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Interim Report for Duni AB (publ) 1 January – 30 June 2013

Regulatory press release 12 Jul 2013 08:00
Strong second-quarter in an economy which continues to be a challenge

1 April – 30 June 2013

  • Net sales amounted to SEK 914 m (934). Adjusted for exchange rate changes, net sales increased by 1.0%.
  • Earnings per share, after dilution, amounted to SEK 1.41 (1.19).
  • Seasonally, a historically strong operating margin of 10.0%.
  • On 17 June, Duni entered into an agreement for the acquisition of the assets in Song Seng Associates, the leading supplier of single-use packaging for food and beverages in Singapore with a growing export market in Southeast Asia.

1 January – 30 June 2013

  • Net sales amounted to SEK 1,766 m (1,790). Adjusted for exchange rate changes, net sales increased by 1.7%.
  • Earnings per share, after dilution, amounted to SEK 2.18 (1.97).
  • Stability despite a somewhat declining European market.

Key financials

SEK   m3 months
3 months
April -
6 months
January –June
6 months
January –June
12 months
July – June
12 months
January –December
Net   sales9149341 7661 7903 6453 669
Operating   income1) 2)9190146150338342
Operating   margin1) 2)10.0%9.6%8.3%8.4%9.3%9,3%
Income   after financial items 2)8877137128213204
Net   income2)665610393136126

1)  Underlying operating income; for link to reported operating income, see the section entitled "Non-recurring items".
2) Comparison figures for 2012 recalculated in accordance with IAS19R; see further in Note 2.

CEO’s comments

“The growth from the first quarter of the year was maintained into the second quarter and, despite low growth figures, it is pleasing that the pace exceeds the market in general. Sales during the second quarter amounted to SEK 914 m (934) which, measured at fixed exchange rates corresponds to an increase of 1.0% compared with last year. Operating income before non-recurring items was SEK 91 m (90) and the operating margin was 10.0% which is strong, for the second quarter, even from a historical perspective. The results were particularly good within Meal Service, which is a part of Professional, and in our markets outside of Europe. The growth trend is stable in markets such as Russia and the Middle East, and the export markets grew during the quarter by 28%. Within Europe, demand continues to be weak and industry statistics generally show either demand on par with last year or a decrease of a few percentage points. Within the segments, we see continued growth in easily accessible concepts such as Fast Food and take-away which, on most markets, occurs at the expense of growth via traditional restaurants.

During the quarter, we decided to carry out organizational changes within each category. In order to increase the degree of specialization and strengthen the focus on prioritized customer segments, the sales organization is being integrated into each business area. The change, which is a natural step in the reorganization which was commenced during 2012, is creating the conditions for more efficient use of resources and improved integration between marketing and sales activities. The organizational change is being implemented in stages and it is anticipated that it will be fully implemented at the end of the first quarter of 2014.

As a part of our increased focus on growth markets, the acquisition of Song Seng in Singapore was announced during the quarter. Song Seng has successfully conducted the purchase and sale of single-use products on the rapidly growing take-away market in Southeast Asia since 1984. In recent years, the company has increased its market presence significantly and invested in a structure which renders possible future growth. The acquisition creates a platform for the immediate launch of Duni's products while the business itself is both profitable and growing strongly.

Professional reports at fixed exchange rates a marginal increase in sales during the quarter with strong earnings. Good cost controls and positive effects from purchasing, among other things, generated an operating margin for the quarter of 13.8% (12.9%). Developments in southern Europe continue to be a challenge while our primary markets are developing on par with last year. Customer-oriented work is at a high level but, as a consequence of poor demand, competition is increasing. The premium range is developing better than the range as a whole and efforts in Evolin® and other premium products continues. Sales for the quarter amounted to SEK 699 m (689) which, measured at fixed exchange rates, corresponds to a sales increase of 0.9%. Net income for the period comes in at SEK 94 m (90).

Due to lower level of promotions, Consumer sales during the quarter were lower than last year. Net sales amounted to SEK 119 m (126) which, measured at fixed exchange rates, corresponds to a decrease in sales of 1.6%. The business climate in the Consumer business area is challenging and, despite the fact that several new customer contracts were implemented, sales came in at below last year's level. Viewed over two quarters and measured at fixed exchange rates, the business area grew by 6.7% but further measures must be taken in order to achieve stability. Operating income amounted to SEK -5 m (0) and was primarily affected by lower gross profits. The business operations within the Tissue business area follow the plan established in conjunction with the decision to leave the hygiene products market.

All in all, and given the market situation, we are satisfied with the income for the quarter. It is pleasing that underlying growth persists and we have segments and markets reporting high growth. In addition, two important activities have been implemented with the acquisition of Song Seng and the change in the sales organization, initiatives which create opportunities for both enhanced profitability and faster growth,” says Thomas Gustafsson, President and CEO, Duni.