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Interim Report for Duni AB (publ) 1 January – 31 March 2013

Regulatory press release 19 Apr 2013 08:00
Underlying positive sales growth

1 January – 31 March 2013

  • Net sales amounted to SEK 852 m (856). Adjusted for exchange rate changes, net sales increased by 2.5%.
  • Increase in sales adjusted for currency exchange rates and invoicing days.
  • Strong Swedish krona has declined operating income.
  • Earnings per share, after dilution, amounted to SEK 0.77 (0.78).

Key financials

3 months
3 months
12 months
12 months
SEK m201320122012/20132012
Net sales8528563 6653 669
Operating income1) 2)5560336342
Operating margin1) 2)6.4%7.0%9.2%9.3%
Income after financial items 2)4950202204
Net income 2)3637125126

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

“Taking into account the fact that the opening quarter of the year included three fewer invoicing days and was characterized by a stronger Swedish krona, the quarter demonstrates underlying growth with both income and sales reaching satisfactory levels. Measured at fixed exchange rates, underlying sales increased by more than 2% compared with last year. Sales in the quarter are reported at SEK 852 m (856); at fixed exchange rates, sales increased to SEK 877 m (856). Operating income was SEK 55 m (60), but was affected by both currency exchange rates and fewer invoicing days.

Professional reports sales for the quarter of SEK 586 m (626). At fixed exchange rates, sales declined by some 3% compared with last year. This was due to the fact that the first quarter of the year includes fewer delivery days and invoicing days than the corresponding quarter of 2012. Meal Service is growing as a percentage of Professional’s business and it is pleasing to note that our position is strengthening within the increasingly important take-away market. Table Top sales demonstrate a degree of growth compared with last year when measured at fixed exchange rates and comparable invoicing days. The result was on the low side of our expectations, due primarily to the weaker demand in southern Europe. Evolin® has now been on the market for a year and, even if growth is proceeding more slowly than planned, we envision that over time Evolin will come to play an increasingly important role in our premium range. During the rollout year we have made extensive investments in sales and we can see that different customer segments have reacted to Evolin in different ways. Among other things, one conclusion is that the catering segment is the channel which has primarily understood the advantages provided by Evolin. At the same time, it is taking longer and requiring more sales resources to convince a conservative linen market. During the year, we launched several colors and the next stage is to evaluate new tablecovering formats with the aim of achieving a higher penetration in prioritized segments.

Consumer reports a strong quarter in terms of sales, driven by the major customer contracts which were won in 2012. Sales amounted to SEK 140 m (127) and, measured at fixed exchange rates, sales increased by 15.0% against the previous year. However, the result was negatively impacted by high market and sales costs and it is important that we incrementally increase efficiency in the cost structure in the major customer contracts. During the quarter, two external design cooperation projects were launched under the Designs for Duni™ concept, a concept which is unique for Duni and the industry as a whole. In Scandinavia, a product series was launched created by the Finnish design company Vallila and, in the rest of Europe, a corresponding cooperation project has been launched with the company behind the Melli Mello brand. These cooperation projects are unique and of strategic importance for Duni as a brand and a partner to the retail trade. Since the distribution is relatively selective, the activity should be regarded first and foremost as aimed at stimulating interest in Duni as an innovative player, and not as a volume-driving activity.

In February, the Board of Directors decided to leave the hygiene products market. The unit affected by the decision will continue to produce until April 2014. The phasing-out model resulted in a higher rate of production and more efficient cost structure in the quarter, which led to an improvement in the results in the Tissue business area. Sales revenues for the quarter amounted to SEK 126 m (104), with an operating margin of 3.2% (0.2%).

All in all, it is pleasing that underlying growth in the quarter increased compared with the previous quarter, a trend we will take care of and develop during the coming quarters,” says Thomas Gustafsson, President and CEO, Duni.