New Markets business area

PLATFORM FOR EXPANSION IN ASIA

Business area New Markets sells Duni’s concepts and products in markets outside Europe.

BUSINESS AREA STRATEGY IN BRIEF:

• Focus on four geographic areas: Asia, Oceania, the Middle East and Russia

• Continue to build on all acquisitions and grow the sale of premium products

• Further develop the distributor network in regions where demand for Duni’s concepts is strong

• Acquisitions and new strategic partnerships complement organic growth

The business area includes the subsidiaries Duni Song Seng in Singapore, Terinex Siam in Thailand, Duni ZAO in Russia, Duni Inc. in the US, the newly-acquired Sharp Serviettes (United Corporation Limited) in New Zealand as well as exports to other markets such as the Middle East, Oceania, the rest of Asia, and North and South America. The business is primarily focused on the HoReCa segment and retail chains.

ACQUISITION OF SHARP SERVIETTES IN NEW ZEALAND

Duni has been distributing to Asia for many years, but in 2013 decided in favor of a more extensive venture in a structural organization with clear growth strategies. The acquisition in Singapore was the first piece of the puzzle. The strategy up to today has been to acquire companies with experience and knowledge of the market, and with contacts in the channels with which Duni needs to establish a deeper cooperation. Sharp Serviettes in New Zealand was acquired in spring 2017. The acquisition is an important part of the platform Duni is building and allows for increased marketing initiatives in Asia and Oceania. Sharp Serviettes, formerly a distributor of Duni, is market leader in New Zealand.

Net sales for the business area amounted to SEK 322 m (220), corresponding to a sales increase of 42.4% at fixed exchange rates. Operating income was SEK 24 m (23) and the operating margin was 7.4% (10.4%). The improvement in income was predominantly due to the acquisitions. The decrease in margin is attributable to, among other things, initiatives to ensure effective distribution and coordination in Asia and Oceania.

A JOURNEY TOWARDS PREMIUM SALES

Products considered premium in Asia are seen as more basic products in Europe. The companies in Thailand and New Zealand convert napkins with fewer colors and simpler prints. Growth can be seen in the hotel and restaurant industry, particularly in the premium chains in larger cities, where purchasing power is available and there is a greater number of tourists.

STRENGTHENED ORGANIZATION

After a number years of setting-up, structured work is now underway to find forms of cooperation and synergies between the companies. It is partly a matter of a modified organizational structure and partly a matter of developing sales and marketing initiatives. During the year, a purchaser and a regional manager were employed locally. At the same time, the business model in Singapore was redirected towards increasing sales of concepts. With the acquisition of Sharp Serviettes, New Markets’ new organizational structure, and cooperation with other units at Duni, we are well equipped for further initiatives i Asia and Oceania.