Thomas Gustafsson, President and CEO, Duni comments:
“The first quarter was strong and included a historic increase in net invoicing and operating income. Growth was recorded of approximately 14%, with net invoicing of SEK 1,046 m (921). Operating income for the quarter increased to SEK 112 m (73) and the operating margin strengthened to 10.7% (7.9%). The net debt at the end of the quarter was SEK 836 m. Since the beginning of 2013, the Company has enjoyed a positive earnings and sales trend. The improvement has been achieved through structural measures (acquisitions and divestments) and greater internal efficiency. During the period, we have also experienced a volatile currency situation, with a weaker Swedish krona having a positive effect on earnings, while an ever stronger USD has had a negative impact on our raw materials costs. With the closure of the hygiene products business, the structural effects will diminish during the second quarter of 2015. As from the third quarter, the structural effect will become somewhat negative compared to last year; the acquired Paper+Design will then have been part of Duni for more than 12 months, at the same time as the hygiene product operations will be phased out entirely. Delivery capability during the quarter was good and all business areas (with the exception of Materials & Services) demonstrated growth and an improvement in earnings compared to last year.
In the Table Top business area, net invoicing increased to SEK 513 m (477). The quarter started relatively weak but followed up by a strong finish, among other things with an increased share of premium sales contributing to an improved product mix. Western Europe demonstrated solid growth, while sales in Central Europe and the Nordic region were in line with last year. Operating income increased to SEK 78 m (64) and the operating margin strengthened to 15.2% (13.3%).
The Meal Service business area continues to grow faster than the overall market. Net invoicing increased to SEK 136 m (123) and operating income increased to SEK 2 m (-1). Strong growth in Central Europe, together with a successful focus on customized and environmentally adapted product concepts, has continued to have a positive impact on both sales and earnings.
The Consumer business area continues to contribute to a significant increase in sales as a consequence of the acquisition of Paper+Design. Net invoicing for the quarter increased to SEK 276 m (157), while operating income improved to SEK 24 m (6). The operating margin strengthened to 8.6% (3.6%). Parallel with the acquisition, we are witnessing strong growth in Duni’s consumer operations. For example, certain important markets such as the Nordic region and Germany are demonstrating growth in excess of 10%, at the same time as our design initiatives are generally developing extremely positively.
Within New Markets, Russia remains challenging, although a degree of stability was achieved during the quarter. Sales were initially weak, but the quarter closed with sales measured in local currency ending on the same level as last year. Sales for the business area as a whole amounted to SEK 47 m (43) and operating income increased to SEK 3 m (-3).
Within Materials & Services, the manufacture of hygiene products ceased at the end of March and the coming quarter will include only very limited final invoicing. The process of consolidating continued production in Skåpafors is proceeding and the transition is to be completed in full during the fourth quarter of the year. Net invoicing for the quarter fell to SEK 74 m (120) and operating income to SEK 4 m (7).
All in all, the quarter includes a series of improvements and the strong start to the year gives us good reasons to continue to invest in growth, attractiveness and efficiency”.
In The picture: Thomas Gustafsson, President and CEO, Duni.