Directors’ Report – The Group

Duni is one of Europe’s leading suppliers of inspiring table setting concepts and creative packaging solutions for take-away. The Group’s strong position has been achieved by focusing on food, people and design and the ambition to always help the customer create a positive food and drink experience. A combination of high quality products, a well-reputed brand, established customer relations as well as a strong local presence on most European markets have resulted in Duni being a market leader in Europe. Operations are conducted within five business areas: Table Top, Meal Service, Consumer, New Markets and Materials & Services.

The Table Top business area offers Duni’s concepts and products primarily to hotels, restaurants and catering companies. Table Top primarily markets napkins, tablecoverings and candles for the set table. Duni is a market leader within the premium segment in Europe. The business area accounted for approximately 54% (57%) of Duni’s net sales during the year.

The Meal Service business area offers concepts for food packaging and serving products for, e.g. take-away, fresh ready-to-eat food and various types of catering. Customers are mainly companies operating within the restaurant, catering or food production industries. As a niche player in this area, Duni holds a leading position in the Nordic region and has a clear growth agenda on prioritized markets in Europe. The business area accounted for approximately 15% (14%) of Duni’s net sales during the year.

The Consumer business area offers consumer products primarily to the retail trade and retail outlets in Europe. Customers comprise grocery retail chains, as well as other channels such as various types of retail outlets, for example, garden centers, home furnishing stores, and DIY stores. The acquisition of Paper+Design, which was carried out in 2014, has been integrated during the year and is a part of the business area. The business area accounted for approximately 25% (23%) of Duni’s net sales during the year.

The New Markets business area offers Duni’s concepts of attractive quality products and concepts for table setting and packaging, focused on new markets outside Europe. In addition to customer segments such as hotels, restaurants and catering, the business area also addresses its offering to the retail trade. The business area accounted for approximately 5% (5%) of Duni’s net sales during the year.

The Materials & Services business area comprises those elements that are not accommodated in the other business areas. The business area mainly comprises sales of tissue and airlaid to external customers. Previously, sales of hygiene products were also included; however, these products were discontinued entirely during the first quarter of 2015. The hygiene products business is reported as a discontinued operation. The income statements of the business area and the Group have been recalculated and include only continuing operations. Sales of hygiene products previously accounted for 88% of Materials & Services in 2014. The business area accounted for approximately 1% (1%) of Duni’s net sales during the year.

Product and concept development

Within product development, Duni’s work involves new designs and color schemes, as well as new materials and solutions. Duni focuses on product and concept development, and possesses a unique strength within form, design and functionality. Duni’s innovation process is characterized by the ability to quickly and flexibly develop new collections, concepts and products which create a clear added value for the various customer categories on the market.

Designs for Duni®

In order to strengthen the Duni brand as an innovative player, 2013 saw the creation of Designs for Duni®, a unique concept whereby Duni develops products in cooperation with well-known European designers and design houses. The concept positions Duni as the leading design partner at the retailers. It creates an opportunity for higher margin contracts, while at the same time strengthening drawing power and a higher degree of innovation in the product range. During 2015, two new collections were successfully launched together with byGraziela and Glööckler, both of which are well-known on the German market.

Continuous innovation

Products in the Duni ecoecho® premium range are manufactured in innovative materials with a clearly improved environmental profile compared with the standard product range. Focus is placed on aspects such as resource efficiency, renewability, compostability, and responsible forest management.

During 2015, Duni continued to produce products with a high environmental profile. New food packaging solutions made of groundbreaking bioplastic material were launched. The compostable range of single-color napkins and tablecoverings carrying the prestigious OK Compost® mark was expanded to also include a number of designed products.

Duni has a number of products that replace linen. At the end of 2011, an entirely new tablecovering material – Evolin® – was launched, combining the look and feel of textile and linen tablecoverings with the advantages of single-use products. Evolin is aimed at restaurants and catering firms that are currently using linen. The product constitutes one of the cornerstones for future growth, since an increasing number of customers are converting from traditional linen to single-use materials.

Market development

Global economic prospects are one of the main indicators as regards growth on the HoReCa market. Broad economic growth is positive for the industry. It stimulates consumption within the HoReCa sector, as well as demand for single-use products. The long-term trend continues to point towards an increasing number of restaurant visits and an increase in the number of hotel nights, driven mainly by increasing urbanization, changed consumption patterns and a lifestyle trend whereby consumption of meals on the go is increasing. New restaurant concepts, such as ready-to-eat food in grocery stores, take-away and fast service restaurants are continuing to increase and gain ever larger market shares. After several years of stagnating economic growth, consumers on the mature European markets are showing greater interest in seeking value, and HoReCa companies are competing harder to attain an even greater share of the total mealtime market. On the customer side, continued structural changes are taking place within the restaurant industry, with restaurant chains that operate under joint brands growing at a faster rate than the market in general. This is a development which favors Duni’s sales of customized concepts.

Duni’s product category in the retail trade focuses primarily on low-price products and private labels. Distribution of parts of the category has also expanded into new channels, such as gardening centers, home furnishing stores and do it yourself stores. The acquired company Paper+Design is successful in cultivating these retailer categories.

Another sector of the market comprises of the serving of food to companies and institutions. It is primarily the care sector that is taking an increasingly large share of the segment, and the market has experienced stable growth in recent years. Here, there is clear potential for Duni to create growth.

Prospects for the future

The HoReCa industry is greatly influenced by lifestyle changes and trends. Long-term demand is being driven primarily by greater purchasing power combined with changed habits, including an increased proportion of meals being eaten outside the home. In addition, demand for Duni’s products benefits from the fact that an increasing number of restaurants are choosing to replace linen with premium quality single-use solutions. Demand for brand-profiling single-use products is also increasing. Furthermore, the trend towards increased accessibility and convenience connected with meals is continuing, and thus the take-away alternative is continuing to grow. This trend is reinforced by the increase in the number of single households and the fact that urbanization is continuing. The number of restaurant chains that wish to profile their brands through single-use products is also increasing, and this is an area where Duni is well positioned.


The annual report covers the 2015 financial year. ‘Preceding year’ means the 2014 financial year. Duni controls its operations based on what Duni refers to as operating income. Operating income means operating income before restructuring costs and non-realized valuation effects of currency derivatives, fair value allocations and amortization of intangible assets identified in connection with business acquisition. The hygiene products business that was discontinued during the year has been removed from the Group’s income statements, also with respect to comparison years, and is reported as discontinued operations on a line after net income for the year.

Restructuring costs amounted to SEK -11 (0) m. These relate primarily to organizational changes within management as well as organizational changes and efficiency improvements within the Consumer business area. Restructuring costs have also been positively affected by compensation received for damages relating to the period prior to Duni’s IPO. For more information on restructuring costs, see Note 9.

The non-realized valuation effect of currency derivatives reported in the operating income amounts to SEK 0 (0) m.

The operating income is commented on in the text below, exclusive of these non-recurring items.

Bridge between operating income and operating margin

SEK m 2015 2014
Operating income 528 452
Non-realized valuation changes, derivative instruments 0
Restructuring costs -11 0
Amortization of intangible assets identified in connection with business acquisitions -27 -14
Fair value allocation in connection with acquisitions -4
Reported operating income (EBIT) 490 433

Net sales

Duni’s net sales from continuing operations amounted to SEK 4,200 (3,870) m, an increase in sales of 8.5%. At unchanged exchange rates from the preceding year, net sales would have been SEK 172 m higher compared with the outcome for 2014, representing an increase in sales of 4.4%. Organic growth, excluding structural changes, amounted to 1.3% at fixed exchange rates.

The Table Top business area reported net sales of SEK 2,266 (2,179) m. At fixed exchange rates, this corresponds to a decrease in sales of 0.3%. The business area experienced steady growth during the year, with many markets demonstrating growth but a slight downturn being experienced in Germany.

The Meal Service reported net sales of SEK 616 (555) m. At fixed exchange rates, this corresponds to an increase in sales of 8.5%. Continued strong market demand in the prioritized segments and successful product launches are strengthening Meal Service’s position as an innovator. Growth has been positive on all markets.

Within the Consumer business area, net sales amounted to SEK 1,063 (889) m. At fixed exchange rates, this corresponds to an increase of 14.6%. The business area has enjoyed positive structural effects from the acquisition of the German company Paper+Design. 2015 was characterized by increased uncertainty in sales, with sales results varying sharply between the different markets. Although the most recent statistics point to retail trade growth within the euro area, individual contracts have a greater impact on Duni.

The New Markets business area reported net sales of SEK 207 (195) m. At fixed exchange rates, this corresponds to an increase in sales of 2.7%. New Markets experienced solid growth, apart from in the case of Russia where demand continues to decline. On the other hand, Southeast Asia is growing and there is continued growth on other export markets.

The Materials & Services business area reported net sales of SEK 48 (52) m. At fixed exchange rates, this corresponds to a decline in sales of 7.8%.


Operating income for the continuing operations amounted to SEK 528 (452) m. At unchanged exchange rates from the preceding year, operating income for the year would have been SEK 35 m lower. The gross margin was 29.6% (29.3%) and the operating margin strengthened from 11.7% to 12.6%. The operating margin improved within all business areas compared with the preceding year. Despite modest organic growth in sales of approximately SEK 50 m, income increased by almost the same amount. This is a consequence of increased internal efficiency with relatively low costs as well as savings within the production structure.

The finance net was SEK -31 (-19) m. Translation effects, primarily in RUB, CHF, GBP and NOK, are sharply negative for the year compared with positive effects in the preceding year. Income before tax for the continuing operations was SEK 459 (414) m.

A tax expense of SEK 113 (113) m is reported for the financial year. The effective tax rate is 24.6% (27.2%). The tax expense for the year includes adjustments and one-off effects from the preceding year of SEK -1.0 (-8.2) m. During the year, the deferred tax assets related to loss carry-forwards was reduced by SEK 29 (40) m.

Net income for the year amounted to SEK 346 (302) m. Net income for the year for discontinued operations amounted to SEK 4 (18) m.


The Group’s net investments for continuing operations excluding acquisitions amounted to SEK 161 (87) m. Approximately SEK 50 m of the investment totaling SEK 110 m in increased tissue capacity at the paper mill in Skåpafors was taken in 2015. Apart from this, the investments related primarily to the Group’s production plants in Poland, Germany and Sweden. Depreciation as well as the reversal of write-downs in respect of continuing operations amounted to SEK 158 (120) m.

Cash flow and financial position

The Group’s operating cash flow was SEK 623 (533) m. The improved income is a strong contributory factor behind the improved cash flow, but lower working capital also contributed.

The Group’s balance sheet total on December 31 amounted to SEK 4,178 (4,328) m.

The Group’s interest-bearing net debt amounted to SEK 584 m, compared with SEK 888 m on December 31, 2014.

Operational and financial risks

Duni is exposed to a number of operational risks which it is important to manage.

The development of attractive product ranges, particularly the Christmas collection, is very important in order for Duni to achieve satisfactory sales and income growth. Duni addresses this issue by constantly developing its range. Approximately 25% of the collection is replaced each year in response to, and to create, new trends.

A weaker economic climate over an extended period of time in Europe could lead to a reduction in the number of restaurant visits, reduced consumption and increased price competition, which might impact on volumes and gross margins.

Duni’s finance management and its handling of financial risks are regulated by a finance policy adopted by the Board of Directors. This work is presided over and managed by the Group’s Treasury, which is included as a unit within the Parent Company. The Group divides the financial risks into market risks (consisting of currency risks, price risks and interest rate risks), as well as credit risks and liquidity risks. These risks are controlled in an overall risk management policy which focuses on unforeseeability on the financial markets and endeavors to minimize potential adverse effects on the Group’s financial results. See also Note 3 regarding risk management.

Legal disputes

Upon closing of the accounts, there were a few disputes with customers and suppliers involving small amounts. Provisions have been made in the annual accounts which, in the management’s opinion, cover any negative outcome of these disputes. See also Note 35, Pledged assets and contingent liabilities.


In accordance with an adopted environmental strategy, Duni works according to policies and goals covering development in information concerning products, efficiency and control production, as well as knowledge and communication from an environmental perspective.

Environmental and quality systems in accordance with ISO 14001 and ISO 9001 have been implemented and certified at all of the Group’s production units. Suppliers are evaluated in accordance with the Group’s Code of Conduct, which covers both environmental and social responsibility.

Duni has also been granted FSC® certification, license number FSC-C014985 (Forest Stewardship Council) certification regarding the sale, production and distribution of, among other products, napkins, tablecoverings and serving products. This means that Duni’s cellulose products are sourced from sustainable forests.

Rexcell Tissue & Airlaid AB conducts two operations which are subject to permit requirements pursuant to the Swedish Environmental Code. The Group holds permits for the production of 65,000 tonnes of wet laid tissue per year and 52,000 tonnes of airlaid tissue per year at the mill in Skåpafors and 10,000 tonnes of airlaid tissue in Dals Långed. The mills hold permits issued by the Administrative Board in Västra Götaland County regarding emissions of carbon dioxide, CO2. The allocation of emission rights comprises 2,237 tonnes in 2015 for Dals Långed and 19,146 tonnes for 2015 in Skåpafors. The total number of emission rights will decline each year up to 2020, when Dals Långed will be granted emission rights equivalent to 2,027 tonnes per year and Skåpafors 17,349 tonnes per year. In total, 11,700 tonnes were used during 2015.

The Board’s work

Since the Annual General Meeting held on May 5, 2015, the Board of Directors comprises five members and two employee representatives. During the year, the Board held 11 meetings at which minutes were taken. For further information on the work of the Board, see the Corporate Governance Report.


Good working conditions, clear goals and structures combined with regular support to employees constitute the foundations for creating growth and profit. Human Resources (HR) has the task of supporting management, supervisors and employees in order to stimulate employee development, increase involvement, and drive and coordinate work regarding change. HR also assists in the work of ensuring a sound work environment for all employees. Since 2014, development plans have been gradually produced whereby all employees in the organisation shall have clear, individualized goals which are followed up.

Duni operates based on four core values which provide guidance in the day-to-day work and clarify how things are done “the Duni way”. The core values – Ownership, Added value, Open mind, and Will to win – find concrete expression in a number of operational principles which, taken together, are aimed at creating profitable growth, organizational efficiency, and increased customer satisfaction.

On December 31, 2015, there were 2,082 employees. On December 31, 2014, there were 2,092 employees.

Remuneration for the CEO and senior executives

Principles regarding the CEO and senior executives, as proposed to the 2016 Annual General Meeting, to be applicable in 2016, correspond in all essential respects to the established principles which were adopted by the 2015 Annual General Meeting. For information regarding remuneration to the CEO and senior executives and relevant guidelines, see the Corporate Governance Report and Note 13.

Foreign companies and branches

Duni conducts operations under its own management and has employees in 17 European countries and in Singapore.

Important events since December 31, 2015

No important events have occurred since the closing day.