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Interim Report for Duni AB (publ) 1 January – 30 June 2008

Regulatory press release 30 Jul 2008 08:00
Improved operating margin from 8.0% to 8.9% and continued increase in sales

1 January – 30 June 2008
• Net sales increased by 4.6% to SEK 1,981 m (1,894).
• Income after tax for the continuing operations amounted to SEK 102 m (3).
• Earnings per share for the continuing operations amounted, after dilution, to SEK 2.17 (0.06).
• Operating income increased by 16.6% to SEK 176 m (151).
• Operating margin increased to 8.9% from 8.0%.
• Income after financial items amounted to SEK 140 m (31).
• Continued stable growth within the Professional business area with operating margin rising from 11.0% to 11.8%.

1 April – 30 June 2008
• Net sales increased by 4.2% to SEK 1,012 m (971).
• Income after tax for the continuing operations amounted to SEK 57 m (34).
• Earnings per share for the continuing operations amounted, after dilution, to SEK 1.21 (0.72).
• Operating income increased by 23.3 % to SEK 90 m (73).

CEO's comments
"During the second quarter of the year, first and foremost our largest business area, Professional, has continued to develop positively with a sales increase of 6.2%. For the Group as a whole, sales increased by 4.2%, primarily driven by an improved mix combined with implemented price increases.

Sales growth was strongest in Southern and Eastern Europe and in Benelux. Continued good development could be noted in Germany for both the Professional and Retail business areas. Also in the Nordic region both business areas reported increased sales and improved profitability, primarily due to a better product mix and price increases. Within the Professional business area, we also benefit from strong growth within the take-away range, where we have noted continued strong growth figures.

Sales for the Retail and Tissue business areas were relatively unchanged during the second quarter compared with last year. As regards Retail, this is in line with what has been communicated previously, i.e. that profitability is prioritised over increased sales. For Tissue, it concerns a small number of large customers where deliveries can vary somewhat between quarters. In addition, we benefited from some extra volumes to certain destinations at the beginning of the year, with final deliveries having taken place in May.

Overall, there has been strong income growth during the quarter, to the largest extent within the Professional business area. The gross margin continued to strengthen, mainly as a consequence of increased sales of premium products such as Duniletto® and Elegance, and we succeeded in compensating for increased raw materials cost by carrying out our own price increases.

Looking forward, it can be noted that the macro economic trend has taken a more negative direction than was the case earlier in the year. For example, in the UK and Spain there are signs of an economic slowdown; however, Duni is not so exposed to these markets and is continuing to gain market shares there. The overall picture for Duni shows a generally healthy demand within our market segments, even if the uncertainty regarding the market development during fall has increased due to the general economic outlook. As the market leader and with the effective operating platform put in place we feel well equipped in the event decreased disposable income should lead to a weakening on our markets", says Duni's CEO, Fredrik von Oelreich.