Interim report 1 January – 31 March 2009

Operating margin 7.2% in a softer market

1 January – 31 March 2009

- Net sales increased by 3.9% to SEK 1 007 m (969).
- Earnings per share for continuing operations amounted, after dilution, to SEK 0.79 (0.96).

Key financials

Jan - Mar Jan - Mar FY LTM
2009 2008 2008 2008/2009
Net sales, SEK m 1 007 969 4 099 4 137
Operating income 1), SEK m 73 83 414 403
Operating margin 1), % 7.2% 8.6% 10.1% 9.7%
Income after financial items, SEK m 50 67 251 233
Net income 2), SEK m 37 45 191 182

1) Before an unrealized valuation effect of derivatives of SEK -2 m (3) due to the non-application of hedge accounting.
2) With respect to continuing operations.

CEO’s comments

"The economy continued to weaken in general during the first quarter of the year. For Duni's customer groups, the downturn is most noticeable in the hotel and catering sectors, while the restaurant industry and, to greater degree, the grocery retail trade are coping somewhat better.

In other words, sales slowed down further during the first quarter and we note a decline in sales volumes of 5-6% within both the Retail and Professional segments. The greatest impact of the recession is still evident in Southern Europe, primarily Spain, and on the Eastern European markets. In Eastern Europe, weakened currencies have also had a negative effect.

The weak Swedish Krona, however, implies that we can report an increase in turnover of 3.9%. For business area Professional sales increased by 6.5%. Central Europe with the main market Germany continues to deliver healthy sales numbers in a weakening market.

Sales in Retail increased with 6.2%. We can also in the first quarter note a gradual improvement of the profitability. The results from the markets improved compared to last year and it is very positive that the UK displays a much better result.

For the Tissue business area the development was rather weak. Nevertheless, we still foresee that volumes will pick-up in the second half of the year.
The depth of the recession in which we now find ourselves is something that hardly anyone could have foreseen a year ago. Duni has, however, rapidly adapted to the weaker market. We have cut back on production and succeeded in reducing inventories despite a declining market. This has affected gross margins to a certain extent, but it is a priority to keep inventories under control and focus on cash flow.

As I pointed out earlier, 2009 will be a tough year and we expect a volume development in line with that of the first quarter for the rest of the year. In the coming quarters we will enjoy larger positive effects of falling purchase prices and of the previously announced structural measures," says Fredrik von Oelreich, President and CEO, Duni.