• Net Sales: Increased by 4.4% to SEK2,057 million.
• Operating Income: Decreased to SEK178 million from SEK191 million.
• Operating Margin: 8.7% compared to 9.7% last year.
• Dining Solutions Sales: SEK1.2 billion, largely in line with the previous year.
• Dining Solutions Operating Margin: 12.6%.
• Food Packaging Solutions Sales Increase: 12% on comparable exchange rates.
• Food Packaging Solutions Profit: SEK26 million with a margin of 3.1%.
• Operating Cash Flow: Close to SEK500 million for the year, with nearly SEK300 million generated in Q4 alone.
• CapEx: Slightly exceeding SEK200 million for 2024.
• Net Debt: Remains at low levels despite acquisitions and dividends.
• Return on Capital Employed: 25%, slightly lower than 32% a year ago.
• Organic Growth: 4.9%.
• Proposed Dividend: $0.05 per share.

• Warning! GuruFocus has detected 4 Warning Sign with FRA:2DU.

Release Date: February 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Duni AB (FRA:2DU) achieved the highest quarterly sales in the company's history, with net sales increasing by 4.4% to SEK2,057 million.
• The acquisition of UK converter Poppies significantly strengthens Duni AB's presence in the UK and Ireland, making it their second-largest market after Germany.
• The company has a low net debt and maintains a strong financial position, providing flexibility for future investments and acquisitions.
• Duni AB's sustainability initiatives are progressing well, with a 62% reduction in emissions compared to the 2019 base year and recognition on Time's list for the world's best companies in sustainable growth.
• The food packaging solutions segment recorded a 12% sales increase, driven by acquisitions and strong organic growth in Australia.

Negative Points

• Operating income decreased to SEK178 million from SEK191 million, resulting in a lower operating margin of 8.7% compared to 9.7% last year.
• The German market remains weak, impacting sales in the dining solutions segment, which saw a slight organic decline.
• High costs for power, freight, and storage continue to affect profitability, with inflation and rising salary costs adding further pressure.
• The food packaging solutions segment faces intense competition and regulatory challenges in Europe, impacting growth and profitability.
• Inventory levels are higher than desired, particularly in the food packaging segment outside Europe, contributing to increased storage costs.

Q & A Highlights

Q: Could you provide insights into the volume growth for Dining Solutions in Q4, given the operating margin of roughly 13%? A: Magnus Carlsson, CFO, explained that the slight decline in organic growth was mainly due to volume, with minimal price effect. Improvements were noted in the Horeca segment, which returned to flat levels compared to previous quarters.

Q: Regarding the price increases in Dining Solutions for 2025, how much have you raised or intend to raise prices? A: Robert Dackeskog, CEO, stated that price increases initiated in Q3 will be implemented in Q1 and Q2 of 2025. The aim is to compensate for inflation experienced in 2024, with adjustments ranging between 1% and 5%, varying by customer segment.

Q: What are the expectations for operating margin development in the Food Packaging segment, given the current 3% to 4% range? A: Magnus Carlsson, CFO, mentioned that while no specific guidance is provided, the company aims to return to historical levels of 6% to 9% margins. Investments and strategic focus on certain product areas are expected to drive future profitability.

Q: Is the higher inventory in Food Packaging a market-wide issue or specific to Duni? A: Robert Dackeskog, CEO, clarified that the higher inventory levels are specific to Duni, particularly in Australia. Efforts are underway to reduce inventory and improve profitability, a challenge shared by peers in adapting to new market circumstances.

Q: What changes have driven the improvement in demand in the Asia and Pacific region, and is this trend expected to continue? A: Robert Dackeskog, CEO, noted that the growing middle class in Asia is demanding more premium products, such as profile-printed napkins. This shift is supported by investments in production capabilities in Bangkok, with expectations for continued growth in the region.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.