Year-End Report for Duni AB (publ) 1 January – 31 December 2017 (Company news)
Stable quarter despite strongly increasing raw materials prices
1 October – 31 December
-Net sales amounted to SEK 1,254 m (1,234). Adjusted for exchange rate movements, net sales increased by 1.9%.
-Earnings per share after dilution amounted to SEK 2.55 (2.41).
-The price compensation has not fully offset record-high levels of pulp prices.
-A stable quarter with strong results in Consumer and Meal Service.
-Duni adopts an investment in airlaid capacity for around SEK 50 m for the subsidiary Rexcell Tissue & Airlaid AB. The investment is planned for completion of installation during Q2 2018.
1 January – 31 December
-Net sales amounted to SEK 4,441 m (4,271). Adjusted for exchange rate movements, net sales increased by 3.0%.
-Earnings per share after dilution amounted to SEK 6.99 (7.06).
-Net debt was higher than in the previous year, which is mainly due to acquisitions and an increase in investments.
-The Board of Directors proposes dividend of SEK 5.00 (5.00) per share.
-Acquisition of Sharp Serviettes in New Zealand.
-An investment of SEK 55 m in a logistics property in Germany.
CEO Johan Sundelin (photo) comments:
“Sales in Q4 2017 amounted to SEK 1,254 m (1,234). The sales increase is primarily attributable to the acquisition of Sharp Serviettes in New Zealand during Q2. Excluding acquisitions, sales are generally at the level of the previous year. Operating income was SEK 169 m (171). The slightly lower result is mainly related to strongly increasing raw materials prices, primarily for paper pulp, which cannot yet be sufficiently compensated by market price adjustments. Net income after tax for the quarter was SEK 121 m (113), which is the highest net income ever in a single quarter.
Net debt at the end of the quarter amounted to SEK 855 m. During the last two years, Duni's net debt has increased by around SEK 280 m. This increase is a consequence of the acquisition of Terinex Siam and Sharp Serviettes, as well as a high investment level to strengthen the Group's production and logistics capacity. Nonetheless, the financial position is still strong, with a net debt ratio to the profit before amortization of 1.36 (1.20).
During 2017, great efforts were made to strengthen Duni's delivery capacity. This was affected negatively, however, by capacity shortages in the logistics markets, primarily in Central Europe. Measures to safeguard capacity and delivery capacity will therefore take continued high priority in 2018.
The Table Top business area reported net sales of SEK 641 m (645) and operating income of SEK 121 m (125). Sales were relatively stable in most markets, but with some reduction in the UK and in certain Central European markets. The somewhat weaker result is mainly related to the record-high paper pulp prices. The achievement of price compensation in relation to the market is therefore the most important action for the business area at the start of the new year.
The Meal Service business area increased its net sales to SEK 179 m (171) and its operating income to SEK 7 m (6). After a relatively weak Q3, the business area has now regained its previous growth rate. It is pleasing to note that the market investments which took place during the second half of 2016, which burdened the business area's result for the year, are now beginning to have a positive impact. The business area's growth is mainly attributable to the environmentally-conscious range, for which innovation and product development continue to be very important.
Yesterday, 8 February 2018, Duni acquired 75% of the shares in Biopac in the UK. This is our first acquisition in the Meal Service business area. The company has annual sales of approximately SEK 55 m and is solely focused on sales of environmentally-customized meal products, which was an important consideration for the acquisition.
The Consumer business area’s net sales fell to SEK 317 m (331) while its operating income increased to SEK 32 m (28). The main reasons for the improved result are a low cost level and a more favorable product mix. Like the Table Top business area, Consumer was affected by the high pulp prices. This makes price compensation towards the market a very high priority.
The New Markets business area increased its net sales to SEK 96 m (73) while its operating income fell to SEK 7 m (10). Sales increased mainly as a consequence of the acquisition of Sharp Serviettes, while organic growth was also favorable. During the year, the business area achieved several market investments and organizational improvements, to ensure continued strong organic growth. These investments explain the reduced operating income during the quarter. The primary focus during 2018 is driving growth continuously.
After my first quarter as President and CEO of Duni, and after meeting many of Duni's employees, I can note that Duni is ready to meet the future opportunities and challenges. I therefore look forward with confidence to building a stronger Duni, together with the entire organization,” says Johan Sundelin, President and CEO, Duni.