​Interim Report for Duni AB (publ) 1 January – 30 June 2015

Continued improved earnings.

1 April – 30 June 2015

• Net sales amounted to SEK 1 002 m (922). Adjusted for exchange rate changes, net sales increased by 4.2%.
• Earnings per share, for continuing operations, after dilution amounted to SEK 1.44 (1.40).
• Table Top reported earnings in parity with 2014, other operating business areas improved over the previous year.
• Decision to invest SEK 110 m in upgrading two paper machines in Skåpafors for increased capacity.
• Hygiene production in Skåpafors is now closed, and hygiene business and changeover work in the Materials & Services business area are reported as discontinued operations as from the second quarter 2015. This is reported on a line in the income statement before "Net income". The consolidated income statement has been recalculated from 2013 and reports only continuing operations.

1 January – 30 June 2015

• Net sales amounted to SEK 1 987 m (1 739). Adjusted for exchange rate changes, net sales increased by 8.5%.
• Earnings per share, for continuing operations, after dilution amounted to SEK 2.94 (2.39).
• Net debt amounted to SEK 916 m, compared with SEK 1,164 m for the same period last year.

Key financials 1)

1) For continuing operations.
2) For bridge to EBIT, see the section entitled “Operating income - Non-recurring items”.

CEO’s comments

“Despite a late and cold spring, with an unfavorable calendar effect, quarterly earnings improved by SEK 11 m as compared with last year.

Hygiene production has now been completely closed and the previously announced production move from Dals Långed to Skåpafors is continuing according to plan. The project will be fully completed during the fourth quarter of 2015. In order to clarify the effects from the discontinued hygiene business, the accounts and reporting will from now distinguish between "continuing operations" and "discontinued operations".

The Group’s overall structural effects in the second quarter are largely neutral due that the hygiene production is completed and Paper+Design, which was acquired on 11 June 2014, entails relatively small effects on earnings as the second quarter is the year’s weakest.

Net invoicing for the second quarter amounted to SEK 1,002 m (922), corresponding to growth of 8.7% as compared with last year. Operating income for continuing operations is SEK 104 m (93) and the operating margin was strengthened to 10.3% (10.1%). Net debt at the end of the quarter amounted to SEK 916 m (1,164).

Organic growth during the quarter is lower than the previous quarter. A disadvantageous calendar effect with an early Easter, together with a late and cold spring in central and northern Europe, led to demand during the period which was weaker than expected. A consequence of this is a lower leverage effect in terms of earnings within the supply of goods.

During the quarter, the decision was taken to invest SEK 110 m in the paper mill in Skåpafors. The investment, with installation anticipated to be fully completed during the second quarter of 2016, yields an increase in capacity of approximately 15% and, in addition, creates a new platform for product development, not the least in the area of environmentally-adapted material.

The Table Top business area increased net invoicing to SEK 563 m (552) during the quarter; adjusting for currency sales for the business area fell by 2.6%. The decline is explained by calendar effects and worse spring weather in several of our main markets. Western and Southern Europe report continued good growth but this does not compensate for the decline in our more important business regions. The operating income for the quarter were SEK 87m (87) and the operating margin was 15.5% (15.7%).

The Meal Service business area continues to grow at a stronger rate than the market. Net invoicing for the quarter increased to SEK 163 m (148) and the operating income increased to SEK 13 m (7). The business area reports positive growth throughout all markets and the consistent investment in innovation and environmentally-adapted concepts continues 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 result of the acquisition of Paper+Design. Net invoicing for the quarter increased to SEK 212 m (161) and the operating income improved to
SEK -1 m (-5). The operating margin was strengthened to -0.3% (-3.2%). Seasonally, the second quarter is weak for this business area; few holidays and a mix of relatively simple products has resulted in the second quarter having the lowest percentage over the year in terms of earnings.

In the New Markets business area, we are seeing a more stable currency situation in Russia while, at the same time, demand in the restaurant and hotel sector has declined heavily. We see satisfactory growth in other markets. Net invoicing during the quarter amounted to SEK 55 m (48) and the operating income increased to SEK 4 m (3).

In the Materials & Service business area, hygiene business has been discontinued and are reported for the quarter as "discontinued operations" outside of Materials & Services. Net sales for the business area, i.e. "continuing operations" for the quarter amount to SEK 10 m (13), with an operating income of SEK 0 m (1).

Although the weather was working against us, we experienced positive growth on most of our markets and our on-going projects continue to contribute to better profitability in the continuing operations”, says Thomas Gustafsson, President and CEO, Duni.