Note 5 – Operating segments

Company management has established operating segments based on the information which is addressed by the strategic decision-making group and used for making strategic decisions. Since January 1, 2017, operations in Duni are divided into four operating segments.

The strategic decision-making group addresses and evaluates the operations based on lines of business to which the same risks and opportunities apply. Duni regards the Table Top, Meal Service, Consumer and New Markets lines of business as operating segments; internally within Duni they are designated as business areas.

The Table Top business area offers Duni’s concepts and products primarily to hotels, restaurants and catering, and companies in the health and care sectors. Table Top mainly markets napkins, tablecoverings and candles for the set table.

The Meal Service business area offers concepts for meal packaging and serving products for take-away, fresh ready-to-eat meals, and various types of catering. The business area’s customers are mainly take-away-operated restaurants, food producers, and companies in the health and care sectors.

The Consumer business area offers consumer products primarily to the retail sector in Europe. The business area’s customers comprise grocery retail chains, but also other channels such as specialty stores, including garden centers, home furnishing stores, and DIY stores.

The New Markets business area offers Duni’s attractive quality products, table top concepts and packaging to new markets outside of Europe. In addition to customer segments such as hotels, restaurants and catering, the business area also aims its offering at retail.

Up to and including 2016, operations were divided between five operating segments. Starting in 2017, Duni no longer tracks the Materials & Services business area and will instead report it under Other. This is a natural step given that the former hygiene business, which were discontinued in March 2015, were included in Materials & Services. At that time, the business area accounted for approximately 13% of Duni’s total net sales. After the hygiene business were discontinued, they were recognized as discontinued operations and were therefore no longer included in Materials & Services. The business area accounted for only slightly more than 1% of Duni’s net sales in 2016. External sales of tissue and airlaid materials from the Skåpafors factory and external sales of finance and accounting services from the European Finance Function (EFF) in Poznan are also included in Other.

These business areas largely have a joint product assortment. However, design and packaging solutions are adapted to suit the different sales channels. Production and support functions are largely shared by these business areas. Sales between the business areas take place on market terms.

Shared costs have been allocated based on estimated utilization of resources, which normally corresponds to actual business volumes.

Group Management constitutes the strategic decision-making body in Duni and decides on the allocation of resources within Duni and evaluates the results of the operations. Duni’s Group Management monitors the operations divided into the four business areas, which are evaluated and controlled based on the operating income, i.e. reported EBIT before restructuring costs, non-realized valuation effects of currency derivatives, fair value allocations and amortization of intangible assets which are identified in connection with business acquisitions. Interest income and interest expenses are not allocated per segment since they are affected by measures taken by the central treasury function, which manages the Group’s cash liquidity.

Operating segment

2017, SEK m Table Top Meal Service Consumer New Markets Non-allocated TOTAL
Total net sales 2 338 705 1 034 322 67 4 465
Net sales from other segments – 0 24 – – 24
Net sales from external customers 2 338 704 1 010 322 67 4 441
Operating income 375 31 57 24 5 491
Items not included in operating income 0 0 -26 -9 0 -35
Reported EBIT 375 31 31 15 5 456
Financial income 0
Financial expenses -18
Income tax -106
Net income for the year 334
Total assets 2 979 225 1 235 355 39 4 833
Total liabilities 827 106 346 99 860 2 239
Investments 151 13 62 8 3 237
Depreciation/amortization 79 7 69 16 2 174

 

2016, SEK m Table Top Meal Service Consumer New Markets Materials & Services Non-allocated TOTAL
Total net sales 2 293 666 1 067 220 680 – 4 926
Net sales from other segments – – 28 – 628 – 656
Net sales from
external customers		 2 293 666 1 039 220 52 0 4 271
Operating income 369 41 65 23 4 – 502
Items not included in operating income -5 -2 -27 -4 0 – -38
Reported EBIT 364 39 38 19 4 0 463
Financial income 1
Financial expenses -23
Income tax -107
Net income for the year 334
Total assets 2 804 187 1 172 291 33 0 4 487
Total liabilities 794 104 338 72 16 676 2 001
Investments 118 6 46 26 4 0 200
Depreciation/amortization 74 7 68 9 2 0 159

Duni controls its operations based on what Duni refers to as operating income. ‘Operating income’ is an alternative key ratio that means operating income before restructuring costs, non-realized valuation effects of currency derivatives, fair value allocations and amortization of intangible assets identified in connection with business acquisitions. See the bridge between operating income and EBIT below.

SEK m 2017 2016
Bridge between operating income and EBIT
Operating income 491 502
Restructuring costs 0 -10
Non-realized valuation changes, derivative instruments – –
Amortization of intangible assets identified in connection with business acquisitions -34 -27
Fair value allocation in connection with business acquisitions -1 -1
Reported EBIT 456 463

The assets and liabilities included in each business area include all operating capital which is used – primarily inventories, accounts receivable and accounts payable. In addition, certain assets which are shared (primarily fixed assets) have been allocated. Duni has chosen not to allocate financial liabilities, with the exception of accounts payable and derivative instruments. See also the table on non-allocated liabilities below and Note 4.2.

SEK m 2017 2016
Non-allocated liabilities
Overdraft facility 2 14
Leases 4 3
Bank loans 834 659
Liabilities of other operations not tracked as an operating segment 21 –
Total non-allocated liabilities 860 676

Total sales from external customers broken down per product group:

SEK m 2017 2016
Product groups
Napkins 2 270 2 160
Tablecoverings 785 852
Candles 181 179
Serving products 455 421
Packaging solutions 412 372
Other* 339 286
Net sales from external customers 4 441 4 271

 

*Other includes coffee filters, take-away bags, straws and bags etc.

Total net sales from external customers broken down per geographic area:

SEK m 2017 2016
Net sales
Sweden 324 318
Rest of the Nordic region 513 493
Germany 1 371 1 368
Rest of Central Europe 1 198 1 200
Southern and Eastern Europe 697 642
Rest of the world 338 249
Net sales from external customers 4 441 4 271

 

Duni does not have any single customer that accounts for more than 10% of its net sales.

Total tangible and intangible fixed assets broken down per geographic area:

SEK m 2017 2016
Tangible and intangible fixed assets
Sweden 1 544 1 532
Germany 996 918
Rest of Central Europe 2 2
Southern and Eastern Europe 138 118
Rest of the world 311 262
Total tangible and intangible fixed assets 2 991 2 832

Parent company’s breakdown of net sales per operating segment and geographic area:

Parent Company, SEK m 2017 2016
Operating segment
Table Top 564 563
Meal Service 373 364
Consumer 175 178
New Markets 39 28
Other 9 7
Total net sales 1 160 1 140
Parent Company, SEK m 2017 2016
Geographic area
Nordic region 759 728
Central Europe 275 273
Southern and Eastern Europe 126 139
Rest of the world 0 0
Total net sales 1 160 1 140