Interim Report for Duni AB (publ) 1 January – 30 June 2018

Margins under pressure from strongly increasing pulp prices

1 April – 30 June

  • Net sales amounted to SEK 1,197 m (1,101). Adjusted for exchange rate movements, net sales increased by 4.0%. Organic growth for the quarter was 1.9%. 
  • Earnings per share after dilution amounted to SEK 1.39 (1.54).
  • Previously announced price increases under implementation and new price increases adopted to compensate for the strong rise in raw materials and energy costs.

1 January – 30 June

  • Net sales amounted to SEK 2,277 m (2,106). Adjusted for exchange rate movements, net sales increased by 4.2%.
  • Earnings per share after dilution amounted to SEK 2.61 (2.75).

  • Continued significant increase in pulp prices, which have increased by 15-20% since the beginning of the year. 

KEY FINANCIALS

SEK m  3 months
Apr-Jun
2018
3 months
Apr-Jun
2017
6 months
Jan-Jun
2018
6 months
Jan-Jun
2017
12 months
Jul-Jun
2017/2018
12 months
Jan-Dec
2017
Net sales 1,197 1,101 2,277 2,106 4,613 4,441
Operating income1) 96 110 186 199 479 491
Operating margin1) 8.0% 10.0% 8.2% 9.4% 10.4% 11.1%
Income after financial items  87 98 165 176 428 439
Net income 66 73 125 132 327 334

1) For key financials and reconciliation of alternative key financials, see pages 27-28.

CEO’S COMMENTS

”Net sales amounted to SEK 1,197 m (1,101) and continued to develop positively during the quarter, with sales increases for both Table Top and Meal Service. Adjusted for exchange rate movements, net sales increased by 4.0%. Adjusted for acquisitions, the underlying organic growth was 1.9% in the quarter.

The operating income of SEK 96 m (110) was subject to the strong negative effect of continuously increasing raw materials prices. During the last nine months, pulp prices have increased as much as during the past nine years. This presents a considerable risk of continued pressure on margins during the second half of the year. We therefore recently initiated a further price increase which, with current pulp prices, will fully be compensated for in the first quarter of 2019.

Net debt at the end of the quarter amounted to SEK 1,220 m (1,109). The debt is affected negatively by the acquisition of Biopac in the UK in February, but primarily by the weak Swedish krona.

The Table Top business area reported net sales of SEK 645 m (605) and operating income of SEK 87 m (95). Growth excluding currency fluctuations totaled 1.5%, with growth visible in most markets. One exception, however, was the important German market, where sales slowed down somewhat. Market focus on Evolin®, a Duni premium table cover, made a positive contribution to growth during the quarter. The poorer operating income is explained by the record-high and continuously increasing pulp prices.

The Meal Service business area increased sales from SEK 194 m to SEK 231 m during the quarter. This strong sales growth is primarily related to the Biopac acquisition, as well as exchange rate effects. Excluding these effects, we still see an underlying growth of around 6%. This is because the business area has managed to adjust from lower sales of plastic-based items to our rapidly expanding ecoecho® range. The rapidly increasing demand for environmentally-profiled materials puts pressure on the supply of products. Operating income of SEK 14 m (15) was therefore affected negatively by measures to safeguard Duni's supply of these materials.

Net sales to our retail customers in the Consumer business area amounted to SEK 221 m (211) during the quarter. The business area presented growth in virtually every market. A loss from a large customer contract reduced the quarter's total currency-adjusted growth to 0%. Both Consumer and Meal Service are affected by the growing debate concerning the environmental consequences of plastic. During the quarter, the business areas therefore cooperated on offering alternative products to plastic-based articles. The quarter's operating income amounted to SEK -9 m (-6), and was affected negatively by the high pulp prices.

Finally, the New Markets business area increased its sales to SEK 79 m (78) during the quarter. Operating income was SEK 3 m (5). In Singapore, major structural adjustments took place, with the introduction of a new business system and the relocation of offices and stores. This change had a short-term negative impact on both sales and margins. Our largest company in Asia, Terinex Siam in Thailand, continues to present very sound growth figures.

In overall terms, another quarter in which Duni achieved some growth, but with margins under pressure from the strongly increasing pulp prices. The time needed to implement price increases will also put pressure on margins in the second half-year,” says Johan Sundelin, President and CEO, Duni.

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For additional information please contact:
Johan Sundelin, President and CEO, +46 40 10 62 00
Mats Lindroth, CFO, +46 40 10 62 00
Helena Haglund, Group Accounting Manager, +46 734 19 63 04

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Duni is a leading supplier of attractive and convenient products for table setting and take-away. The Duni brand name is sold in more than 40 markets and enjoys a number one position in Central and Northern Europe. Duni has around 2,400 employees in 23 countries, headquarters in Malmö, Sweden, and production units in Sweden, Germany, Poland, Thailand and New Zealand. Duni is listed on NASDAQ Stockholm under the ticker name “DUNI”. The ISIN code is SE0000616716. This information is information that Duni AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 07:45 CET on 13 July 2018.

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About Us

Duni is a leading supplier of attractive and convenient products for table setting and takeaway. The Duni brand is sold in more than 40 markets and enjoys a number one position in Central and Northern Europe. Duni has some 2,400 employees in 23 countries, headquarters in Malmö and production units in Sweden, Germany, Poland, New Zealand and Thailand. Duni is listed on NASDAQ Stockholm under the ticker name “DUNI”. ISIN-code is SE 0000616716.

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In overall terms, another quarter in which Duni achieved some growth, but with margins under pressure from the strongly increasing pulp prices.
Johan Sundelin, President and CEO, Duni