The year in brief

Strong balance sheet, significant restructuring costs

A more market-oriented category organization was established during the year, aimed at increasing efficiency and competitiveness within our product areas through, among other things, quicker launching processes and more detailed insight into the needs of customers and consumers. The organizational change will also contribute to a strengthened focus on our export activities.

During the period January 1 – December 31, 2012, net sales declined by SEK 138 m compared with the same period last year, to SEK 3,669 (3,807) m.  Adjusted for exchange rate movements, net sales fell by 1.6%.

Sales within Professional declined marginally during the year by 0.8%. This was largely due to the phasing out of napkin contracts in the UK. The take-away sector is an area which experienced positive growth and on which Duni will continue to focus in the coming years. Consumer experienced a weak first half of the year, with sales falling by a total of 8.1% on a market characterized by intensive competition within the grocery retail trade. Secured new contracts gradually contributed to sales during the second half of the year. Tissue performed in line with last year, but was characterized by a low level of production capacity utilization and costs for test runs of new materials. A decision has been taken to commence negotiations with the unions regarding the closure of the unit within Tissue which produces hygiene product materials for external customers.

The gross margin weakened, from 27.1% to 25.8%. Adjusted for non-recurring items, underlying operating income (EBIT) amounted to SEK 340 (404) m for the period January 1 - December 31, 2012. The Group's underlying operating margin thereby declined from 10.6% to 9.3%. Adjusted for exchange rate movements, operating income was SEK 52 m lower than last year. Reported income after financial items amounted to SEK 202 (358) m and income after tax was SEK 124 (261) m.

The low level of capacity utilization at the converting plants and within tissue production constituted the largest single factor for the lower underlying income. The weak economic climate, combined with high inventories, led to a need to adjust inventory levels downwards. As a consequence of these reductions and a focus on capital tie-up, Duni has delivered a very strong cash flow, with net debt at the end of December being at a historically low level. Pulp and electricity costs were kept at a low level, while raw materials costs for plastic and candles remained high.

During the year, restructuring costs of SEK 113 m were incurred. SEK 83 m of these costs relate to the planned closure of the hygiene products unit within Tissue. In addition, SEK 12 m is attributable to the previously communicated restructuring program aimed at strengthening Duni's competitiveness in the future. A further SEK 18 m in costs was incurred in connection with the change in CEO, restructuring on certain export markets, and write-downs of other fixed assets.

• This is Duni
• The year in brief
• CEO statement
• Operations
• Business areas
• Corporate social responsibility
• The share

Dunilin^® premium napkin in Sarala design, mandarin