A new strategy launched after a year heavily influenced by increasing pulp prices

All companies must address and manage trends and other external factors. In a world in constant flux, you must adapt when the playing field and rules change.

As a result, Duni initiated a program in 2018 to strengthen margins and launched a new strategy for 2019–2023. Our long-term goal is to improve growth. It’s a balancing act. We have to be brave enough to invest in the future at the same time that we cut costs.

Strong initiatives to strengthen Duni’s profit

The first program aims to strengthen Duni’s profit, which was impacted by several external factors in 2018. The exceptional increase in pulp prices posed a major challenge. With pulp prices increasing just as much in one year as they had in all the past ten years combined, and energy prices increasing sharply at the same time, Duni’s income was impacted negatively. We tackled the challenge with three strong initiatives that will contribute to improving income in 2019:

• Prices were raised at the end of 2017 and another price increase was announced in summer 2018. We have successfully implemented these price increases.
• A major project was initiated to update Duni’s logistics structure, which will cut the company’s costs. These efforts will continue into 2019. One example is that we are looking into how Duni can create more transshipment points. In addition to cutting costs, this is also good for the environment and the customer service.
• For several years, Duni’s workforce has grown faster than its sales. The company is now downsizing white-collar staff, which will result in annual savings of slightly more than SEK 35 million.

“In a challenging world around us, we have received confirmation that Duni is on the right path, with both a strong organization and offering.”

New strategy to improve growth

Another initiative will improve Duni’s growth in the long term. As a competitive supplier, we must make an effort to be a customer-focused partner. Duni already has this approach, but is taking a major step further in this direction with its new strategy, the 2019–2023 Platform for Growth.

The strategy has five fundamental components. These are based on trends in the world around us where we see great opportunity to build on Duni’s strengths in order to meet market needs and create a successful business.

• The most attractive end-customer experience
• The best partner partner for sustainable solutions
• Customized concepts
• A digitalized and effective supply chain
• A strengthened organization (The Duni Way)

Several efficiency improvement measures are also being taken to ensure progress in the implementation of the strategy. For example, restructuring will ensure that resources and staff are used in prioritized projects and initiatives that contribute to long-term growth.

The most attractive end-customer experience

Customers should see Duni as the best company to do business with. This means that Duni’s offering must be relevant and easy to comprehend, while contacts with Duni should also be a pleasant experience for the customer. In 2019, Duni will test whether increased digitalization of the customer experience is considered positive. Another good example is the Go Joy Wow assortment platform, which the Table Top business area uses to make it easier for customers to choose the right quality of table covers and napkins. The clarity this provides has led to an increase in table cover sales for our premium material, Evolin^®.

The best partner for sustainable solutions

The new strategy will give the Group an even stronger environmental profile. Duni has come a long way with environmentally sound solutions and the ecoecho® product range sales are growing steadily. This assortment is performing particularly well in the Meal Service business area where it’s a perfect match for the increasing market demand for innovative environmental products, in part as a replacement for fossil-based plastic.

The negative impact of plastic on the environment and expected regulations in this area are an important issue for us. However, we are well-equipped and the growth in ecoecho® is a testament to the strength of Duni’s environmental offering. The Consumer business area is planning to use new alternatives to phase out single-use products made from plastic by 2020.

Two strategically important activities in 2018 were the acquisition of British Biopac and Australian BioPak. Both of these companies hold strong positions in their local markets in environmentally sound packaging for food and beverages. The acquisition of BioPak is also strategically important for the New Markets business area because it strengthens Duni’s position in Asia and Oceania, one of our prioritized growth markets.

Customized concepts

As demand for customized products and services grows, Duni will expand its collaboration with customers to develop tailor-made solutions that strengthen their brands. Duni has already made great strides in areas such as branded prints and will continue to develop this part of its offering.

Duni’s extensive knowledge of the company’s customers’ customer and how we can create goodfoodmood® is crucial in this collaboration and can enhance the competitiveness of our customers.

A digitalized and effective supply chain

Digitalization impacts all industries. Digitalizing internal processes increases Duni’s efficiency in administration, manufacturing and conversion. Digitalizing and automating the supply chain also enables us to improve the customer experience. This makes it easier for customers to collaborate and do business with Duni.

The customer journey is a key part of the strategy and better digital tools will enable us to add value for customers based on well-founded insights.

A strengthened organization

The fifth component of the strategy is The Duni Way, which focuses on how we can continue building a strong organization and corporate culture based on common, relevant core values. Duni continuously strives to be an attractive workplace where employees have good opportunities for development.

We also see benefits from improving Duni’s internal communications. For example, this will make it easier to collaborate and share experiences and ideas across organizational borders.

“With a new strategy based on increased digitalization and customer focus and a stronger environmental focus, we have good prospects for creating long-term positive growth for Duni.”

New direction for Duni

I can now look back on a little over a year as president and CEO of Duni. It’s been a challenging year with the sharp increases in pulp and energy prices putting pressure on margins. However, I am confident that our short-term margin-improvement program has a good chance of delivering gradual income improvements in 2019.

When I look at Duni’s strengths and what is happening on the market, I see several opportunities. With a new strategy based on increased digitalization and customer focus, and a stronger environmental focus, we have laid a solid foundation for long-term positive growth for Duni. I also have great faith that Duni’s skilled and committed organization will deliver on the new strategy excellently.

Malmö, March 2019

Johan Sundelin
President and CEO