Business area Tissue

Improved profitability following improvements in production efficiency

The Tissue business area comprises the subsidiary Rexcell Tissue & Airlaid AB, which produces tissue and airlaid. Approximately 40% of production is sold to external customers, primarily for the manufacture of hygiene products, while the remainder is used within Duni.

Tissue and airlaid constitute the basis for Duni's production of table top products, such as napkins and tablecoverings, as well as hygiene products. The term ‘airlaid’ refers to air laid tissue, while ‘tissue’ refers to wet laid tissue. Production plants are located in Skåpafors and Dals Långed in Dalsland. These paper mills are relatively small and specialized in the production and deep dyeing of high-quality tissue and airlaid.

Development in 2011

In 2011, net sales within Tissue fell by 14.2%, to SEK 428 (499) m. Operating profit increased to SEK 25 (18) m. The operating margin was 5.9% (3.7%). A major project was carried out during the year aimed at improving efficiency in the production. Savings have been achieved through a more efficient use of raw materials as well as investments in new plant. The work is expected to result in continued cost savings in 2012.

During the year, our capacity utilization within the production of tissue remained high, primarily due to Duni's internal demand. As regards airlaid, which is largely supplied to external customers, sporadic lower order intake resulted in short production stoppages.

At the beginning of the year, certain price increases were carried out to offset the higher cost level established in 2010.

Prices of long and short fibre pulp used in tissue production increased during the first six months of the year, but fell back somewhat during the remainder of the year. Prices of fluff pulp (long fibre pulp prepared for production in dry environments) for airlaid production fell steadily throughout the year.

Events in 2011

In 2011, Duni invested SEK 105 m in the paper mills. Most of this investment related to new production equipment for the new material, Evolin ^® . In addition, a new tissue production roller was installed to replace an existing one.

During the course of the year, Duni – together with a major customer – began the development of a new generation of products which will reach the market in 2012. In addition, Duni is in the qualification process for a couple of new customer contracts within the hygiene products area, which is expected to result in the start of a cooperation in 2012.

Table top products and hygiene products

Duni’s own tissue production meets most of the Group’s needs for the manufacture of paper-based table top products. Tissue is produced in various qualities and processed into various materials, such as Dunicel^® and Dunisilk^® . Dunicel^® is a robust material which is suitable for the production of table top products and has a feel which resembles cotton and linen tablecoverings. Dunisilk^® is a material which is used for tablecoverings and has been produced to protect the table and can be wiped off after use. Production of airlaid meets Duni’s own needs for the production of napkins. The unique premium material, Dunilin^® , has incredibly good absorption quality combined with a very soft feel. Since the end of 2011, production is also taking place of Evolin^®, a new and revolutionary tablecovering material which is a direct alternative to linen.

Customers and external sales

The Tissue business area’s customers consist mainly of converting companies within table top products and leading companies within the hygiene products industry. More than one-half of the total production value of tissue and airlaid is used for processing within Duni, while the remainder is sold to external customers.

Within the airlaid product category, most of the production is sold externally as an input material, primarily to a small number of manufacturers of hygiene products. Customer relations are long term and based on close cooperation, which also includes product development work

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Duni's two paper mills in Sweden have ISO 9001 certification and, thanks to their location in Dalsland, water is not used from areas in which there is a shortage.