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Year-End Report for Duni AB (publ) 1 January – 31 December 2012

Regulatory press release 14 Feb 2013 08:00
Strong balance sheet, significant restructuring costs

1 January – 31 December 2012

  • Net sales amounted to SEK 3 669 m (3 807). Adjusted for exchange rate changes, net sales fell by 1.6%.
  • Earnings per share, after dilution, amounted to SEK 2.63 (5.54).
  • The Board proposes a dividend of SEK 3.50 (3.50) per share.
  • Strong cash flow and historically low net debt.
  • Weak demand with generally slow growth on Duni's main markets as consequence.

1 October – 31 December 2012

  • Net sales amounted to SEK 1 031 m (1 063). Adjusted for exchange rate changes, net sales fell by 0.2%.
  • Earnings per share, after dilution, amounted to SEK -0.35 (2.09).
  • The Board has as a consequence of unsatisfactory profitability decided to enter into trade union negotiations with the intention to discontinue one of the three plants of the subsidiary Rexcell Tissue & Airlaid AB. In connection to this assets have been written-down with SEK 83 m.
  • Stabilization of the Professional business area, but demand remained weak.
  • The gross margin was affected by continued low capacity utilization and high cost level of traded goods.

Key financials

12 months
12 months
3 months
October –December
3 months
October –December
SEK m2012201120122011
Net sales3 6693 8071 0311 063
Operating income 1)340404128151
Operating margin 1)9.3%10.6%12.4%14.2%
Income after financial items20235816134
Net income124261-1698

1)  Underlying operating income; for link to reported operating income, see the section entitled "Non-recurring items".

CEO’s comments

The economic climate on Duni's main markets is in line with the trend from previous quarters, namely perceptibly weaker demand, particularly in southern Europe, as well as a degree of weakening in our main markets. Given the market conditions, sales in the quarter reached a satisfactory SEK 1 031 m, representing a decline of 0.2% at fixed exchange rates. Operating income was SEK 128 m (151), with the difference being attributable to continued inventory reduction and a high cost level on traded goods. As a consequence of the inventory reductions and focus on tied up capital, the quarter delivered a very strong cash flow. Consequently, the net debt at the end of December is at a historically low level.

Despite a somewhat weaker market, the Professional business area continues to exhibit stability. Sales reached SEK 722 m, at fixed exchange rates a decline of 0.5%, which is explained by a planned phase-out of low margin products in the UK. Duni enjoys a strong market position within Professional and it is pleasing that the premium range is continuing to increase its range share. The rate of growth on our export markets remains high, but from relatively low levels; it is particularly pleasing that the investments we have made in Russia led to growth in excess of 30% in the quarter.

The Consumer business area reported sales of SEK 197 m for the quarter, which is a decline of 2.8% at fixed exchange rates. The result failed to meet expectations, due to a delayed phasing in of the new customer contracts which were signed during the second quarter. Operating income was affected by costs relating to these contracts, the full impact on sales has not yet been achieved.

Within Tissue, the development in the quarter reflects the same trend as for the full year. Sales reached the same level as last year, but income was negatively affected by a low level of capacity utilization in production and costs relating to test runs of new materials.

As communicated, the Board has decided to enter into trade union negotiations with the intention to discontinue the unit of the subsidiary Rexcell Tissue & Airlaid AB which manufactures hygiene product material for external customers within the Tissue business area. The unit is not profitable and the Board sees no reasonable chance to make it profitable thus a decision has been taken to focus on Duni's core business. As a consequence of this, assets have been written-down with SEK 83 m. In addition, we have pursued the restructuring projects communicated earlier and also taken further restructuring cost due to the change of CEO, write-down of other fixed assets and restructuring on certain export markets.

During the year, a new and more market-oriented category organization was established and several interesting initiatives were started up during the final quarter. The ambition is to increase efficiency and competitiveness within each product area, among other things through quicker launch processes and greater understanding of customer and consumer needs. The organizational change also contributes to strengthening the focus on our export business. For many years Duni has had a presence on several export markets where demand for superior quality Table Top-products is growing rapidly. Russia provides a good example of how we with increased efforts can establish and develop a position on a market with strong underlying growth.

2012 has been an eventful and challenging year, but nevertheless we enter 2013 with confidence. Many important initiatives have been taken during the year and, based on them, we will develop Duni's growth, profitability and market position,” says Thomas Gustafsson, President and CEO, Duni.