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Interim report for Duni AB (publ) 1 January – 30 September 2008

Regulatory press release 29 Oct 2008 08:00
Continued improvement in the underlying profitability.

1 January – 30 September 2008
• Net sales increased by 3.3% to SEK 2,954 m (2,860).
• Operating income increased by 4.8% to SEK 260 m (248).
• Operating margin increased to 8.8% from 8.7%.
• Income after financial items amounted to SEK 212 m (96).
• Income after tax for continuing operations amounted to SEK 155 m (41).
• Earnings per share for continuing operations amounted, after dilution, to SEK 3.30 (0.87).
• Continued stable growth within the Professional business area.

1 July – 30 September 2008
• Net sales increased by 0.7% to SEK 973 m (966).
• Operating income decreased by 14.4% to SEK 83 m (97).
• Operating income includes an unrealized valuation effect of derivatives of SEK -18 m (3) due to non-application of hedge accounting.
• Income after tax for continuing operations amounted to SEK 53 m (38).
• Earnings per share for continuing operations amounted, after dilution, to SEK 1.12 (0.81).

CEO's comments

“In the last quarterly report we called attention to increased uncertainty regarding the market development for the coming fall. Since that time, we have witnessed a dramatic, to say the least, turn of events on the financial markets which will have consequences for the real economy. As early as during the summer, stagnation or zero growth was noticed on a couple of important European markets.

For Duni's part, we can note weak growth during the third quarter of 0.7%. The deviation from the first six months of the year is, however, mainly attributable to the Retail and Tissue business areas. Sales in our main business area, Professional, have performed satisfactory with growth of 3.8% compared with a strong third quarter last year.

A weaker market was noticed in the UK, where the exchange rate also has a negative impact, as well as in Southern Europe and Denmark. Important markets such as Germany, Benelux and the rest of the Nordic region show continued good development. In addition, we continue to grow in Eastern Europe, primarily in Russia.

With respect to Retail, we have had a difficult market situation in the UK. Moreover, the sales development in the Nordic region has been weak. Despite weaker sales, profitability continues to improve slightly thanks to an improved customer and product mix.

Within Tissue, we have also had a somewhat softer sales trend. Deliveries during the quarter have to some extent been affected by a recently initiated transition to a new generation of products within hygiene.

It is important to point out that the underlying result this quarter shows continued improvement. Due to the fact that Duni does not apply so-called hedge accounting, we had a bookkeeping loss (SEK -18 m) at the close of the quarter when our forward contracts were revalued at current market rates.

The sales for the important Christmas season are off to a good start in September.

The financial crisis has now clearly reached Europe. In light of this, more focus has been placed on the cost side and we have initiated measures to cut costs, however with the goal of maintaining our selling power”, says Fredrik von Oelreich, CEO, Duni.