4/29/2010 8:00 AM
Continued improvement in earnings following increased capacity utilization
1 January – 31 March 2010 - Net sales amounted to SEK 960 m (1,007). Adjusted for exchange rate changes, net sales increased by 1.1%. - Earnings per share for continuing operations amounted, after dilution, to SEK 1.09 (0.79). Key financials 3 months 3 months 12 months 12 months January-March January-March April-March January-December SEK m 2010 2009 09/10 2009 Net sales 960 1 007 4 173 4 220 Operating income1) 77 73 440 436 Operating margin1) 8.1% 7.2% 10.6% 10.3% Income after financial items 66 50 460 444 Net income2) 51 37 350 336 1) Underlying operating income; for link to reported operating income, see the section entitled "Non-recurring items". 2) With respect to continuing operations. CEO’s comments "The first quarter of the year began weakly, but ended with strong sales in March. This partly reflects the fact that the recovery is still slow, but the severe winter weather in large parts of Europe certainly also affected people’s inclination to visit restaurants at the beginning of the year. As a consequence of the significant strengthening of the Swedish krona compared with last year, sales during the quarter declined to SEK 960 m. At fixed exchange rates, however, there was a slight improvement. Volumes in the Professional business area increased by approximately 1.5%, while Retail lost almost 4%. Tissue had a better order situation than in the corresponding period of last year and sales increased by almost 6%. Operating income increased by approximately 6%, to SEK 77 m. This is primarily due to a higher gross margin combined with somewhat lower costs. Despite higher raw materials costs, the margin improved as a consequence of better capacity utilization than last year, when inventories were substantially reduced. The lower inventory levels also contribute to an improvement in inventory quality, which had a positive impact on the margin. In the Professional business area, the operating margin during the quarter improved by just over 1 percentage point to 10.8%, due to the factors mentioned above. Within Retail, the gross margin continued to benefit from an improved customer and product mix. The operating margin increased to 4.3%, compared with 1.3% the year before. Despite higher sales in the Tissue business area, income weakened somewhat due to the lag which occurs when prices of raw materials and energy increase rapidly. Overall, prices of input materials have continued upwards at a rapid pace. In order to offset these substantial increases in costs, Duni has announced price increases, most of which will take effect during the third quarter. In other respects, our overall view regarding market trends remains unchanged, namely that we see before us a slow recovery in the real economy," says Fredrik von Oelreich, President and CEO, Duni.