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Interim Report for Duni AB (publ) 1 January – 30 September 2014

Regulatory press release 22 Oct 2014 08:00
Growth and strong operating margin
1 July – 30 September 2014
  • Net sales amounted to SEK 1 100 m (936). Adjusted for exchange rate changes, net sales increased by 12.1 %.
  • Organic growth in the core business, currency-adjusted net sales (excluding acquisitions and the hygiene products business) increase by 5.5%.
  • Earnings per share, after dilution amounted to SEK 1.85 (1.25).
  • Improved operating margin within the three dominant business areas.
  • Strengthened position on most markets.
  • Decision to concentrate Rexcell Tissue & Airlaid AB’s production in a single locality.
1 January – 30 September 2014
  • Net sales amounted to SEK 3 037 m (2 701). Adjusted for exchange rate changes, net sales increased by 8.2 %
  • Earnings per share, after dilution amounted to SEK 4.48 (3.43).
  • Acquisition of Paper+Design, which is reported within the Consumer business area as from the middle of June.
Key financials
SEK m3 months
July-       September
3 months
July-  September
9 months
9 months
January-  September
12 months  October-September
12 months
Net sales1 1009363 0372 7014 1393 803
Operating   income1) 13288306234458385
Operating   margin1) 12.0 %9.4 %10.1 %8.6 %11.1 %10.1 %
Income  after financial items 11775285212423350
Net income   8759211161317267

1)       For bridge to EBIT, see the section entitled “Operating income - Non-recurring items”.


CEO’s comments

“Duni's third quarter is historically strong and includes improvements in all major business areas. Growth – which reached 18% in the quarter – is being driven primarily by the acquisition of Paper+Design, volume increases in the core business, and positive currency effects. Excluding currency and structural effects, the organic growth is in line with our financial target of 5%, and with a good end of the year we see that the growth target can be achieved. Net invoicing amounts to SEK 1,100 m (936) and the operating income increased to SEK 132 m (88). The net debt is SEK 1,061 m (673).

In addition to volume increases, efficiency improvements are also contributing to improved operating income. The operating margin for the quarter increased to 12.0% (9.4%), driven by Paper+Design and by improvements within the production and logistics units as well as within our business areas. We have a lower percentage of indirect costs compared with the preceding quarter, as well as more efficient logistics flows. Our assessment is that the disruptions reported within logistics in the preceding quarterly report will be entirely made up for during the final quarter of 2014.

Since hygiene product production will terminate after the first quarter 2015, a decision has been taken to concentrate all remaining production in Dalsland at the plant in Skåpafors. Accordingly, the operations in Dals Långed will be shut down during the autumn of 2015. The concentration will lead to efficiency improvements and an increase in capacity within important product segments, and is expected to be fully implemented during the autumn of 2015.

With the exception of Materials & Services, all business areas grew in the quarter; our largest business area, Table Top, increased sales by 9.7% compared with the same quarter last year. The increase in sales is due to positive currency effects and also increased market shares and improved efficiency in sales operation. During the year, several successful products and concepts have been launched and Table Top is continuing to grow despite a continued cautious market.

The Meal Service business area, which is operating in a more favorable market climate, generated high growth figures also in the third quarter. Net revenues increased by 10.7% and amounted to SEK 140 m (126). Growth had a leverage effect on income and the operating margin increased to 5.4% (2.2%). The improvement is being driven by the business area’s consistent focus on more environmentally adapted segments and products with unique functionality.

Paper+Design is now integrated in Consumer and the acquisition generated most of the business area’s increase in earnings and sales in the quarter. The takeover has been carried out without operational disruptions, and both sales and income are in line with the plan adopted during the acquisition process. Paper+Design has a somewhat earlier sales cycle than Duni, entailing that the third quarter is normally stronger than other quarters. Consumer achieved net sales of SEK 249 m (123) and operating income of SEK 22 m (-4).

During the quarter, the New Markets business area experienced a lower rate of growth than other business areas. Net sales amounted to SEK 50 m (47), with an operating income of SEK 1 m (2). The business area was negatively affected primarily by developments in Russia, where an increasingly weak Ruble is leading to a decrease in demand for imported products. Growth on other export markets has been positive, in line with previous quarters.

Within Materials & Services, we are following the phase-out plan regarding the production of hygiene articles which was adopted at the beginning of the year. Sales for the quarter amounted to SEK 116 m (142) and operating income fell to SEK 4 m (9).

The third quarter results are historically strong and it is pleasing that both structural effects and improvements in the core business are contributing to growth and an increase in operating income,” says Thomas Gustafsson, President and CEO, Duni.

Additional information is provided by:

Thomas Gustafsson, President and CEO, +40 10 62 00
Mats Lindroth, CFO, +46 40 10 62 00
Tina Andersson, Corporate Marketing & Communication Director, +46 734 19 62 24