Pace of rationalization measures increases due to decline in profits

8/10/1998 7:00 AM EST

Swedish Match's sales during the first six months of 1998 rose 5 percent to
SEK 3,814M, compared with SEK 3,626 M during the corresponding period in 1997.
Operating profit declined to SEK 650 M, down from SEK 741 M. An item affecting
comparability amounting to SEK 48 M was charged against operating profit for
the period.

During the first six months of 1998, the Snuff Division continued to develop
strongly, says Göran Lindén, President and CEO of Swedish Match. The Cigarette
Division's sales and operating profit declined due to lower volumes in the
Swedish Market as a result of last year's 63-percent tax increase.

As a result of changes in patterns of tobacco consumption worldwide, the
tobacco industry is facing a restructuring phase. Göran Lindén comments on
recent developments:

In the Western world, consumption of snuff and cigars is increasing, while
consumption of cigarettes is declining. In other parts of the world, however,
cigarette consumption is increasing. In due course, these developments can be
expected to lead to a consolidation and restructuring of production resources
within the industry. Swedish Match intends to play an active role in this
restructuring process.

Accordingly, a decision has been made to intensify efforts aimed at enhancing
the efficiency of Swedish Match's production facilities. During the first six
months of the current year, costs of SEK 48 million were posted for moving

production from the plant in Geraardsbergen in Belgium to Szeged, Hungary. In
addition to the rationalization measures that have already been announced

further decisions of this kind will be made during the second half of the
year. The additional costs involved are estimated to amount to approximately
SEK 100 million. The rationalization measures are expected to have a positive

impact on earnings as early as 1999".


For further comments, please contact:

Göran Lindén, President and Office: +46 8

CEO 658 01 75
Sven Hindrikes, Senior Vice Office: +46 8

President and CFO 658 02 82
Mobile: +46 70
567 41 76

Bo Aulin, Senior Vice Office: +46 8
President, Corporate Affairs 658 03 64

Mobile: +46 70
558 03 64
Boel Sundvall, Vice Office: +46 8

President, Investor Relations 658 01 73
Mobil: +46 70

651 39 09