Subject: ACC
Interim Report for Duni AB (publ) January 1 - March 31, 2020
BOX, Sweden, April 24, 2020 /PRNewswire/ --
Decreased volumes and lower income due to the Covid-19 pandemic
January 1-March 31
- Net sales amounted to SEK 1,249 m (1,264), corresponding to a 1.2% decrease in sales. Adjusted for exchange rate movements, net sales decreased by 2.9%.
- Earnings per share after dilution amounted to SEK 0.43 (1.08).
- Stable start to the quarter but volumes fell as various countries' Covid-19 restrictions went into effect starting in mid-March.
- New segment reporting as of January 1: two segments, Duni and BioPak, instead of the previous four business areas.
- In March, the Board resolved to withdraw its previously announced proposed dividend for the 2019 financial year.
KEY FINANCIALS
SEK m | 3 months | 3 months | 12 months | 12 months |
Net sales | 1,249 | 1,264 | 5,533 | 5,547 |
Organic growth | -4.2% | 0.3% | -2.1% | -0.5% |
Organic pro forma growth 1) | -4.0% | 3.2% | 0.3% | 2.4% |
Operating income 2) | 80 | 93 | 520 | 533 |
Operating margin 2) | 6.4% | 7.3% | 9.4% | 9.6% |
Income after financial items | 29 | 67 | 339 | 377 |
Income after tax | 22 | 52 | 243 | 273 |
1) Currency-adjusted growth including acquisitions, which are compared with the previous year's pro forma figures.
2) For key financials, definitions and reconciliation of alternative key financials, see pages 25-26.
Stable start to the year - slowdown in March due to Covid-19 pandemic
Following a stable January and February, the Duni Group experienced a slowdown in March. In the second quarter we expect sales to be reduced by more than half and a loss in terms of operating income. We will still be financially strong and expect a gradual recovery in the second half of the year.
Stable start to the year slowed down in March
In 2019, the Duni Group improved its income, balance sheet and cash flow, a trend that continued into January and February 2020. However, the lower sales at the end of March impacted the sales for the quarter as a whole, which decreased by 2.9% at fixed exchange rates. The negative volume performance also brought down operating income to SEK 80 m (93).
Boosting the sales and marketing organization and investing in two brands
A new sales and marketing organization was implemented during the quarter, in purpose to modernize and boost innovation, marketing and sales capabilities for the long term. In the short term, during this Covid-19 pandemic, the new sales organization enabled us to implement our cost-cutting program quickly and effectively. The reorganization announced in January also leads to cost savings during the year.
As a part of this change, the BioPak brand was introduced globally in the Group, which resulted in our previous focus on four business areas instead giving way to two segments that are naturally aligned with the Duni and
BioPak brands. As a result, the Duni Group's income will be reported for these two segments as of January 1, 2020.
Covid-19 has negative impact on sales
In March, the shutdown of Europe's economies began in order to slow down the spread of Covid-19. The primary impact is on the Duni segment's customer groups hotel and full-service restaurants, where many units basically shut down during the end of March. As a result, the Duni segment's sales fell by 11.1% in the quarter and operating income decreased to SEK 56 m (76). Conversely, many restaurants began successfully offering take-away solutions, which contributed to a 16.5% increase in sales and a boost in operating income to SEK 24 m (17) for the BioPak segment during the quarter.
Powerful cost-cutting program
A cost-cutting program was introduced in March to adapt production capacity and spending to lower demand. The program will basically be effective immediately in April and is estimated to save about SEK 150 m in costs during the second quarter, mainly through introduced working time reductions. This cost-cutting program do not result in any restructuring costs and the previously announced saving program regarding organizational changes is not included in this saving.
As an additional measure, the Board withdrew its already announced proposed dividend of SEK 5 per share for the 2019 financial year. The Duni Group has a strong financial position going into the crisis and we do not see any need for additional liquidity beyond our current financing.
With the help of our amazing staff, we are, despite shortened working hours, fully operational with continuing high customer service and a strong customer focus. As a result of our stricter health and hygiene procedures along with the great care and consideration we show for one another, we do not have any confirmed Covid-19 cases among our staff at the time this was written, which is very good news.
Expected loss in Q2 followed by gradual recovery
Although several countries are now announcing gradual easing of the restrictions put in place, our operational planning is based on the assumption of continuing restrictions and that the hotel and full-service restaurant segments will remain closed for much of the second quarter. Such a situation will cut our sales in more than half compared to normal level for the quarter and, even counting the cost-cutting program, result in a loss for the quarter for the Duni Group. However, it is reasonable to assume that there will be a relatively fast market recovery once the restrictions are eased as there is a pent-up social need among restaurant consumers.
A strong Duni Group both before and after the Covid-19
Duni Group went into the Covid-19 with a strong balance sheet, cost-cutting programs implemented, and a historically high sales rate measured on a rolling 12-month basis. With the cost-cutting program in place, we have begun planning activities to come out stronger once the restrictions start being eased. We have a great offering to support restaurants and hotels in making a quick comeback with a focus on good hygiene and take-away. Therefore, the Duni Group is well-positioned for strong performance even after this challenging period.
For more information, please contact:
Johan Sundelin, President and CEO, +46 (0)40-10-62-00
Mats Lindroth, CFO, +46 (0)40-10-62-00
Helena Haglund, Group Accounting Manager, +46 (0)734-19-63-04
Duni AB (publ)
Box 237
SE-201 22 Malmö
Phone: 040-10-62-00
www.duni.com
Company registration number: 556536-7488
Duni Group is a leading supplier of attractive and functional products for table setting and takeaway. The Duni brand name is sold in more than 40 markets and enjoys a number one position in Central and Northern Europe. Duni Group has around 2,400 employees in 24 countries, its headquarters in Malmö and production units in Sweden, Germany, Poland, New Zealand and Thailand. Duni Group is listed on the NASDAQ Stockholm under the ticker name "DUNI". Its ISIN code is SE0000616716. This information is information that Duni AB is obligated to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 07:45 am CET on April 24, 2020
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