Scandinavian Tobacco Group, the Copenhagen-listed company behind General Cigar, Forged Cigar Company, Cigars International and a long list of handmade brands, raised its full-year 2026 outlook on Nov. 11. The company pointed to year-to-date results and higher-than-expected tariff and duty refunds, and it also reported another quarter of growth in handmade cigars.
That combination is the story for people who actually smoke the cigars. STG is not a boutique factory. It is one of the largest players in the premium category, and when it tightens or lifts its forecast, it is usually telling you something about the U.S. handmade market as well as about its own ledger.
Q3: Profit Up 30 Percent, Handmade Cigars Still Growing
STG’s official Interim Report for the first nine months of 2026 (Company Announcement No. 12) shows:
- Net sales: DKK 2.434 billion in Q3, up 3.3 percent from DKK 2.357 billion a year earlier. Organic growth for the quarter was 2.1 percent.
- Net profit: DKK 294 million, up 30 percent from DKK 227 million.
- EBIT before special items: DKK 484 million, up 19 percent, with an EBIT margin of 19.9 percent, up from 17.3 percent.
- EBITDA before special items: DKK 610 million, up 18 percent.
- Free cash flow before acquisitions: DKK 440 million, up 154 percent from DKK 173 million.
- Earnings per share: DKK 3.7, up from DKK 2.9. Adjusted EPS was DKK 4.2, up from DKK 3.4.
For the first nine months, reported net sales were DKK 6.627 billion, down 1 percent as reported but up 0.5 percent at constant currencies. Handmade cigars delivered 4 percent organic net sales growth over that stretch. Machine-rolled cigars and smoking tobacco were flat organically.
“The third quarter was another step in the right direction with respect to executing our Focus2030 strategy and stabilising our business,” CEO Niels Frederiksen said in the report. “Our full-year guidance is adjusted partially reflecting higher tariff and duty refunds. The third quarter is positively affected by timing of certain shipments that will reverse in the fourth quarter, but I am pleased with the continued growth in handmade cigars, the underlying margin stabilisation and the strong cash-flow generation.”
That last warning matters. STG is clear that some of the Q3 strength, especially in machine-rolled cigars and smoking tobacco, is a timing effect that it expects to weigh on the fourth quarter. The handmade growth is the part that held up without that caveat.
What the Handmade Numbers Actually Say
Handmade cigars generated DKK 890 million in Q3 net sales, up 1 percent organically, and DKK 2.427 billion through nine months, up 4 percent organically. In dollar terms, that nine-month total is roughly $360 million, depending on the exchange rate.
STG now estimates that total handmade market volumes have declined slightly less than the 4 percent drop it had assumed for the full year, and it says it expects a better volume result than that earlier forecast. The company also estimates that its U.S. branded business-to-business business gained market share, while its online and retail (business-to-consumer) businesses maintained their combined share.
The brands doing a little better than the 4 percent organic pace, STG says, are its handmade power brands: Macanudo, CAO, Cohiba and Alec Bradley. That Cohiba is the American Cohiba line produced at General Cigar Dominicana, not the Cuban Habanos brand. We just wrote about one of those U.S. Cohiba releases, Weller by Cohiba 2026, which ages its USA Broadleaf binder in Weller C.Y.P.B. barrels. CAO, another of those power brands, also just put a TAA exclusive Flathead into shops.
STG also owns a large U.S. retail and online network, including Cigars International, Thompson, Cigora, Cigarbid and PipesandCigars.com, plus General Cigar Co. and Forged Cigar Co. The Q3 report is a look under the hood of a big slice of what American smokers are actually purchasing.
Why Guidance Went Up
STG issued a separate company announcement (No. 11) the same day, then confirmed the new ranges in the interim report. The updated 2026 expectations are:
- Net sales growth at constant currencies: -2 percent to 0 percent, narrowed from -2 percent to +2 percent
- EBIT margin before special items: 14.0 to 15.5 percent, raised from 13.0 to 14.5 percent
- Free cash flow before acquisitions: DKK 1.2 to 1.4 billion, unchanged
- Adjusted EPS: DKK 9.5 to 11.5, raised from DKK 9.0 to 11.0
The narrower sales range is not a demand warning in isolation. STG says the assumptions for net sales are broadly unchanged, but the outlook now excludes the fine-cut brands BREAK and Moro, which were divested as of Oct. 1. Those brands accounted for a little less than 4 percent of group net sales in the first nine months. Completing that sale, Frederiksen said, has restored financial flexibility. The company expects leverage of about 2 times by year-end, compared with 2.7 times at the end of Q3.
The lift in the margin and EPS ranges is the part driven by performance so far and by those larger tariff and duty refunds. For the first nine months, STG says duty refunds contributed about 120 basis points to the EBITDA margin before special items, which was 21.8 percent, up 190 basis points from a year earlier. Tariffs have been a running issue for cigar businesses this year, and we covered that broader context in our look at the policy stories cigar lovers should know, including the tariff debate alongside FDA and state bills.
The “timing” language is aimed mainly at the machine-rolled side. STG says a rare raw-tobacco quality issue hit its Signature PLC cigarillo brand over the summer and stalled European market-share progress in the second and third quarters. Machine-rolled volumes then rebounded in Q3, and some of that strength is expected to reverse in Q4. Handmade cigars are not the business it is flagging with that warning.
The Cigar Guys’ Take
A 30 percent jump in net profit will get the headline, and it should. Just read it with the footnotes STG already provided. Refunds and shipment timing helped the quarter. The more useful signal for smokers is that handmade still grew, the category’s volume decline looks a bit milder than STG planned for, and the company says its U.S. branded share improved. The big ships are still moving product, still leaning on names like Macanudo, CAO, Alec Bradley and the American Cohiba, and still dealing with a tariff environment that shows up in the financials.
Guidance going up on margins and earnings, while sales expectations are simply narrowed to account for a divestment, is a more confident close to the year than STG was advertising a quarter ago. The fourth-quarter reversal it already flagged means we will not treat Q3 as a straight line. We will watch the handmade numbers again when the full-year report lands.
Keep it locked to The Cigar Guys Podcast for more cigar news every week.
Sources: STG Interim Report, 1 January–30 September 2026 (Company Announcement No. 12) (Nov. 11, 2026) · STG Company Announcement No. 11: full-year expectations raised (Nov. 11, 2026) · halfwheel: Tariff Refunds Propel STG to Upgrade 2026 Guidance (Nov. 11, 2026)
