

Subtotal

   640     620     574     516     553     624     531      460      528  

Items affecting comparability

   —       (68 )   —       —       —       —       —        1,417      104  
    

 

 

 

 

 

 

  

  

Total

   640     552     574     516     553     624     531      1,877      632  
    

 

 

 

 

 

 

  

  

 

Operating margin by product area

PERCENT

 

     Q2/02

   Q3/02

   Q4/02

   Q1/03

   Q2/03

   Q3/03

   Q4/03

     Q1/04

     Q2/04

 

Snuff

   44.0    45.3    44.4    44.3    46.2    47.9    46.5      47.0      44.7  

Chewing Tobacco

   28.6    32.1    30.6    28.5    29.3    32.3    27.1      28.7      28.7  

Cigars

   17.1    16.2    13.8    12.4    11.6    15.6    12.3      15.1      15.5  

Pipe Tobacco & Accessories

   17.1    18.9    20.0    21.5    21.0    23.7    22.1      24.6      20.6  

Matches

   14.0    13.7    11.6    10.9    9.0    2.6    1.4      (9.3 )    (15.0 )

Lighters

   12.5    10.3    8.5    6.0    0.0    4.0    (0.7 )    4.8      4.8  
    
  
  
  
  
  
  

  

  

Group

   18.1    17.9    17.3    17.2    16.9    18.3    15.9      15.3      15.6  
    
  
  
  
  
  
  

  

  

 

Swedish Match AB (publ), SE-118 85 Stockholm

Visiting address: Rosenlundsgatan 36, Telephone: 08 658 02 00

Corporate Identity Number: 556015-0756

www.swedishmatch.com

 

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For further information, please contact:

 

Sven Hindrikes, President and Chief Executive Officer

Office +46 8 658 02 82, Mobile +46 70 567 41 76

 

Lars Dahlgren, Chief Financial Officer

Office +46 8 658 04 41, Mobile +46 70 958 04 41

 

Bo Aulin, Senior Vice President, Secretary and General Counsel

Office +46 8 658 03 64, Mobile +46 70 558 03 64

 

Emmett Harrison, Vice President, Investor Relations (IR)

Office +46 8 658 01 73, Mobile +46 70 938 01 73

 

Richard Flaherty, Vice President, Business Control & CFO, IR (US)

Office +1 804 302 1774, Mobile +1 804 400 1774

 

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