October 29, 2013 / 9:22 AM / 4 years ago

UPDATE 1-Cut-price competition dents Swedish Match in Q3, shares fall

* Swedish snuff, U.S. cigar prices under pressure

* Reorganises in Scandinavia to meet competition

* Shares down 3.2 percent (Adds detail, share)

STOCKHOLM, Oct 29 (Reuters) - Swedish tobacco firm Swedish Match posted a slightly bigger than expected fall in third-quarter operating profit as fierce competition weighed and repeated it saw lower profits from its main products this year.

Operating profit fell due to increased price competition in the U.S. cigar market as well as the Swedish wet snuff market and due to a charge as the firm reorganised its Scandinavian business, it said in a statement.

The company sells snus - wet snuff - mainly in Sweden and Norway. It is put under the lip, mostly in small pouches.

Swedish Match has seen increasing cut-price competition in Sweden for its biggest product in recent years as international tobacco companies British American Tobacco and Imperial Tobacco have gobbled up local start-up snus brands.

It still dominates the market with a more than 70 percent market share, but the competition has weighed on its margins.

Operating profit fell to 924 million Swedish crowns ($146 million) against 1.02 billion a year ago and compared to a mean forecast of 940 million in a Reuters poll of analysts.

Swedish Match shares were down 3.2 percent at 221.10 crowns at 0840 GMT compared to a largely flat Stockholm blue-chip index

The snus and snuff margin was 45.4 percent, lower than the expected 47.0 percent, but was weighed down by a restructuring charge as the firm reorganized its Scandinavian snus operations. Excluding this charge, the margin was 47.7 percent.

“With the reorganization during the quarter, we have put in place a new and more effective Scandinavia Division that is better equipped to address the dynamic market demands with more power and speed,” the company said in a statement. The company repeated that operating profit from the snus and snuff product area as well as from its second biggest product area - other tobacco products, which includes cigars and chewing tobacco - would likely be lower this year than in 2012.

Swedish Match earlier this month cut its outlook for its other tobacco products segment.

Link to full report: r.reuters.com/bef34v ($1 = 6.3362 Swedish crowns) (Reporting by Sven Nordenstam; editing by Niklas Pollard)

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