STOCKHOLM (Reuters) - Tobacco group Swedish Match (SWMA.ST) on Friday reported a bigger-than-expected rise in third-quarter operating profit, helped by strong sales growth of its tobacco-free nicotine pouches in the United States.
The tobacco group, whose main business is its moist snuff “snus” product in Scandinavia, started rolling out its non-tobacco pouch product ZYN across the United States in April. Like snus, the ZYN pouch is placed under the upper lip.
Operating profit rose to 1.59 billion Swedish crowns ($164.61 million) from 1.31 billion a year earlier. Analysts had on average forecast a profit of 1.44 billion, according to Refinitiv data.
Swedish Match’s shares were up 3.5% at 0954 GMT
“Shipments of ZYN in the US amounted to 31 million cans during the first nine months, up from 8.5 million cans in the prior year,” the company said. The product is available in more than 60,000 stores in the country, it said.
The U.S market is an important growth area for Swedish Match, particularly as its Scandinavian home market for snus has become increasingly competitive.
“Within the conventional snus category in Scandinavia, our market share remains under pressure,” Chief Executive Lars Dahlgren said.
Despite this, group sales increased by 13% to 3.83 billion crowns from 3.39 billion. Cigar sales were flat in the quarter.
This week, the American Food and Drug Administration (FDA)granted Swedish Match snus products a so-called modified risk status, meaning the company can market them as less dangerous than cigarettes.
“There is a fast-growing interest among consumers and regulators in products that compete with traditional
cigarettes,” Dahlgren said.
($1 = 9.6594 Swedish crowns)
Reporting by Colm Fulton, editing by Anna Ringstrom and Jane Merriman