CEO statement

More efficient business areas and strong acquisitions create profitable growth

Our ambition for 2014 was to continue to focus on growth, efficiency and attractiveness. In 2013, we implemented a series of structural changes which resulted in improvements in efficiency in prioritized areas. The new division into five business areas has created more efficient customer relations work and provided greater understanding of what the customers expect of Duni. We have improved our internal routines and established a clear, long-term ambition to be the leader in customer service in our industry. In 2015, we will remain focused on growth, efficiency and attractiveness. There is still a great deal to develop within these areas.

Duni’s objective is to grow by 5% per year over a business cycle. During the year, we achieved organic growth of 3.9% at fixed exchange rates (excluding acquisitions) – faster than in recent years and outstripping the market in general. The acquisition of Song Seng in Singapore in 2013 was followed up in 2014 with the acquisition of the German company Paper+Design. The supplementation of organic growth with acquisitions represents an important aspect of our long-term growth strategy.

All business areas strengthened their positions during the year. Duni’s total net sales were 11.7% higher than in the preceding year and amounted to SEK 4,249 m. Operating income increased to SEK 475 (385) m, with the increase being driven mainly by acquisitions, organic growth and a more favorable exchange rate.

Table Top increased its market shares while Meal Service accelerated the pace of innovation

The market is continuing to consolidate, the major wholesalers are becoming larger and increasingly international, and consequently we must coordinate and have control over our communication in different countries. The increase in sales within Table Top is being driven by increased market shares and improved efficiency in our sales work. Several successful products and concepts were launched during the year and Table Top is continuing to grow, despite a stagnating market.

Within the Meal Service business area, we have built up an entirely new organization while at the same time focusing our strategy towards products with unique functionality or a high level of innovation. Meal Service works close to the market in order to foresee the customers’ future needs at an early stage. Environmentally adapted products such as biomaterial for Duniform and the ecoecho™-range are examples of this. The Meal Service market is growing and we expect to grow at a faster pace than the market.

Acquisitions lift Consumer and New Markets

The Consumer business area demonstrated organic growth in 2014 and margins gradually improved. With the strategically important acquisition of Paper+Design, altogether the business area will achieve net sales of almost SEK 1 billion, with a margin of almost 10%.

Our presence on several geographic markets is important for our long-term growth. Southeast Asia is prioritized and the acquisition of Song Seng in 2013 has been followed up in 2014 with the launch of our Duni range. Customers have displayed initial strong interest. It is a challenge to create a new premium market, and thus a long-term focus is required in order to achieve our ambitious objectives.

The unstable situation in Russia remains challenging. Our sales in 2014 were stable, but in light of the prevailing uncertainty we need to constantly review our presence and our business model.

Our hygiene product operations will be discontinued during the first quarter of 2015. In so doing, we will obtain a more streamlined production process, concentrated in Skåpafors. The next phase will involve strengthening our competitiveness through, among other things, skills development, investments, and new material development initiatives.

During 2014,we continued to focus on providing even better customer service. It goes without saying that we must be the leader in customer service within our industry. That is the ultimate measure of how we live up to the customers’ expectations from us, and therefore it is an important building block in our work of enhancing Duni’s attractiveness.

Duni contributes to Goodfoodmood®

During 2014, we conducted a review of Duni’s brand. We are proud of our history and the brand has grown and expanded to cover much more than previously. Today, we are endeavoring to be the leader in many areas. We must offer a palette of colors and designs that are both trendy and appealing. We must develop materials that are kind to our planet. In addition, we must be quickest at discovering and adapting to future trends, be a positive partner and a good employer. All of these factors must be reflected in the brand.

There is a high, but splintered, level of awareness of Duni’s brand among our stakeholders. We perceived a need to clarify the brand, to transfer the perception from the head to the heart. The result is a new, creative approach to what we do: Duni contributes to Goodfoodmood in all contexts where food is involved: breakfast, lunch, coffee break, at the restaurant, at home in the evening or at a party.

A strong platform for profitable growth

During 2014, Duni has taken several important steps to strengthen growth, efficiency and attractiveness. We have made an additional acquisition and, through Goodfoodmood,we have broadened and clarified our overarching business.

All in all, I perceive great opportunities for further developing the strong growth Duni achieved in 2014.

Malmö, March 2015

Thomas Gustafsson

President and CEO