CEO statement

A streamlined Duni creates a foundation for growth

2015 was the year when we continued to put the finishing touches to the platform on which Duni’s operations are based. With enhanced market intelligence, a streamlined production base and an improved design offering, we are now well-positioned for further expansion.

We operate on a market which is undergoing changes. This creates both challenges and opportunities for a company such as Duni. There is, for example, a general trend towards hotels and restaurants being operated with increasingly clear profile concepts. Quite simply, it is a question of standing out in order to attract the attention of the guests. This increases the need for innovative and unique products, but in certain cases leads to fewer tabletop products being used than a few years ago. This trend puts demands on Duni as a supplier. Thus, product innovation and market intelligence are key factors in maintaining a relevant product offering.

Another trend is that eating on the go is increasing markedly, throughout the world. Various types of take-away chains, ranging from food trucks to cafes and superior quality take-away food, are increasing in pace with an ongoing urbanization. This trend is accompanied by an increased need for single-use articles for food, drink and service.

Growth in 2015

The market trend is reflected in the figures for the year. Duni’s total sales amounted to SEK 4,200 m for the full year of 2015. Excluding currency effects, organic growth reached 1.3%. There is some way to go to achieving the target of 5%, but a strong result was achieved on a market in flux.

Within the Table Top business area, we fell slightly short of the sales targets for Central Europe, while growth in Southern and Eastern Europe was much stronger. Consumer made advances and, despite structural changes on the market, generated growth of 14.6% at fixed exchange rates. The Meal Service business area is growing at 8.5% at fixed exchange rates, which is almost twice as fast as the market in general. Within the New Markets business area, sales to markets such as Singapore, the UAE and the US developed well.

The operating profit for the continuing operations increased to SEK 528 m, with an operating margin of 12.6%. This gives us a strong financial position which allows for work to continue according to plan for achieving growth both organically and through acquisitions, while always having the shareholders’ interests in mind.

Customer intelligence sets the agenda

One of Duni’s guiding principles is to always be positioned at the forefront. We have become better at reading the market and conducting all processes based on a customer perspective. This has an impact in all stages, from innovation and production to sales and marketing. Maintaining a close dialogue with the end customers is a key factor for being able to develop products and services that are attractive and meet their needs. This is particularly the case when we sell through distributors and wholesalers. Our endeavors shall primarily have an impact on those markets where we have witnessed stagnation. Continued measures to develop customer and market intelligence are given high priority.

Employees create the Duni of today and tomorrow

Success is best created by a motivated team possessing the right skills. As a leader, I personally find it extremely gratifying to get employees to achieve their full potential. Since 2014, we have gradually begun producing development plans whereby everyone in the organization will have clear, individualized goals which are followed up. The work method is aimed at creating dedication, skill enhancement and job satisfaction.

Goodfoodmood accentuates our focus

Ultimately, it is a question of doing what we’re best at – at creating Goodfoodmood® on every occasion involving food and drink. It is important that we have a holistic approach and create a good atmosphere in everything we do, be it production, processes, products or design. This is the reason why, in 2013, we took the decision to streamline Duni and thereby discontinue the hygiene products business. Just over a year later, the decision was taken to transfer all airlaid production at the plant in Dals Långed to the plant in Skåpafors. The closure of the Dals Långed plant was completed at the end of 2015. The phasing out has exceeded expectations and I would like to extend particular thanks to all employees at the plant who, despite the gravity of the situation, displayed the utmost professionalism.

VERTICAL INTEGRATION FOR IMPROVED MARKET POSITION

The closure of the hygiene products business was made due to weak profitability in operations, not because of unwillingness to make investments. Thus, during 2015 it was decided that Duni would invest an additional SEK 110 m in the continuing operations at the Rexcell subsidiary in Skåpafors. The investment will increase our core product capacity while also creating conditions for materials development. Duni’s strength lies in being vertically integrated as regards paper-based products, with complete ownership throughout the chain, from material development to converting and distribution. With a strengthened production base, we can now attain an even clearer market position, become more industrially focused, and we can concentrate even more on product development.

PAPER+DESIGN GENERATES NEW POSSIBILITIES

The acquisition of Paper+Design in Germany in 2014 was a significant development. Through the acquisition, Duni obtained access to several sales channels and a strong consumer brand. Paper+Design is now a successful part of Duni’s Consumer business area. We are pleased with the purchasing and production synergies that have been achieved. We also appreciate the increased possibilities to reach out with new, attractive design offerings on an important market, among other things involving new technology such as digital printing.

All in all, 2015 has been characterized by structural work, as well as continued focus on customer service and market understanding. With more efficient production and additional investments for increased competitiveness, we consider the conditions to be very good for continued growth in 2016.

Malmö, March 2016

Thomas Gustafsson
President and CEO