Good day, and thank you for standing by. Welcome to the Scandinavian Tobacco Group Q3 2023 Results webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's webcast is being recorded. I would now like to hand the webcast over to your speaker today, Torben Sand. Please go ahead. Thank you, and welcome all to Scandinavian Tobacco Group's webcast for the third quarter results for 2023. My name is Torben Sand. I'm Director of Investor Relations and Group Communications, and I am, as usual, joined by our CEO, Niels Frederiksen, and CFO, Marianne Rørslev Bock. Please turn to slide number 3 for the agenda for today's webcast. The agenda is as follows: highlights of the third quarter, a business update will focus on our developments that feed into the wider Rolling Towards 2025 strategy, and these insights will be followed by an overview of the performance in our three commercial divisions. Then we'll go to key financial developments for the group, including an update on net debt and leverage, and the launch of a new share buyback program. This will be followed by comments on our outlook for 2023. We will conclude the webcast with a Q&A session, as said, where we will be pleased to take any questions you might have. Before we start, I ask you that you pay attention to our disclaimer on forward-looking statements at the end of this slide presentation. Please turn to slide number four, and I'll leave the word to Niels. Thank you, Torben, and welcome and good morning to everyone on the call. Consumer trends for our key product categories remained broadly unchanged throughout the third quarter. North America Online and Retail delivered positive organic net sales growth, whereas the two other divisions declined. Our reported net sales performance was impacted by negative exchange rate developments, whereas the EBITDA margin and the cash flow improved substantially versus previous quarters. We maintain the outlook for the full year and have also announced the approval of a new share buyback program in line with our capital allocation policy. Before Marianne gives you more details on the drivers behind the financial results, I will update you on the progress of our strategic agenda, as well as a few key financial highlights from the third quarter results announcement. Reported net sales decreased by 3.9% to DKK 2.3 billion. The EBITDA margin was almost unchanged at 26.5% versus 26.7% last year. Free cash flow before acquisitions was DKK 622 million versus DKK 462 million last year. Adjusted EPS came in at 4.1 DKK versus 4.4 DKK last year. In organic terms, net sales declined by 1.1%, and EBITDA declined by 0.1%. For the nine-month period, net sales were negative by 1.8%. The EBITDA margin was 24.6%, compared with 25.9% last year, and free cash flow before acquisitions was DKK 602 million versus DKK 735 million last year. Marianne will give you more details on the financial performance in a moment. I will now turn to an update on our strategy, so please go to slide number 5. I will now give you an update on our progress with the Rolling Towards 2025 strategy. We've outlined 3 important pillars for our road ahead: mergers and acquisitions, growth enablers, and sustainability. We look at M&A first. During the first 9 months of the year, we invested almost DKK 600 million in new companies and brands. The integration of both Alec Bradley and XQS is completed and both, both brands are now fully integrated within our commercial divisions. Further, North America Online and Retail Division recently completed a small acquisition with the purchase of La Perla Habana, a cigar brand in the value segment. La Perla Habana will be a proprietary offering, which primarily will be available through Cigars International. We move to the growth enablers. We need to invest more in areas where we see growth potential, and with the aim of giving better insights into these, we've decided to adjust the definition of our growth enablers accordingly. In addition to our next-generation product sales and the retail stores in the US, we've also included the international sales of handmade cigars outside the US. We are confident that these categories hold further growth opportunities and will be able to contribute to improving our group performance over time. In the third quarter of the year, the growth enablers accounted for almost 8% of group net sales, compared with 5% in the same quarter last year. All categories have contributed to an increasing share of group net sales. Let's move to sustainability. Our sustainability agenda, which we call Rolling Responsibly, is based on three priorities. 1, the preparation to meet the regulatory compliance demands set forth by the Corporate Sustainability Reporting Directive, also known as the CSRD... and 2, reaching our commitments on climate reduction, and 3, embedding sustainability into key business processes. And we are making good progress on all three priorities. We finalized the Double Materiality Assessment and are incorporating the quantitative and qualitative aspects into relevant work streams and preparing for data gathering. Secondly, we continue the work of gathering data to analyze Scope 3 emissions, and plan to finalize this work within the fourth quarter of 2023. Finally, we continue to work across the global organization to embed sustainability considerations and initiatives into key business processes. We will continue this initiative to ensure that solid progress is being made across our company. We'll now turn to focus on the performance by division, and I'll leave the work to Marianne. Please turn 2 slides to slide number 7. Thank you, Niels. I will start the overview with Europe Branded. Reported net sales for the third quarter decreased by 3.5% to DKK 716 million, reflecting a negative organic development in net sales of 4.8%, partly offset by the impact of the acquisition of XQS. The negative organic growth is driven by machine-rolled cigars and pipe tobacco within the category smoking tobacco. Handmade cigars, fine cut tobacco in Germany, and next generation products all delivered good growth, and for most product categories, pricing remained a key contributor to offset volume declines. In the largest product category, machine-rolled cigars, the price mix impact was positive by almost 7%. The overall market declined by close to 3% in the quarter, but with our main markets, France and the UK, declining by almost 10%, we continue to experience a larger volume decline than the market average. The market share index for our key markets declined to 29.3%, compared to 29.8% in the second quarter. EBITDA before special items decreased to DKK 176 million, with an EBITDA margin of 24.6% versus 31.1% in the third quarter of 2022. The margin development was driven by changes in the market and product mix, the scale impact of lower volumes, in comparison to a very strong quarter last year. We will increase investments in regaining market share and volume in machine-rolled cigars, as the current level of volume declines are unsustainable, which, together with the increased investments in the expansion of our next generation product categories, will impact margin progression in the coming quarters. However, we are convinced that the more aggressive initiative we have launched will support a turnover - a turnaround in the organic net sales for the division. Please turn to slide 8, where I'll speak to North America Branded and Rest of the World. For the third quarter, reported net sales in North America Branded and Rest of the World decreased by 4.9% to DKK 809 million, as a result of an organic decline of 2.6% and a negative impact from exchange rates, being only partly offset by the acquisition of Alec Bradley. The net impact from exchange rates and acquisitions was negative by close to 2%. The organic development was driven by lower volumes in handmade cigars in the U.S. and contract manufacturing being partly offset by solid pricing. EBITDA before special items decreased slightly to DKK 321 million, with an EBITDA margin of 39.7% versus 38.3% in the same quarter last year. The increase in profitability is driven by stronger pricing and mix. Consumer demand for cigars is considered resilient, although volume of handmade cigars in the U.S. continued to decline by more than the expected structural decline rate for the years to come. Although we continue to see a stabilization of the online sales channel throughout the third quarter, the uncertainties for the overall consumption levels remain for the coming quarters. I'll now turn the attention to the performance in our North America Online and Retail division. Please turn to slide number 9. Net sales for the third quarter decreased by 3.2% to DKK 745 million, compared to the third quarter of 2022, and the EBITDA margin improved to the highest level in almost two years, at 17.4%. The reported numbers are, however, significantly impacted by the U.S. exchange rate. Exchange rates impacted net sales negatively by almost 8%, implying the organic growth in net sales was positive, with 4.4%. The development in the organic net sales is driven by new stores in the retail business and in the distribution of next generation product sales. The online business also delivered growth, despite a continued decline in the active customer base compared with last year. The performance of the division has improved throughout 2023, as the dynamics between between retail and online sales channels have moved back towards pre-pandemic levels. As an example to the benefit of the online sales channel, the channel to which we have a higher exposure. We expect the rebalancing between the sales channels to continue, and we also expect the number of active customers on file to have finally stabilized. Retail accounts for a steadily increasing share of net sales in the division, and delivered double-digit organic net sales growth versus last year, driven by new store openings. This resulted in retail accounting for about 9% in the quarter. EBITDA before special items increased to DKK 129 million, versus DKK 110 million last year, with an EBITDA margin before special items of 17.4%, versus 14.3% last year. The margin development is primarily driven by the scale impact from higher net sales, and as a result of efficiency improvements, most notably through the investment in our AutoStore facility in our Bethlehem warehouse last year. Now, please turn two slides to slide number 11. Before I turn to the details of the financial performance from a group perspective, I would like to update you on the long-term trends in the EBITDA margins by the group and by division. Each quarter, we deliver many details to the development of the actual quarter by division, and to the development compared with the same quarter of the previous year. In this slide, we have outlined the development in the third quarter EBITDA margins over the past six years since 2018. These trends give a different and maybe better insight into the underlying progress in our strategy and financial ambitions. Overall, the third quarter group margin of 26.5% confirms we remain on track with our ambition of increasing the EBITDA margin over time. The pre-COVID margin in the third quarter of 2019 was 24.7%. The margin has improved by almost 180 basis points since then. It also appears from the long-term trend that the pandemic did influence and did create significant impacts to the underlying growth traction, especially for the online and retail business, and North America Branded and Rest of the World. Finally, it is also apparent from the chart that Europe Branded, which was not significantly impacted by the pandemic, was up against a very strong third quarter last year. Our financial ambition of increasing the EBITDA margin over time, subject to changes in business mix as well as acquisitions and investments in growth, is anchored in our strategy Rolling Towards 2025, and the ambition is based in the past performance, and gives us comfort we will continue to deliver on the ambition in the years ahead. With this, please turn to slide number 12. Overall, we deliver a financial performance during the third quarter with these key characteristics: Organic net sales developed in line with previous quarters, with a decrease of 1.1% compared with a 1.2% decrease for the first nine months of the year. The EBITDA margin recovered to 26.5% for the quarter, and 24.6% for the nine-month period. The Free Cash Flow Before Acquisitions of DKK 622 million was a strong improvement versus the first two quarters of the year, and was also stronger than the third quarter of last year. For the nine-month period, the free cash flow before acquisition was DKK 602 million Danish kroner. The development in exchange rates, and in particular the US dollar, once again, did impact on our reported numbers negatively. Even when including DKK 52 million in acquired net sales from Alec Bradley and XQS, the reported net sales declined by 3.9% compared with 1.1% decline in organic net sales, as I just mentioned. The decrease in organic net sales is composed by a 4.4% growth in North America online and retail, a 2.6% decrease in North America Branded and Rest of the World, and a 4.8% decrease in Europe Branded. The group EBITDA margin was almost unchanged at 26.5%, compared with a relatively strong margin in the third quarter of 2022. The development was a result of an improving gross margin in North America Branded and Rest of the World, driven by mix, an unchanged gross margin in North America online and retail, and a decreasing gross margin in Europe Branded, still impacted by mix and lower volumes. The OpEx ratio for the group declined to 21.6% in the quarter, compared with 22.9% last year. The improvement was primarily a result of scale and efficiency improvements in our US online business. The free cash flow before acquisitions of DKK 622 million was one hundred and sixty million kroner higher than in the third quarter of last year, driven by well-managed working capital with inventory reductions. We expect the improved cash flow trend will continue in the fourth quarter. With this, please turn to slide number 13.... Before I move to the outlook, I will give you a brief update on our net debt and leverage position, and the approval of relaunching our share buyback program. During the third quarter, the net interest-bearing debt decreased by DKK 577 million to slightly below DKK 4.5 billion by the end of September. Compared with the end of 2022, the net interest-bearing debt has increased by slightly more than DKK 850 million as a result of the cash flow from operations, investing activities, and capital allocations. The leverage ratio decreased to 2.1x versus 2.3 x by the end of the second quarter. The leverage ratio by the end of 2022 was 1.6 x. As I mentioned at the webcast in August, we expect the leverage ratio by the end of the year will be close to 2x. We have a clear and transparent shareholder return policy, including the ambition... Sorry, I moved to slide 14. We have a clear and transparent shareholder policy, including the ambition, ambition to increase the annual payment in the ordinary dividends, as well as the objective of distributing excess cash to our shareholders. The latter is based on an ongoing evaluation and comparison of the projected leverage ratio against the target of 2.5x. The capital distribution will always take into account potential acquisition and other liquidity needs. We remain committed to this shareholder return policy. In 2022, we allocated DKK 1.5 billion to our shareholders, with almost DKK 700 million paid in ordinary dividends, and the remaining close to DKK 800 million as a repurchase of shares in the market. In 2023, we have allocated more than DKK 800 million, with DKK 715 million in ordinary dividends and about DKK 100 million in a share buyback program, which was completed by the end of February this year. In the past five years, we have returned almost DKK 4.8 billion to our shareholders. Yesterday, the board of directors approved the launch of a new share buyback program running to the end of February 2025, so almost 16 months. The aggregated value is up to DKK 860 million and will be partly executed under the Safe Harbor Regulation and partly by pro rata participation by Christian Augustinus Fabrikker and C.W. Obel. The value and the length of the share buyback program is a testimony to our strong financial position and our aim to adjust the group's capital structure. With this, now please turn to slide number 15. I will now give you more details on the full year outlook. We maintain the expectation for all four metrics we guide for, with the net sales expected to be DKK 8.7 billion-DKK 9 billion, the EBITDA margin expected in the range of 23.5%-24.5%, the free cash flow before acquisition seen in the range of DKK 1.1 billion-DKK 1.3 billion, and the adjusted earnings per share in the range of DKK 14-DKK 16 per share. The expectation for net sales reflects growth in the fourth quarter based on the positive trend in the online and retail business, increased net sales growth from the growth enablers, and stabilization in Euro pe Branded. Exchange rates will, at current levels, have a negative impact on net sales growth in the fourth quarter. In most of our product categories, price increases are expected to offset the underlying volume decline. The growth enablers are expected to deliver an increasing contribution to net sales, driven by the retail expansion in the U.S., international sales of handmade cigars, and net sales from next-generation products. For the fourth quarter of this year, the group EBITDA margin will be impacted negatively by investments in the growth enablers, investments in regaining momentum in our machine-rolled cigar business in Europe, and changes in product mix and market mix. The expectation for free cash flow before acquisition in the fourth quarter is more than DKK 500 million, driven by the operational performance and continued improvement of the working capital. As always, expectations are based on current exchange rates. Please turn to the next slide, where I'll leave the word back to Torben. Thank you, Marianne, and we are now quickly approaching the day for our second Capital Markets Day. We are very excited about the opportunity to give all our stakeholders an opportunity to gain additional insights into our company, our strategy, and how we intend to create value for our shareholders, our many partners, our consumers, as well as our employees. This year, we will have a special focus on our consumers, how we see changing consumer trends and demands, and how we are positioned to meet these changing consumer trends with our existing portfolio of brands and products, in combination with the expansion into new product categories. The event will take place in less than two weeks, on twenty-first November, at The Ned Hotel in London. ... It will be possible to follow the Capital Markets Day, both in person in London or through a live-streamed event. The agenda and all registration details for the Capital Markets Day is available on our investor website, so please remember to sign up to take part. With this, we conclude our presentation for today's call, and I'll now hand the word back to the operator and take questions. Thank you. Thank you. As a reminder, to ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will take our first question. Your first question comes from the line of Niklas Ekman from Carnegie. Please go ahead. Your line is open. Thank you. Yes, a couple of questions from my end. Firstly, on the buyback program here, you haven't set a start date here. You mentioned in the presentation, you show November until February 25. But is it safe to assume that this buyback mandate will be valid almost immediately, or are you waiting for something? Is this a buyback that will more likely start after the Q4 results? Or can you just elaborate here on what the plan is? Yeah, and hi, Niklas. You're assuming right. We will start the buyback very shortly, so it will start here in November. Super. Very clear. Can you tell us also, shifting to machine-made cigars in France and U.K. here, can you tell us a little bit about the main reasons for the market share decline here? Is it because of increased competition? Have you seen a strong shift towards value products that you've been failing to follow? Or what are the main reasons for the quite steep volume decline in those markets? Yeah. Thank you. Hi, Nicholas. I think it's important to understand that coming out of the supply issues we've had for quite a long period, our initial focus has been on regaining distribution, you know, reactivating the brands that have been out of stock. And our expectation was actually that that would be sufficient to stabilize and subsequently turn around the market share development. What we can see now is that we have, let's say, two areas that we need to address. One is that we have a relatively strong position, market share-wise, in the segments that are declining the fastest. And we have a growing share in the segments that are developing more positively, but we need to strengthen our effort even further in this area. So this could be in the form of new launches or even pricing initiatives. And the other part, which is also related to pricing, is that we can see that some competition have not been as aggressive on pricing as we have been. And I think you notice the 7% pricing impact from year to date for our machine-rolled cigar, which is quite strong, and we need to tactically address that. Which is not about reducing pricing across our product range, but really about being tactical about which are the brands that are not recovering and focusing on those. So I think it's important to emphasize there's no reason to panic here, but we need to adjust our efforts, and we need to make sure we get on top of the brands that are not recovering as we anticipated. And that's what the focus will be on in Q4 here, where we're already executing, and also into 2024. Thanks for clarifying that. That's very clear. And given looking at your reiterated full year guidance here, it assumes a fairly significant improvement of growth in Q4. I think even the lower end would require organic growth of at least 2.5%, according to my calculations. Do you think that the measures you've done here, they're really sufficient to reach that kind of growth or that growth or even higher? Yeah. I think that the growth in the fourth quarter is coming primarily from, let's say, the positive trend we've already been seeing in North America online and retail. And then it's coming from Europe Branded, where it is a combination of the, let's call it the reinforced initiatives, but also the growth in next-generation products, which is continuing well. Thank you. And then kind of the opposite question when looking at EBITDA, because your margin guidance is, even the upper end of your margin guidance, is below what you delivered in the first nine months of this year. So are we talking about a fairly significant magnitude of investments in Q4, or what's the reason for that guidance? Yeah, and you're right, Niklas. So for the fourth quarter, we are expecting top-line growth, but we are also expecting to invest more so the declining EBITDA margin. And we will invest in regaining the market share, as Niels was just talking to, but we will also invest more in our next generation product, as we continuously are investing in new competencies for supporting the transformation that our company is in. Super. Very clear. Talking about your growth investment, this international rollout of handmade cigars, can you provide us some scope here just so we understand the magnitude? What is international sales of handmade cigars today? How many markets are you expanding this into at the moment? Yeah, so the handmade cigars outside the U.S. has always been a growth opportunity, because you can say, whereas in the U.S. we are the clear market leader in handmade cigars, outside the U.S. we've been number three. So the geographic coverage is actually quite wide already, but what we've seen in the last couple of years with the particular troublesome challenges that the Cuban cigars have seen, and also the, let's call it, the new pricing policy, which have taken a number of the Cuban cigars significantly up in price, we see an opportunity to push even further. So you should think about the growth opportunity in international handmade cigars as one where we are taking our existing platform and trying to invest more in brand building, in distribution, even in lounges. So we've opened, for example, I think it was last year, a Macanudo lounge in Kuala Lumpur, and we are trying to put in selected cities across Asia some of these brand initiatives as well. So it's a combination of many things, but it's not really a new thing, but the Cuban situation has allowed us to be more ambitious, and we think there is a window that we need to pursue. Is there any way you can quantify handmade cigars outside the U.S.? What share of sales are we talking about, roughly? Yeah. If you look at the third quarter, it would be close to 2%-3% of our net sales. Very clear. Thank you so much for taking my question. Thank you. Once again, if you wish to ask a question, please press star one and one on your telephone. We will take our next question, and the question comes from the line of Sebastian Grave from Nordea. Please go ahead. Your line is open. Hi, guys, Sebastian here. Thank you for taking my questions. So, just going back to just these new initiatives to safeguard market share. So, in terms of margin impact, could you provide some indications to how this will affect your P&L? And also, is this a Q4 thing, isolated or should we expect the impact to also... or should we expect these initiatives to also impact the margins in 2024 and beyond? Any help here would be appreciated. Yeah, and hi, Sebastian, and thanks for asking questions. So if you look at the primarily Europe Branded, we have seen a decline in gross margin. That comes from first of all, mix, where we are growing in lower valued segments, and losing in high value segments. However, it's also primarily the decline in volume, and you should think the decline in volume in two ways. When we decline in volume, we of course losing net sales, but it also means that unless we restructure our plants, our cost per stick will increase. Mm-hmm. So the initiatives that we are embarking on in Europe Branded is expected to regain some of our market share, and thereby also increasing our volume that will enhance the gross margin. But I think it's also important to understand that our Next Generation Products have lower margins than our current business, so that will also impact. So over time, I do expect that the margin in Europe Branded will increase from the level that we're seeing in Q3. Okay. That's very helpful, Marianne. So, but I guess in short term, you could say before you hopefully soon, but get volumes back into the business, there could be some margin headwinds from these new initiatives. Is that how to- Yes ... to understand it? Yes. Yes. Okay. So I do not expect a significant improvement in gross margin in Europe Branded for Q4. And as I explained before, we will invest in these new categories also in Q4, and that will impact our EBITDA margin. Okay, thank you. I guess this next question here is also to you, Marianne. So in terms of the ERP system, as I recall, you've previously communicated that you expect the system to be fully implemented by 2025, at which point you will see, I guess it was DKK 150 million-DKK 250 million annual benefits. So is this still the game plan here? And also, do we see some of these benefits in the numbers already, or how should we think of this whole implementation? Yeah. So, it is still the plan that we will be fully rolled out globally during 2025. Currently, as you know, we started the implementation in Denmark and Sweden and went live before summer. And we expect to go live with the next wave during 2024. We have just postponed that go live to go live after summer next year from before summer, simply out of a risk perspective, because we're also going live with Track and Tr ace in May 2024, and we simply don't want to risk anything on the operations disruption by going live with two significant systems. So that's the rollout. The benefits from the program will primarily be seen when we have the global rollout. It will be due to standardized processes, so we can execute processes more efficiently. After having implemented in Europe, we will see how many of the benefits we can actually take out there, but the main benefits will come after 2025 or during 2025. Okay, thank you so much. You stick to the DKK 150 million-DKK 250 million annual benefits? That's still, that's still the guidance. Correct. Yeah, I didn't get you. That's correct, yes. Yeah, yeah. Thank you. And then just last thing, so just if I heard correctly, you had a P&L impact from Alec Bradley and XQS of DKK 52 million in the quarter. Is that correct? That's the net sales, yes. Net sales. Yeah, perfect. Okay, thank you so much. Thank you for taking my questions. Thank you. Once again, if you do wish to ask a question, please press star one and one on your telephone. There seems to be no further questions at this time. I would like to hand back for closing remarks. Yes. Well, thank you very much. From my side, thank you for participating and wishing everyone a continued good day. This concludes today's conference call. Thank you for participating. You may now disconnect.