7/29/2009 8:00 AM
Strong cash flow and stable profitability
1 January – 30 June 2009 - Net sales increased by 3.1% to SEK 2,042 m (1,981) - Earnings per share for continuing operations amounted, after dilution, to SEK 2.24 (2.17) 1 April – 30 June 2009 - Net sales increased by 2.2% to SEK 1,035 m (1,012) - Earnings per share for continuing operations amounted, after dilution, to SEK 1.45 (1.21) - Strong cash flow, primarily as a consequence of reduced inventories - Healthy profitability trend in Professional business area Key financials 6 months 6 months 3 months 3 months 12 months 12 months January-June January-June April-June April-June January-December July-June 2009 2008 2009 2008 2008 08/09 Net sales, SEK m 2 042 1 981 1 035 1 012 4 099 4 160 Operating income 1), SEK m 157 167 84 84 414 403 Operating margin 1), % 7.7 % 8.4% 8.1 % 8.2% 10.1% 9.7 % Income after financial items, SEK m 144 140 94 73 251 255 Net income 2), SEK m 105 102 68 57 191 194 1) Before an unrealized valuation effect of derivatives, due to the non-application of hedge accounting, of SEK 23 m (9) January – June, SEK 25 m (7) April – June and before restructuring costs of SEK -1 m (0) January – June, SEK -1 m (0) April – June. 2) With respect to continuing operations. CEO’s comments "The second quarter of the year has entailed a degree of stabilization in demand within Duni's consumer-related business areas. Sales in both Retail and Professional have largely followed the pattern from the first quarter. In total, sales in Swedish krona increased by 2.2%. At fixed exchange rates, this corresponds to a decline of 6%. Measured in terms of volume, adjusted for comparability, we lost approximately 3-4% within the Retail and Professional business areas which demonstrates that Duni is holding up well in a relatively weak market. On the other hand, Tissue continued to perform weakly with a much sharper decline in volume. Thanks to the relatively strong sales within the core business Professional and Retail, we achieved an underlying operating income of SEK 84 m during the second quarter, which is in line with last year. A positive factor is that Duni succeeded well in maintaining the prices, which is also reflected in a somewhat improved margin. The other important income component is that costs were reduced in time and that we, to a certain extent, managed to implement the restructuring measures earlier than originally planned. The most positive trend derives from our main business area, Professional. Sales increased by 5.8% in current prices and underlying operating income increased by 12.9% to SEK 96 m. The market situation is largely the same as in the preceding quarter. The important German business performed better than the HoReCa market as a whole. Compared with the first quarter, we see an improvement in Southern Europe, where France in particular has delivered relatively better sales figures. Sales in the Retail business area generally follow the development during the first quarter. We experienced declining sales on the Nordic market as a consequence of discontinuation of customer contracts with low profitability. At the same time, we have made some important breakthroughs into new customers in this region. The positive trend in the United Kingdom continued also during the second quarter. Operating income was somewhat lower within Retail, as a consequence of lower volumes. The Tissue business area had a poor quarter, due to reduced volumes in airlaid. As previously indicated, we expect an improvement during the second half of the year as regards deliveries to the hygiene products sector. However, the quarter was weaker than expected and we have further reinforced our cost savings program as regards Tissue. The strong cash flow in the quarter reflects that we have successfully reduced operating capital during the period, mainly through decreased inventory levels. To conclude, we maintain the view regarding 2009 which we expressed in the report for the first quarter. The market situation has stabilized to some degree, but uncertainty remains on several important European markets for the upcoming autumn season," says Fredrik von Oelreich, President and CEO, Duni.