Swedish Match — Earnings Release 2010

Feb 23, 2011

Full Year Report January – December 2010

• Comparable sales1) for the full year increased by 5 percent to 11,222 MSEK (10,678) and for the fourth quarter by 7 percent to 2,801 MSEK (2,620). Sales for the full year, including businesses transferred to STG2), were 13,606 MSEK (14,204)
• In local currencies, comparable sales1) for the full year increased by 7 percent and for the fourth quarter by 9 percent
• Comparable operating profit3) for the full year increased by 9 percent to 3,158 MSEK (2,900) and for the fourth quarter by 13 percent to 836 MSEK (740)
• In local currencies, comparable operating profit3) for the full year increased by 12 percent and for the fourth quarter by 15 percent
• Operating profit including businesses transferred to STG, share of net loss from STG and larger one time items4) for the full year increased by 22 percent to 4,169 MSEK (3,417) and for the fourth quarter to 1,421 MSEK (850)
• EPS (basic) for the full year amounted to 13.12 SEK (9.67) and for the fourth quarter to 4.85 SEK (2.52)
• The Board proposes an increased dividend to 5.50 SEK (4.75)
• 1) Sales excluding businesses transferred to STG.
• 2) In accordance with IFRS, includes sales for businesses transferred to STG for the full year of 2009 and for the first nine months only of 2010.
• 3) Operating profit excluding businesses transferred to STG, share of net loss from STG and larger one time items.
• 4) Larger one time items include a gain from pension settlements, capital gains from businesses transferred to STG, and reversals of amortizations and depreciations relating to assets held for sale.

CEO Lars Dahlgren comments:

For the full year 2010 Swedish Match reported solid sales growth across our businesses. In the fourth quarter, sales, excluding businesses transferred to STG, increased by 7 percent. Sales in local currencies increased for every product area, except for Other operations. Snus and snuff and Other tobacco products showed strong improvements in operating profit.

In the Snus and snuff product area, we achieved solid gains in sales for Scandinavian snus, with volume growth in Sweden and Norway. In the US, fourth quarter moist snuff sales were higher than last year, while operating profit was impacted by marketing investments behind General snus. Our investments for growth in the smokefree business continue, and we see positive signs from recent new product initiatives in Scandinavia as well as in the US. At the end of 2010, SMPM International began its second limited test, this time in Canada. This test is in addition to activities in Taiwan.

The US mass market cigar business continues to perform very well, and our market share continues to grow. With regard to our new partnership with Scandinavian Tobacco Group, operational since October 1, we are pleased with the pace of activity as Scandinavian Tobacco Group works through the integration process. We are now expecting to see some of the synergy benefits coming through over the coming quarters.

Our Group strategy is to position Swedish Match as the global smokefree leader, to leverage our strong platforms in Other tobacco products (US mass market cigars and chewing tobacco) to maximize long term profitability, to continue our operational excellence for Lights, and, through active ownership, realize the potential of Scandinavian Tobacco Group.

New segment reporting following the transaction with STG

On October 1, 2010 the transaction between Swedish Match and Scandinavian Tobacco Group to form a new company was closed. Swedish Match contributed its cigar business (with the exception of its US mass market cigar business and its holding in Arnold André) as well as its pipe tobacco and accessories businesses into the new STG and holds 49 percent of the company. As a result of this transaction, the reportable segments of the Group have changed. In the new segment reporting, US mass market cigars and chewing tobacco are combined and presented as one segment "Other tobacco products". The new segments are thereby Snus and snuff, Other tobacco products, Lights and Other operations. For comparison purposes, the financials of prior periods have been restated to separate the operations transferred to STG, unless otherwise stated.

	October-December		Full year
MSEK	2010	2009	2010	2009
Comparable sales1)	2,801	2,620	11,222	10,678
Sales	2,801	3,545	13,606	14,204
Comparable operating profit2)	836	740	3,158	2,900
Operating profit3)	1,421	850	4,169	3,417
Profit before income tax	1,221	739	3,607	2,974
Profit from continuing operations	1,074	595	2,958	2,361
Profit from discontinued operations, net after tax4)	-	-	-	785
Profit for the year	1,074	595	2,958	3,146
Earnings per share, basic (SEK)	4.85	2.52	13.12	9.67
Earnings per share, including discontinued operations,
basic (SEK)4)	-	2.52	-	12.88

Summary of consolidated income statement

1) Sales excluding businesses transferred to STG.

2) Operating profit excluding businesses transferred to STG, share of net loss in STG and larger one time items.

3) Including operating profit from businesses transferred to STG for 2009 and in the first nine months of 2010, as well as the share of net loss in STG in the fourth quarter of 2010.

4) South African operations divested in 2009. See Note 2 - Discontinued operations.

Sales and results for the fourth quarter

Comparable sales (excluding businesses transferred to STG) for the fourth quarter of 2010 increased by 7 percent to 2,801 MSEK (2,620) compared to the fourth quarter of 2009. Currency translation has affected the sales comparison negatively by 48 MSEK. In local currencies, sales increased by 9 percent.

Sales of Scandinavian snus (pasteurized) and US snuff (fermented) in the fourth quarter increased by 7 percent to 1,178 MSEK (1,101) and operating profit increased by 8 percent to 567 MSEK (523). Scandinavian snus sales were up by 9 percent compared to the fourth quarter of the prior year while volumes measured in number of cans were up by slightly more than 1 percent.

In the US, sales of snuff in local currency increased by 6 percent, while volumes declined by 1 percent year on year in the fourth quarter. The operating margin for the Snus and snuff product area was 48.1 percent (47.5).

For Other tobacco products, sales in the fourth quarter were 557 MSEK (456). Operating profit was 208 MSEK (136). Currency translation has affected the sales and operating profit comparison negatively by 17 MSEK and 6 MSEK respectively. Compared to the fourth quarter of the prior year, sales and operating profit grew most significantly for the US mass market cigar business and were also higher for the chewing tobacco business in local currency. Operating margin for Other tobacco products was 37.4 percent (29.9).

Group operating profit for the fourth quarter was affected by a number of larger one time items including a gain from pension settlements (see details under section Other events in this report) and a capital gain from the revaluation of assets held for sale upon completion of the STG transaction. The capital gain from the STG transaction has no cash flow effect, for details on the cash flow effects from the STG transaction, see Note 3 in this report. The share of net loss from STG for the fourth quarter includes restructuring charges, transaction costs and IFRS acquisition adjustments of 175 MSEK before tax. Comparable Group operating profit (excluding businesses transferred to STG, share of net loss from STG and larger one time items) increased by 13 percent to 836 MSEK (740). Currency translation has affected the comparison negatively by 17 MSEK. In local currencies, comparable Group operating profit increased by 15 percent. Comparable operating margin for the fourth quarter was 29.9 percent (28.3). Comparable EBITDA margin was 32.6 percent (30.7).

Group operating profit, including businesses transferred to STG, share of net loss from STG and larger one time items, reached 1,421 MSEK (850).

Basic earnings per share for the fourth quarter amounted to 4.85 SEK (2.52).

Sales and results for the full year

Comparable sales (excluding businesses transferred to STG) for the full year increased to 11,222 MSEK (10,678). In local currencies, comparable sales increased by 7 percent. Comparable Group operating profit (excluding businesses transferred to STG, share of net loss from STG and larger one time items) increased by 9 percent to 3,158 MSEK (2,900). Currency translation has affected the comparable operating profit comparison negatively by 76 MSEK. In local currencies comparable operating profit increased by 12 percent. Comparable operating margin for the year was 28.1 percent (27.2). Comparable EBITDA margin was 30.7 percent (30.2).

Full year operating profit, including businesses transferred to STG, share of net loss from STG and larger one time items, increased by 22 percent, to 4,169 MSEK (3,417).

EPS (basic) for the year was 13.12 SEK (9.67, or 12.88 including discontinued operations), while diluted EPS was 13.09 SEK (9.66, or 12.87 including discontinued operations).

Sales by product area

	October-December		Chg	Full year		Chg
MSEK	2010	2009	%	2010	2009	%
Snus and snuff	1,178	1,101	7	4,522	4,250	6
Other tobacco products	557	456	22	2,440	2,337	4
Lights	379	373	2	1,429	1,403	2
Other operations	687	690	0	2,831	2,689	5
Comparable sales	2,801	2,620	7	11,222	10,678	5
Businesses transferred to STG1)	-	925		2,385	3,526	-32
Total	2,801	3,545	-21	13,606	14,204	-4

1) Sales for businesses transferred to STG for 2009 and for the first nine months of 2010, net of inter-company sales eliminations.

Operating profit by product area

	October-December		Chg	Full year		Chg
MSEK	2010	2009	%	2010	2009	%
Snus and snuff	567	523	8	2,080	1,916	9
Other tobacco products	208	136	53	942	804	17
Lights	87	100	-12	279	312	-11
Other operations	-26	-18		-142	-132
Comparable operating profit	836	740	13	3,158	2,900	9
Businesses transferred to STG1)	-	109		334	518	-35
Share of net loss in STG2)	-60	-		-60	-
Subtotal	777	850	-9	3,433	3,417	0
Net gain from pension settlements	59	-		59	-
Capital gain from transfer of businesses to STG	585	-		585	-
Reversal of depreciation and amortization
relating to assets held for sale	-	-		93	-
Total larger one time items	644	-		737	-
Total	1,421	850	67	4,169	3,417	22

1) Operating profit for businesses transferred to STG for 2009 and for the first nine months of 2010.

2) The share of net loss from Scandinavian Tobacco Group includes charges for restructuring, other transaction costs as well as IFRS acquisition adjustments amounting to 175 MSEK before tax.

In order to reconcile to the Group's profit before income tax amounting to 1,221 MSEK (739) for the fourth quarter and 3,607 MSEK (2,974) for the full year, the Group's net finance cost needs to be deducted from operating profit with an amount of 199 MSEK (111) for the fourth quarter and 562 MSEK (443) for the full year.

Operating margin by product area1)

	October-December		Full year
Percent	2010	2009	2010	2009
Snus and snuff	48.1	47.5	46.0	45.1
Other tobacco products	37.4	29.9	38.6	34.4
Lights	23.0	26.6	19.5	22.2
Comparable operating margin2)	29.9	28.3	28.1	27.2
Group, including businesses transferred to
STG and share of net loss in STG	27.7	24.0	25.2	24.1

1) Excluding larger one time items.

2) Excluding businesses transferred to STG and share of net loss in STG.

EBITDA by product area

	October-December		Chg	Full year		Chg
MSEK	2010	2009	%	2010	2009	%
Snus and snuff	604	559	8	2,225	2,066	8
Other tobacco products	235	152	55	1,033	933	11
Lights	98	110	-11	320	352	-9
Other operations	-24	-16		-137	-126
Comparable EBITDA1)	912	805	13	3,441	3,226	7
Businesses transferred to STG	-	142		432	659	-34
Share of net loss in STG2)	-60	-		-60	-
Total	852	947	-10	3,813	3,885	-2

1) Excluding businesses transferred to STG and share of net loss in STG.

2) The share of net loss from Scandinavian Tobacco Group includes charges for restructuring, other transaction costs as well as IFRS acquisition adjustments amounting to 175 MSEK before tax.

EBITDA margin by product area

October-December 2010	2009	Full year 2010
			2009
32.6	30.7	30.7	30.2
30.4	26.7	28.0	27.4
	51.3 42.2 25.8	50.8 33.3 29.4	49.2 42.3 22.4	48.6 39.9 25.1

1) Excluding businesses transferred to STG and share of net loss in STG.

Snus and snuff

Sweden is the world's largest snus market measured by per capita consumption. A substantially larger proportion of the male population uses the Swedish type of moist snuff called snus* compared to cigarettes. The Norwegian market is smaller than the Swedish market but has in recent years experienced strong volume growth. The US is the world's largest moist snuff market measured in number of cans and is nearly five times larger than the Scandinavian snus market. In Sweden and Norway, Swedish Match has a leading position. In the US, the Group is well positioned as the third largest player. Some of the best known brands include General, Ettan, Grovsnus, Göteborgs Rapé, Catch, and Kronan in Sweden, and Red Man, Timber Wolf and Longhorn in the US.

The fourth quarter

*

During the fourth quarter, sales increased by 7 percent compared to the same quarter of the previous year to 1,178 MSEK (1,101), and operating profit increased by 8 percent to 567 MSEK (523). Sales, operating profit and operating margin improved in Scandinavia versus the fourth quarter of the prior year. In the US, sales revenues improved, while operating profit declined as a result of increased investments behind Swedish snus products. The operating margin for the product area was 48.1 percent (47.5).

In Scandinavia, sales volumes measured in number of cans, were up by slightly more than 1 percent during the fourth quarter compared to the fourth quarter of the previous year. Sales volumes increased in Sweden and Norway, more than offsetting declines

Swedish snus is moist snuff which is produced using a special heat treated process, much like pasteurization, as opposed to other moist snuff products for which a fermentation process is used.

in Travel Retail. Sales revenues in Scandinavia grew by 9 percent in the fourth quarter, and the operating margin improved from prior year's levels.

In the US, sales increased by 6 percent in local currency during the fourth quarter versus the fourth quarter of the previous year. US volumes measured in number of cans declined by 1 percent in the fourth quarter. Marketing spending remained at high levels, tied to brand awareness campaigns for General Swedish snus on the US market. For traditional moist snuff brands net selling price per can improved compared to the fourth quarter of the prior year, due to midyear price increases, but also due to the planned phasing of promotions resulting in less promotional volume in Q4 versus prior year. During the fourth quarter, the package design for the Timber Wolf brand was updated with a stronger, more impactful design.

Full year

For the full year, sales volumes in Scandinavia increased by more than 2 percent compared to the same period in the prior year with volume growth in Sweden, Norway and Travel Retail. Sales revenues grew by 10 percent and operating margin improved.

For the full year Swedish Match shipment volumes in the US declined by 2 percent compared to the prior year. Retail sales volumes of Swedish Match brands, as measured by Nielsen, for the year to date period through December 25, increased by 1.9 percent compared to the same period of the previous year. The total market growth in the same period was 9.8 percent according to Nielsen. Sales revenues in the US for the full year were up 3 percent in local currency versus prior year as improved average prices offset the decline in shipment volumes. Operating profit declined primarily as a result of marketing investments and higher raw material prices.

For the year, sales for the total product group increased to 4,522 MSEK (4,250) and operating profit increased to 2,080 MSEK (1,916). Operating margin was 46.0 percent (45.1).

Other tobacco products

With the contribution of the US premium and European cigar businesses to the new STG company, 49 percent owned by Swedish Match, the US business for mass market cigars and chewing tobacco have been combined into a new reporting segment: Other tobacco products. Swedish Match is a major player in the US mass market cigar market, with such well known brands as White Owl, Garcia y Vega, and Game by Garcia y Vega. Swedish Match offers a full range of sizes, styles, and price points for US mass market cigars. Swedish Match is the leading producer of chewing tobacco in the US and the product is mainly sold in the southern states of the country. Well known brands include Red Man and Southern Pride. The market for chewing tobacco shows a declining trend.

The fourth quarter

During the fourth quarter, sales for Other tobacco products increased to 557 MSEK (456), and operating profit increased to 208 MSEK (136). In local currencies, sales in the fourth quarter increased by 26 percent compared to the same period of the previous year, and operating profit increased by 58 percent. Operating margin was 37.4 percent (29.9).

During the fourth quarter, US mass market cigar sales increased by 49 percent in local currency compared to the same period in the previous year, and volumes grew by 69 percent. The strong growth for US mass market cigars is attributable to the continued success of FoilFreshTM cigars, as well as the successful introduction of a new line of sweet cigars, first introduced towards the end of the second quarter during 2010. The operating margin for mass market cigars was higher than prior year level.

US chewing tobacco sales in the fourth quarter increased 4 percent in local currency, and 1 percent in SEK, as higher average prices more than offset modest volume declines. A price increase of 5 percent occurred in November. During the fourth quarter, there was some forward buying on promotions, which accounted for shipment volumes higher than normal trends would indicate. The operating margin was higher than prior year level.

Full year

For Other tobacco products, sales for the full year amounted to 2,440 MSEK (2,337), while operating profit was 942 MSEK (804). In local currency sales increased by 11 percent versus the previous year, while operating profit increased by 24 percent. For US mass market cigars, sales grew by 22 percent in local currency on 35 percent higher volumes as the product mix moved to one with substantially more smaller cigars than large cigars. Full year operating profit improved for US mass market cigars and was flat for chewing tobacco.

A restructuring charge of 10 MSEK relating to the closure of the production of the Piccanell chewing tobacco brand in Sweden in the second quarter 2010 is included in the operating profit, while a restructuring charge of 45 MSEK relating to US mass market cigars was included in the Q3 2009 result.

Lights

Swedish Match is the market leader in a number of markets for matches. The match brands are mostly local, with leading positions in their home countries. Larger brands include Solstickan, Fiat Lux, Swan, Tres Estrellas, Feudor, and Redheads. The Group's main brand for disposable lighters is Cricket. Swedish Match's largest market for lighters is Russia.

The fourth quarter

During the fourth quarter sales amounted to 379 MSEK (373). In local currencies, sales increased by 5 percent. Operating profit amounted to 87 MSEK (100). Operating margin was 23.0 percent (26.6).

Lighters experienced sales and operating profit growth in local currencies during the fourth quarter, primarily resulting from stronger overall shipment volumes versus the prior year. Matches sales and operating profit declined in the fourth quarter in local currencies on somewhat lower volumes as well as higher production costs.

Full year

Sales for the full year amounted to 1,429 MSEK (1,403), while operating profit amounted to 279 MSEK (312). Operating margin was 19.5 percent (22.2). For the full year, lighters experienced sales and operating profit growth, while matches experienced some declines in sales and operating profit on lower volumes.

Other operations

Other operations primarily include the distribution of tobacco products on the Swedish market, and corporate overhead costs.

The fourth quarter

Sales in Other operations for the fourth quarter amounted to 687 MSEK (690). Operating loss for Other operations was 26 MSEK (18).

Full year

Sales for the full year amounted to 2,831 MSEK (2,689). Operating loss for the full year was 142 MSEK (132). Transaction costs related to the combination of cigar and pipe tobacco activities with Scandinavian Tobacco Group are included in Other operations costs.

Scandinavian Tobacco Group

The Swedish Match 49 percent share of Scandinavian Tobacco Group's net loss after interests and tax amounted to 60 MSEK for both the fourth quarter and the full year. The share of net loss from Scandinavian Tobacco Group includes charges for restructuring, other transaction costs as well as IFRS acquisition adjustments amounting to 175 MSEK before tax. It should be noted that the share of net loss from Scandinavian Tobacco Group has no direct cash flow impact for Swedish Match. The cash flow impact for Swedish Match from the 49 percent ownership will result from future dividends from Scandinavian Tobacco Group. The size of future dividends will depend on the net result of Scandinavian Tobacco Group as well as its financial policy, stipulating a net debt/EBITA ratio of between two and three. The underlying performances of the businesses of Scandinavian Tobacco Group were somewhat mixed during the fourth quarter. The US long-filler premium cigar business was weak in the traditional brick and mortar channel, to a large extent due to inventory reductions at a major customer, while the Cigars International business (Internet, e-mail and catalogues) performed strongly which partly offset the declines in brick and mortar. For the European cigar business, Scandinavian Tobacco Group gained or maintained market share in most key markets, but suffered from a general market volume decline and mix shifts to lower priced cigars. For fine cut and pipe tobacco, the performance was stronger than prior year for branded products, but the volume manufactured for third parties declined. Excluding restructuring charges, transaction costs and IFRS acquisition adjustments, the operating profit of Scandinavian Tobacco Group in the fourth quarter was 206 MSEK.

On January 14, 2011, Scandinavian Tobacco Group announced its plans to acquire Lane Limited in the US (Lane) from Reynolds American, Inc. Lane produces pipe tobacco, fine-cut-tobacco, and little cigars. For more information, please refer to the Swedish Match press release from January 14.

Taxes

For the full year, the reported tax expense amounted to 649 MSEK (613), corresponding to a tax rate of 18.0 percent (20.6). The reported tax rate from continuing operations excluding one time items as well as profit and loss impact from associated companies and joint ventures was 22 percent (22).

Earnings per share

Basic earnings per share (EPS) for the fourth quarter amounted to 4.85 SEK (2.52), while diluted EPS was 4.83 SEK (2.51).

EPS (basic) for the full year was 13.12 SEK (9.67), while diluted EPS was 13.09 SEK (9.66). Including discontinued operations, basic EPS for the full year 2009 was 12.88 SEK, while diluted EPS was 12.87 SEK.

Proposed dividend per share

The Board of Directors proposes an increased dividend to 5.50 SEK (4.75), equivalent to 55 percent of the earnings per share for the year excluding larger one time items. The proposed dividend amounts to 1,181 MSEK (1,089) based on the 214.8 million shares outstanding at the end of the year.

Depreciation, amortization and write-downs

In the fourth quarter, total depreciation, amortization and write-downs amounted to 76 MSEK (97), of which depreciation and write-down on property, plant and equipment amounted to 62 MSEK (69) and amortization of intangible assets amounted to 13 MSEK (28). The fourth quarter of 2009 includes depreciation, amortization and writedowns related to businesses transferred to STG of 33 MSEK, of which depreciation and write-down on property, plant and equipment amounted to 17 MSEK and amortization of intangible assets amounted to 15 MSEK.

During the year, total depreciation, amortization and write-downs amounted to 288 MSEK (468), of which depreciation and write-down on property, plant and equipment amounted to 235 MSEK (350) and amortization of intangible assets amounted to 53 MSEK (118). Amortization of intangible assets mainly pertains to trademarks.

Including depreciation and amortization related to assets reported as held for sale during the period from January 15 up until October 1, 2010, total depreciation, amortization and write-downs for the full year 2010 would have amounted to 381 MSEK, of which depreciation and write-down on property, plant and equipment would have amounted to 286 MSEK and amortization of intangible assets would have amounted to 94 MSEK.

Financing and cash flow

Cash flow from operating activities for the year amounted to 2,616 MSEK compared with 2,911 MSEK for the same period previous year. The main reasons for the decline in cash flow from operations in 2010 compared to 2009 are higher taxes paid, a higher net finance cost, and that the businesses transferred to STG only are included for nine months in 2010.

Investments in property, plant and equipment during the year amounted to 311 MSEK (471). In the first quarter, 2010, the Group acquired 20 percent of the shares in Caribbean Cigar Holdings Group, S.A. (Caribbean Cigars) for 110 MSEK. The holding in Caribbean Cigars was subsequently transferred to STG on October 1.

Net finance cost for the year increased to 562 MSEK (443) of which 77 MSEK is an effect of the total realized value of discounted interest as a result from the repurchase of bond loans of 171 MEUR, maturing 2013, including matched interest rate derivatives.

The net finance cost for the year also includes bondholder consent fees related to the STG transaction of 21 MSEK paid during the second quarter 2010.

The net debt as per December 31, 2010 amounted to 7,650 MSEK compared to 7,188 MSEK at December 31, 2009.

In the year, Swedish Match paid dividends totaling 1,089 MSEK and repurchased shares, net, in the amount of 2,961 MSEK. During the year new bond loans of 4,242 MSEK were issued. Repayment of loans for the same period amounted to 2,961 MSEK including repurchase of 1,970 MSEK of bond loans with shorter maturities. As at December 31, 2010 Swedish Match had 9,885 MSEK of interest bearing debt excluding retirement benefit obligations. During 2011, 542 MSEK of this debt falls due for repayment. As of December 31, 2010, Swedish Match had 1,442 MSEK in unutilized committed credit lines.

Cash and cash equivalents amounted to 3,275 MSEK at the end of the period, compared with 2,530 MSEK at December 31, 2009.

Average number of employees

On October 1, 2010, 6,461 employees were transferred to STG. The average number of employees in the Group during the year, excluding employees transferred to STG, was 3,908 compared with 3,826 for the full year 2009. Including employees transferred to STG, the average number of employees during the year was 8,822 compared with 11,037 during the full year 2009.

Share structure

Swedish Match's Annual General Meeting decided on April 27, 2010 to authorize the Board of Directors to decide on the acquisition, on one or more occasions prior to the next Annual General Meeting, of a maximum of as many shares as may be acquired without the Company's holding at any time exceeding 10 percent of all shares in the Company. Based on this authorization, Swedish Match has during the fourth quarter repurchased 5,875,078 shares.

In accordance with the resolution at the Annual General Meeting, 20 million shares held in treasury have been cancelled. The total number of registered shares in the Company after the cancellation of shares is 231.0 million.

During the year, Swedish Match repurchased 17.0 million shares for 3,014 MSEK at an average price of 176.93 SEK, following authorizations from the Annual General Meetings held in 2009 and 2010. Total shares bought back by Swedish Match since the buyback program started have been repurchased at an average price of 93.46 SEK. During the year the Company sold 0.5 million treasury shares at an average price of 99.75 SEK as a result of option holders exercising options. As per December 31, 2010 Swedish Match held 16.2 million shares, corresponding to 7.01 percent of the total number of shares. The number of shares outstanding, net as per December 31, 2010, amounted to 214.8 million. During 2010, the Company has issued 713,670 call options to senior management and key employees for the stock option program for 2009. These call options can be exercised from March 2013 to February 2015. The exercise price is 197.45 SEK. As per December 31, 2010 the Company has call options outstanding corresponding to 5.5 million shares exercisable in gradual stages from 2011-2015.

In January 2011, a further 1.6 million shares have been repurchased for 313 MSEK at an average price of 195.99 SEK.

The Board will propose to the Annual General Meeting in May 2011 a renewed mandate to repurchase shares up to a total holding in treasury not exceeding 10 percent of the number of registered shares in the Company until next Annual General Meeting in 2012.

Other events

On October 4, 2010 Swedish Match announced that it had completed its transaction with Scandinavian Tobacco Group (STG) at the close of business on October 1. With this transaction, Swedish Match and STG have formed a new company. Swedish Match contributed all of its cigar business with the exception of US mass market cigars and the minority stake in the German cigar company Arnold André, and also contributed its remaining pipe tobacco and accessories businesses. STG transferred all of its tobacco business (cigars, pipe tobacco and fine cut tobacco) into the new company. The new company, named Scandinavian Tobacco Group, also distributes lighters and matches supplied by Swedish Match in relevant markets. Swedish Match holds 49 percent of the shares in the new company, with the remaining 51 percent of the shares held by the previous STG shareholders. Swedish Match is compensated

with 30 MEUR to account for the shareholding and the relative differences in enterprise values on a cash and debt free basis. The revaluation of the Swedish Match assets contributed to STG in the transaction resulted in a reported capital gain of 585 MSEK in the fourth quarter. The final purchase price and transaction adjustments are expected to be completed in the first half of 2011 and may result in an additional gain or loss. The new Scandinavian Tobacco Group has leading positions for US premium cigars, for European cigars, and strong positions in a number of other markets. For further information regarding this transaction, please refer to the press releases of April 26 and October 4, 2010 available on the Swedish Match website, www.swedishmatch.com.

In October 2010, and in accordance with the instructions adopted by the Annual General Meeting 2010, a Nominating Committee was appointed. In addition to Conny Karlsson (Chairman of the Board), Andy Brown (Cedar Rock Capital), Mads Eg Gensmann (Parvus Asset Management), William Lock (Morgan Stanley Investment Management), and Anders Oscarsson (AMF & AMF Funds) have been appointed members of the Nominating Committee.

On December 1, 2010, the pension obligations for salaried personnel and workers in Sweden which were funded by insurance policies with two company specific pension funds, PSF and PSA, were transferred to three insurance companies. As a result of this transaction, a settlement gain of 59 MSEK has been recognized in the fourth quarter of 2010. The settlement gain is the result of the difference in the obligations settled with the insurance companies and the present value of the pension obligations based on the actuarial assumptions net of the fair value of the plan assets as per the settlement date. In conjunction with the update of the pension obligations to current actuarial assumptions as per settlement date, an actuarial loss of 166 MSEK has been recognized in other comprehensive income in the fourth quarter of 2010. In accordance with IAS 19, the transferred pension obligations are treated as defined contribution plans after the transaction date of December 1, 2010.

Outlook

In 2011 Swedish Match will continue to invest for growth. During the year Swedish Match will increase its investments in Swedish snus in new markets, in the US, as well as in our joint venture with PMI for other geographies. We expect both the snus market in Scandinavia and the snuff market in the US to continue to grow versus prior year in volume terms.

In our US mass market cigar business we expect continued strong momentum, with increased sales and profits in local currency driven by innovative product introductions. The trend for US chewing tobacco of declining volumes is expected to continue.

The tax rate from continuing operations, excluding one time items, for 2010 was 22 percent and is expected to be at a similar level in 2011.

The Company maintains its long term financial strategy and dividend policy, and we remain committed to returning cash not needed in operations to shareholders.

Risk factors

Swedish Match faces intense competition in all of its markets and for each of its products and such competition may increase in the future. In order to be successful the Group must promote its brands successfully and anticipate and respond to new consumer trends. Restrictions on advertising and promotion may, however, make it more difficult to counteract loss of consumer loyalty. Competitors may develop and promote new products which could be successful, and could thereby have an adverse effect on Swedish Match results of operations.

Swedish Match has a substantial part of its production and sales in the US as well as in Brazil and EMU member countries. Consequently, changes in exchange rates of euro, Brazilian real and the US dollar in particular may adversely affect the Group's results of operations, cash flow, financial condition or relative price competitiveness in the future. Such effects may occur both in local currencies and when such local currencies are translated into Swedish currency for purposes of financial reporting.

Regulatory and fiscal changes related to tobacco and other taxes, as well as to the marketing, sale and consumption of tobacco products, in the countries where the Group is operating may have an adverse effect on Swedish Match results of operations.

For a further description of risk factors affecting Swedish Match, see the Report of the Board of Directors in the published Swedish Match annual report for 2009.

Swedish Match AB (publ)

Swedish Match AB (publ) is the Parent Company of the Swedish Match Group.

Sales in the Parent Company for the full year amounted to zero (2 MSEK). Profit before income tax amounted to 2,614 MSEK (4,742) and profit for the year amounted to 2,402 MSEK (4,578). The main sources of income for the Parent Company are dividends and Group contributions from subsidiaries. During the year the Parent Company received dividends amounting to 4,286 MSEK (4,235) and Group contributions amounting to 1,952 MSEK (1,771). An impairment loss on shares in subsidiaries of 2,757 MSEK (-) was recognized as a result of dividends paid from subsidiaries and a gain on sale of shares in subsidiaries amounting to 299 MSEK has been recognized in the income statement of 2010.

Part of the Group's treasury operations are included in the operations of the Parent Company and include the major part of the Group's external borrowings. Some of these loans have variable interest rates and a change of interest rates could impact the result of the Parent Company.

Capital expenditures on tangible fixed assets for the year amounted to 2 MSEK (-) and 42 MSEK (0) have been capitalized in intangible assets as an investment in software development on an ERP system for the Group.

The total cash flow for the year was zero (negative 2,702 MSEK) as the Parent Company no longer holds any cash and bank balances. During the year, new bond loans of 4,242 MSEK were issued. Repayment of loans for the same period amounted to 2,961 MSEK including repurchase of 1,970 MSEK of bond loans with shorter maturities. During the year the Parent Company made share repurchases of 3,014 MSEK (2,598) and sold 0.5 million (0.6) treasury shares for 53 MSEK (51). Dividends of 1,089 MSEK (1,024) have been paid during the period.

Forward-looking information

This report contains forward-looking information based on the current expectation of the Swedish Match Group's management. Although management deems that the expectations presented by such forward-looking information are reasonable, no guarantee can be given that these expectations will prove correct. Accordingly, the actual future outcome could vary considerably compared to what is stated in the forward-looking information, due to such factors as changed market conditions for Swedish Match's products and more general conditions regarding business cycles, market and competition, changes in legal requirements and other political measures, and fluctuation in exchange rates.

Additional information

This report has not been reviewed by the Company's auditors. The annual report for 2010 is expected to be distributed in early April. The Annual General Meeting will be held on May 2, 2011 in Stockholm, Sweden. The January-March 2011 report will be released on May 4, 2011.

Stockholm, February 23, 2011

Lars Dahlgren President and CEO

Key data

All key data, with the exception of share data, have been calculated reversing all
effects from reporting assets and liabilities as held for sale between January 15, 2010 and October 1, 2010 and excluding larger one time items.	Full year 2010	Full year 2009
Continuing operations Operating margin, %1)	25.2	24.1
Operating capital, MSEK	7,099	8,494
Return on operating capital, %1)	44.0	39.4
EBITDA, MSEK2)	3,813	3,885
EBITA, MSEK1)3)	3,527	3,535
Net debt, MSEK	7,650	7,188
Net debt/EBITA1)3)	2.2	2.0
Investments in property, plant and equipment, MSEK4)	311	471
EBITA interest cover1)	7.0	8.4
Continuing operations, excluding businesses transferred to STG and share of net loss in STG
EBITA, MSEK3)5)	3,209	2,951
Net debt/EBITA3)5)	2.4	2.4
Share data
Earnings per share, basic, SEK
From continuing operations Including discontinued operations	13.12 -	9.67 12.88
Earnings per share, diluted, SEK
From continuing operations	13.09	9.66
Including discontinued operations	-	12.87
Number of shares outstanding at end of period	214,797,106	231,300,000
Average number of shares outstanding, basic	225,331,835	244,259,880
Average number of shares outstanding, diluted	225,969,047	244,440,057

1) Includes restructuring charges of 73 MSEK in 2009.

2) Operating profit adjusted for depreciation, amortization and write-downs of tangible and intangible assets. Includes restructuring charges of 38 MSEK in 2009.

3) Operating profit adjusted for amortization and write-downs of intangible assets.

4) Including investments in forest plantations of 24 MSEK (22).

5) Includes restructuring charges of 45 MSEK in 2009.

Consolidated income statement in summary

MSEK			October - December Chg		Full year	Full year Chg
	Note	2010	2009	%	2010	2009	%
Continuing operations
Sales, including tobacco tax		5,471	6,409		25,062	25,483
Less tobacco tax		-2,671	-2,864		-11,456	-11,279
Sales		2,801	3,545	-21	13,606	14,204	-4
Cost of goods sold		-1,338	-1,835		-6,662	-7,114
Gross profit		1,463	1,710	-14	6,944	7,089	-2
Selling and administrative expenses		-621	-860		-3,356	-3,681
Share of profit/loss in associated companies and joint
ventures		-65	0		-62	10
Net gain from pension settlements		59	-		59	-
Capital gain from transfer of businesses to STG		585	-		585	-
Operating profit		1,421	850	67	4,169	3,417	22
Finance income		8	10		27	86
Finance costs		-207	-121		-590	-529
Net finance cost		-199	-111		-562	-443
Profit before income tax		1,221	739	65	3,607	2,974	21
Income tax expense		-148	-143		-649	-613
Profit for the period from continuing operations		1,074	595	80	2,958	2,361	25
Discontinued operations
Profit from discontinued operations, net after tax	2	-	-		-	785
Profit for the period		1,074	595	80	2,958	3,146	-6
Attributable to: Equity holders of the Parent		1,073	595		2,957	3,146
Non-controlling interests		0	0		1	1
Profit for the period		1,074	595	80	2,958	3,146	-6
Earnings per share, basic, SEK
From continuing operations		4.85	2.52		13.12	9.67
Including discontinued operations		-	-		-	12.88
Earnings per share, diluted, SEK
From continuing operations		4.83	2.51		13.09	9.66
Including discontinued operations		-	-		-	12.87

Consolidated statement of comprehensive income

MSEK	October-December		Full year	Full year
	2010	2009	2010	2009
Profit recognized in the income statement	1,074	595	2,958	3,146
Other comprehensive income
Translation differences related to foreign operations	-49	165	-504	-222
Translation differences included in profit and loss	285	2	278	163
Effective portion of changes in fair value of cash flow hedges	20	-24	58	41
Reclassification adjustments for gains/losses on cash flow hedges included
in profit and loss	-24	-	-24	25
Actuarial gains and losses attributable to pensions, including payroll tax	32	-48	-193	-115
Share of other comprehensive income in associated companies and joint
ventures	61	-	55	-
Income tax relating to components of other comprehensive income	-38	12	39	38
Other comprehensive income, net of tax	286	107	-291	-70
Total comprehensive income, net of tax	1,360	703	2,668	3,076
Attributable to:
Equity holders of the Parent	1,360	703	2,667	3,075
Non-controlling interests	0	0	1	1
Total comprehensive income, net of tax	1,360	703	2,668	3,076

Consolidated balance sheet in summary

MSEK	December 31, 2010	December 31, 2009
Intangible assets Property, plant and equipment Other non-current financial receivables1) Current operating assets Other current investments and current financial assets2) Cash and cash equivalents	1,027 2,097 5,453 2,886 1 3,275	3,792 2,525 2,193 5,286 10 2,530
Total assets	14,739	16,337
Equity attributable to equity holders of the Parent	-484	899
Non-controlling interests	2	4
Total equity	-482	903
Non-current provisions	1,050	1,301
Non-current loans	9,209	8,252
Other non-current financial liabilities3)	1,478	1,440
Current provisions	98	125
Current loans	525	1,002
Other current liabilities4)	2,861	3,313
Total equity and liabilities	14,739	16,337

1) Includes shares in STG of 3,979 MSEK (-), pension assets of 117 MSEK (150) and derivative financial instruments of 88 MSEK (670) used to hedge the Parent Company's bond loans denominated in euro.

2) Includes current financial derivatives of 0 MSEK (9) used to hedge the Parent Company's bond loans denominated in euro. 3) Includes pension liabilities of 1,158 MSEK (1,291) and derivative financial instruments of 222 MSEK (3) used to hedge the Parent Company's bond loans denominated in euro.

4) Includes current financial derivatives of 18 MSEK (-) used to hedge the Parent Company's bond loans denominated in euro.

Consolidated cash flow statement in summary

MSEK		January – December
	Note	2010	2009
Operating activities
Profit before income taxes		3,607	2,974
Adjustments for non-cash items and other		-297	511
Income tax paid		-733	-507
Cash flow from operating activities before changes in working capital		2,576	2,978
Cash flow from changes in working capital		40	-67
Net cash from operating activities		2,616	2,911
Investing activities Purchase of property, plant and equipment		-311	-471
Proceeds from sale of property, plant and equipment		6	3
Purchase of intangible assets		-51	-16
Net proceeds from businesses transferred to STG	3	1,439	-
1) Acquisition of subsidiaries, net of cash acquired		-	-39
Investments in associated companies and joint ventures2)		-123	-23
Proceeds from sale of subsidiaries, net of cash disposed of3)		-	1,577
Changes in financial receivables etc.		-1	12
Net cash used in investing activities		959	1,043
Financing activities
Changes in loans		1,281	-1,020
Dividends paid to equity holders of the Parent		-1,089	-1,024
Repurchase of own shares		-3,014	-2,598
Stock options exercised		53	51
Other		122	-115
Net cash used in financing activities		-2,646	-4,707
Net increase/decrease in cash and cash equivalents		928	-753
Cash flow from discontinued operations
Net cash from operating activities		-	219
Net cash used in investing activities		-	-6
Net cash used in financing activities		-	-51
Net increase in cash and cash equivalents		-	162
Total net increase/decrease in cash and cash equivalents		928	-591
Cash and cash equivalents at the beginning of the period		2,530	3,178
Effect of exchange rate fluctuations on cash and cash equivalents		-183	-58
Cash and cash equivalents at the end of the period		3,275	2,530

1) Acquisition in 2009 pertains to Rocker Production AB acquired from Philip Morris International of 31 MSEK and final payment for the acquisition of Havana Honeys' assets of 8 MSEK.

2) Investments in 2010 pertain to acquisition of 20 percent of the shares in Caribbean Cigar Holdings Group, S.A. in an amount of 110 MSEK and investment of 12 MSEK in Swedish Match and Philip Morris International's joint venture company, SMPM International. Investments in 2009 pertain to investment of 23 MSEK in SMPM International.

3) The cash flows from sale of subsidiaries during 2009 pertain to the disposal of Swedish Match's South African operations of 1,568 MSEK and additional payment received of 8 MSEK relating to the disposal of Swedish Match UK Ltd. For further information see Note 2 – Discontinued operations in this report and Note 5 - Discontinued operations in the annual report for 2009.

Change in shareholders' equity

MSEK	Equity attributable	Non
	to holders of the Parent	controlling interests	Total equity
Equity at January 1, 2009	1,377	4	1,381
Total comprehensive income	3,075	1	3,076
Dividend	-1,024	0	-1,024
Repurchase of own shares	-2,598	-	-2,598
Stock options exercised	51	-	51
Cancellation of shares	-6	-	-6
Bonus issue	6	-	6
Share-based payments, IFRS 2	18	-	18
Equity at December 31, 2009	899	4	903
Equity at January 1, 2010	899	4	903
Total comprehensive income	2,667	1	2,668
Transfer of non-controlling interest to STG of
partly owned subsidiary	-	-2	-2
Dividend	-1,089	0	-1,089
Repurchase of own shares	-3,014	-	-3,014
Stock options exercised	53	-	53
Cancellation of shares	-31	-	-31
Bonus issue	31	-	31
Equity at December 31, 2010	-484	2	-482

Parent Company income statement in summary

MSEK	Full year
	2010	2009
Sales	-	2
Gross profit	-	2
Selling and administrative expenses	-301	-251
Operating loss	-301	-249
Result from participation in Group companies	3,780	6,006
Result from participation in joint venture	-20	-9
Net finance cost	-845	-1,008
Profit after financial items	2,614	4,740
Appropriations	0	2
Profit before income tax	2,614	4,742
Income tax	-212	-164
Profit for the year	2,402	4,578

Parent Company statement of comprehensive income

MSEK	Full year
	2010	2009
Profit for the year	2,402	4,578
Other comprehensive income
Effective portion of changes in fair value of cash flow hedges	58	41
Reclassification adjustment for gains/losses on cash flow hedges in
profit and loss	-24	25
Income tax relating to components of other comprehensive income	-9	-17
Other comprehensive income, net of tax	25	48
Total comprehensive income, net of tax	2,427	4,626

Parent Company balance sheet in summary

MSEK	Dec 31, 2010	Dec 31, 2009
Intangible and tangible fixed assets	45	2
Non-current financial assets	50,667	51,190
Current assets	2,353	1,920
Total assets	53,064	53,112
Equity	21,578	23,229
Untaxed reserves	1	0
Provisions	114	25
Non-current liabilities	27,606	26,462
Current liabilities	3,765	3,395
Total liabilities	31,485	29,882
Total equity and liabilities	53,064	53,112

Note 1 - Accounting principles

This report for the Group is prepared in accordance with the Accounting Standard IAS 34 Interim Financial Reporting and applicable rules in the Annual Accounts Act. The report for the Parent Company is prepared in accordance with the Annual Accounts Act and the Securities Markets Act which is in accordance with the rules of RFR 2.3 Accounting for Legal Entities issued by the Swedish Financial Reporting Board.

New accounting standards, changes of standards and interpretations applicable from January 1, 2010 as detailed below have been applied in this report:

The revised IFRS 3 Business Combinations entails changes to the reporting of acquisitions regarding, for example, accounting for transaction costs, any contingent consideration and step acquisitions. The Group recognizes transaction costs relating to business combinations as an expense when incurred.

Amendments to IAS 27 Consolidated and Separate Financial Statements bring about changes regarding, for example, how to report changes in ownership in cases where the Parent Company retains or loses control of the owned entity. As a consequence of implementing the amendments to IAS 27 the term "minority interest" has changed and is now called "noncontrolling interests" in the presentation of the Group's consolidated financial statements.

The following amendments and interpretations, applicable as of January 1, 2010 have not had a significant impact on the financial result or position of the Group: amendments to IAS 39 Financial Instruments concerning Recognition and Measurement of Eligible Hedged Items, IFRIC 12 Service Concession Arrangements, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 16 Hedges of Net Investments in a Foreign Operation, IFRIC 17 Distribution of Non-cash Assets to Owners, and IFRIC 18 Transfers of Assets from Customers.

In all other respects the accounting principles and basis of calculations are the same as in the 2009 annual report.

Note 2 - Discontinued operations

In the third quarter of 2009, Swedish Match divested the Swedish Match South African operations. The South African operations primarily manufactured and sold pipe tobacco and nasal snuff and accounted for approximately 70 percent of the sales of the former pipe tobacco and accessories product area. As a consequence of this divestiture, the South African operations were restated as discontinued operations in the Group's accounts. Income and expenses of the discontinued operations for the full year 2009 are specified below.

Analysis of the result from discontinued operations

MSEK	January – December 2009
Sales	489
Expenses	-319
Income taxes	-13
Capital gain from sale of discontinued operations	628
Profit from discontinued operations, net after tax	785

Note 3 - STG transaction

Assets and liabilities transferred to STG

MSEK	2010
Non-current financial assets	9
Other non-current assets	3,148
Current operating assets	2,335
Cash and cash equivalents	103
Inter-company financial receivables	591
Other inter-company receivables	22
Total assets transferred	6,207
Non-current liabilities	406
Current liabilities	404
Inter-company financial liabilities	2,381
Other inter-company liabilities	1,442
Total liabilities transferred	4,634
Transferred assets, net	1,573

Analysis of cash flow effect from transaction with STG

MSEK	2010
Repayment of loans, received from STG1)	1,560
Less cash and cash equivalents in transferred operations	-103
Effect on cash and cash equivalents from net assets transferred	1,457
Transaction costs relating to 49% investment in STG	-19
Effect on cash and cash equivalents from net investment	-19
Net cash effect from transaction with STG	1,439

1) On October 28, 2010, STG made a repayment of loans of 170 MEUR (1,560 MSEK) to Swedish Match. Additional loans amounting to 28 MEUR (257 MSEK) are still outstanding and will be repaid during the first quarter of 2011. The loans were provided by Swedish Match to STG in connection with the formation of the new company and include the 30 MEUR cash consideration as compensation for the relative differences in enterprise values of the businesses contributed from Swedish Match and the former Scandinavian Tobacco Group. Final purchase price adjustments are expected to be determined and settled in the first half of 2011.

Quarterly data

MSEK	Q4/10	Q3/10	Q2/10	Q1/10	Q4/09	Q3/09	Q2/09	Q1/09	Q4/08
Continuing operations
Sales, including tobacco tax	5,471	7,044	6,676	5,870	6,409	6,737	6,648	5,690	6,141
Less tobacco tax	-2,671	-3,221	-2,976	-2,588	-2,864	-3,130	-2,982	-2,303	-2,661
Sales	2,801	3,823	3,701	3,282	3,545	3,606	3,666	3,387	3,480
Cost of goods sold	-1,338	-1,896	-1,805	-1,624	-1,835	-1,843	-1,812	-1,624	-1,747
Gross profit	1,463	1,927	1,896	1,658	1,710	1,764	1,854	1,762	1,733
Selling and administrative expenses Share of profit/loss in associated	-621	-878	-955	-902	-860	-892	-958	-970	-930
companies and joint ventures	-65	1	4	-2	0	3	4	2	4
	777	1,049	945	755	850	874	899	794	807
Larger one time items Net gain from pension settlements Capital gain from transfer of	59	-	-	-	-	-	-	-	-
businesses to STG Gain on sale of subsidiary and	585	-	-	-	-	-	-	-	-
related assets	-	-	-	-	-	-	-	-	73
Operating profit	1,421	1,049	945	755	850	874	899	794	880
Finance income	8	6	5	8	10	35	14	27	41
Finance costs	-207	-134	-134	-115	-121	-152	-122	-135	-137
Net finance cost	-199	-128	-129	-106	-111	-117	-108	-108	-97
Profit before income tax	1,221	921	816	649	739	757	791	686	784
Income tax expense	-148	-192	-180	-130	-143	-142	-168	-159	-97
Profit for the period from
continuing operations	1,074	729	637	519	595	615	624	527	687
Discontinued operations Profit from discontinued operations,
net after tax	-	-	-	-	-	705	41	40	41
Profit for the period	1,074	729	637	519	595	1,319	664	567	728
Attributable to:
Equity holders of the Parent	1,073	729	636	519	595	1,319	664	567	728
Non-controlling interests	0	0	0	0	0	0	0	0	0
Profit for the period	1,074	729	637	519	595	1,319	664	567	728

Sales by product area

MSEK	Q4/10	Q3/10	Q2/10	Q1/10	Q4/09	Q3/09	Q2/09	Q1/09	Q4/08
Snus and snuff	1,178	1,174	1,116	1,054	1,101	1,093	1,087	969	1,031
Other tobacco products	557	631	664	588	456	571	617	694	500
Lights	379	352	347	351	373	341	337	352	370
Other operations	687	806	722	615	690	742	711	546	696
Comparable sales	2,801	2,964	2,849	2,608	2,620	2,747	2,752	2,560	2,597
Businesses transferred to STG1)	-	859	852	674	925	859	914	827	883
Total	2,801	3,823	3,701	3,282	3,545	3,606	3,666	3,387	3,480

1) Net of inter-company sales eliminations.

Operating profit by product area

MSEK	Q4/10	Q3/10	Q2/10	Q1/10	Q4/09	Q3/09	Q2/09	Q1/09	Q4/08
Snus and snuff	567	592	487	434	523	534	463	397	465
Other tobacco products	208	259	270	204	136	169	252	246	151
Lights	87	58	68	66	100	72	69	71	77
Other operations	-26	-35	-32	-48	-18	-25	-39	-49	-38
Comparable operating profit	836	874	793	655	740	750	745	665	654
Businesses transferred to STG	-	143	118	73	109	124	155	130	153
Share of net loss in STG	-60	-	-	-	-	-	-	-	-
Subtotal	777	1,017	911	728	850	874	899	794	807
Net gain from pension settlements Capital gain from transfer of	59	-	-	-	-	-	-	-	-
businesses to STG Reversal of depreciation and amortizations relating to assets	585	-	-	-	-	-	-	-	-
held for sale Gain on sale of subsidiary and	-	32	34	27	-	-	-	-	-
related assets	-	-	-	-	-	-	-	-	73
Total larger one time items	644	32	34	27	-	-	-	-	73
Total	1,421	1,049	945	755	850	874	899	794	880

Operating margin by product area1)

Percent	Q4/10	Q3/10	Q2/10	Q1/10	Q4/09	Q3/09	Q2/09	Q1/09	Q4/08
Snus and snuff Other tobacco products1)	48.1	50.4	43.6	41.2	47.5	48.8	42.6	40.9	45.1
Lights	37.4 23.0	41.0 16.3	40.7 19.6	34.7 18.7	29.9 26.6	29.6 21.3	40.9 20.4	35.5 20.2	30.2 20.7
Comparable operating margin2)	29.9	29.5	27.8	25.1	28.3	27.3	27.1	26.0	25.2
Group, including businesses transferred to STG and share of
net loss in STG	27.7	26.6	24.6	22.2	24.0	24.2	24.5	23.4	23.2
1) Excluding larger one time items, but including restructuring charges of 45 MSEK in the third quarter 2009.

2) Excluding businesses transferred to STG and share of net loss in STG.

For further information, please contact:

____________

____________

____________

Lars Dahlgren, President and Chief Executive Officer Office +46 8 658 0441, Mobile +46 70 958 0441

Joakim Tilly, Chief Financial Officer Office +46 8 658 0213, Mobile +46 76 860 9597

Emmett Harrison, Senior Vice President Corporate Communications and Sustainability Office +46 8 658 0173, Mobile +46 70 938 0173

Richard Flaherty, President US Sales Division, US Investor Relations contact Office +1 804 302 1774, Mobile +1 804 400 1774

The character of the information in this report is such that it shall be disclosed by Swedish Match AB (publ) in accordance with the Swedish Securities Markets Act. The information was disclosed to the media on February 23, 2011 at 08.00 a.m. (CET).

Swedish Match AB (publ), Box 7179, SE-103 88 Stockholm Visiting address: Västra Trädgårdsgatan 15, Telephone: +46 8 658 02 00 Corporate Identity Number: 556015-0756 www.swedishmatch.com