Transcript Proposed Legal and Tax Structure – Consequences for

Duni Presentation
Aktiespararna Halmstad 2008-11-26
www.duni.com
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Disclaimer
 This presentation has been prepared by Duni AB (the “Company”) solely for use at this investor presentation and is
furnished to you solely for your information and may not be reproduced or redistributed, in whole or in part, to any
other person. By attending the meeting where this presentation is made, or by reading the presentation slides, you
agree to be bound by the following limitations.
 This presentation is not for presentation or transmission into the United States or to any U.S. person, as that term is
defined under Regulation S promulgated under the Securities Act of 1933, as amended.
 This presentation contains various forward-looking statements that reflect management’s current views with respect to
future events and financial and operational performance. The words “believe,” “expect,” “anticipate,” “intend,” “may,”
“plan,” “estimate,” “should,” “could,” “aim,” “target,” “might,” or, in each case, their negative, or similar expressions
identify certain of these forward-looking statements. Others can be identified from the context in which the statements
are made. These forward-looking statements involve known and unknown risks, uncertainties and other factors, which
are in some cases beyond the Company’s control and may cause actual results or performance to differ materially
from those expressed or implied from such forward-looking statements. These risks include but are not limited to the
Company’s ability to operate profitably, maintain its competitive position, to promote and improve its reputation and the
awareness of the brands in its portfolio, to successfully operate its growth strategy and the impact of changes in
pricing policies, political and regulatory developments in the markets in which the Company operates, and other risks.
 The information and opinions contained in this document are provided as at the date of this presentation and are
subject to change without notice.
 No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness,
accuracy or completeness of the information contained herein. Accordingly, none of the Company, or any of its
principal shareholders or subsidiary undertakings or any of such person’s officers or employees accepts any liability
whatsoever arising directly or indirectly from the use of this document
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“Duni enhances atmosphere
and brings convenience to any
eating and drinking occasion
by providing inspiring and
innovative products and
concepts”
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Contents
 Market overview
 Business areas
¬ Professional
¬ Retail
¬ Tissue
 Financials
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Duni – the European Market Leader for
Table Top Solutions
Duni
Key financials
Full year 2007
Table Top
Professional
68%
Tissue
14%
Retail
18%
∙ Sales: SEK 4.0 billion (+5.9%)
∙ EBIT: SEK 394 million (277)
Manufactured
∙ EBIT margin: 9.9% (8.7%) ¹
Traded
Napkins
Candles
Plates
Eating & Drinking
(glasses, cups,
plates, cutlery)
¹ Excluding non-recurring items
Jan – Sep 2008
Table coverings
Meal service
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∙
Sales: SEK 3.0 billion (+3.3%)
∙
EBIT: SEK 260 million (248)
∙
EBIT margin: 8.8% (8.7%)
Share Price and Ownership Structure
Ownership structure
Share price
per 30/09/08
Name
Shares
Mellby Gård Investerings AB
14 094 500
PolarisCapital Fund Ltd, USA
4 276 800
Lannebo Fonder
3 619 300
SEB Investment Management, SE
3 590 287
Cominvest, DE
2 403 300
Livförsäkringsaktiebolaget (Skandia Liv), SE
2 171 200
Odin Fonder
2 074 800
JP Morgan Chase Bank, UK
1 509 400
Svenskt Näringsliv, SE
1 400 000
SSB CL Omnibus AC, USA
1 371 700
Total
36 511 287
Duni
OMX
Mid Cap
”Sällanköpsvaror” Index
6
%
29,99%
9,10%
7,70%
7,64%
5,11%
4,62%
4,41%
3,21%
2,98%
2,92%
77,69%
Attractive and Large Addressable Market
European disposable table top market
Eating and drinking
supplements
10%
European airlaid market
Focus areas for Duni
Other
12%
Napkins
30%
Hygiene wipes
10%
Food packaging
21%
Table top
14%
Table covers
6%
Feminine hygiene
64%
Candles
33%
• Addressable market of EUR 4 bn
• Addressable market of approx. EUR 0.4 bn
(production value)
• ~2/3 of market is in the professional customer
segment
• Largest part of feminine hygiene is premium
quality
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Source: B Kay tissue, Duni management
The European Market Leader – Above
2x Relative Market Share
Premium positioning
#1 in European Table Top
Market
shares
19%
8%
8%
8%
5%
4%
3%
Linen1)
300
200
100
50
0
Duni
Georgia
Pacific
Kartogroup
SCA
Kimberly
Clark
Papstar
Premium
150
Duni
Karto
Papstar
SCA
GP
Commodity
Tissuebased products
-2006 tissue table top sales (MEUR)
250
KC
Metsä
Narrow
Metsä
Tissue
Wide
Product range/ concepts
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1) The linen market is characterized by a large number of small and regional players
Source: Company reports and management estimates
Market Outlook
HORECA market growing in line or slightly above GDP
• Positive eating-out trend
• Continued strong growth in take-away sector
Retail growth in line with GDP
• Private label over-represented in our category
• Discount stores and private label more in focus in a
weaker economy
Higher uncertainty
• GDP forecasts revised downwards
Raw material prices and costs of certain traded goods
may have peaked
• Energy
• Transport
• Pulp (USD/SEK)
Changing eating habits
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Eating Out Trend
Food spending outside home
(as a percentage of whole food budget)
50
50
40
30
35
%
20
10
5
5
Poland
Czech
0
Germany
10
USA
Source: BROG Media Biznes
Business Areas
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Professional – Stable Development
Geographical split – sales 2007
Sales and EBIT 1
MSEK
3,000
South & East
16%
14%
Other
1%
Nordic
25%
12%
2,500
10%
2,000
8%
1,500
6%
Central
58%
1,000
4%
500
2%
0
Continued stable sales growth
• 4% annual growth since 2000
0%
2005
2006
Sales
2007
LTM
EBIT margin
Solid EBIT margin, further improving
1) Excluding non-recurring costs and market valuation of derivatives
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Professional - Unique Way to Market
Duni Professional’s market model
Benefits of market model
∙ ~250 sales reps and KAMs with approx.
250,000 customer visits per year
End Customers
∙ Effectively acts as a barrier to entry
Direct Sales
Feedback on
trends, market
sentiment, etc.
Wholesalers
Cash & carry
Flexibility towards
customers, ability
to react fast to
changing demand,
customer loyalty
∙ Solidifies customer relations – push and
pull
∙ Enables constant monitoring of market
trends
Duni Sales Force
Product innovation,
feedback on
product portfolio
Continuous contacts, sampling promotions and
other educational and marketing support
Barrier to entry
towards
competitors
• Closeness to market and customers are the key success factors
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Customers are expanding East and Duni is growing with its customers
● Current Duni customer
● Potential customer
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Ukraine
●
Russia
Bulgaria
●
Romania
●
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Belarus
Macedonia
●
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Slovakia
●
Hungary
Croatia
●
Czech
Republic
●
Slovenia
●
●
Serbia/
Montenegro
Poland
Professional - Growing East
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Duni in Metro Germany
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Duni in Metro Germany
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Retail – Turnaround
Geographical split – sales 2007
Sales and EBIT 1
& South
East
1%
MSEK
900
-+6%
Nordic
21%
-+4%
850
+2%
800
-0%
750
-2%
Central
78%
700
-4%
650
Improved profitability prioritized over
sales
growth
-6%
600
-0%
2005
2006
Sales
2007
Duni brand & premium in focus
LTM
EBIT margin
Tougher market conditions
1) Excluding non-recurring costs and market valuation of derivatives
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Retail – Changing Market Trends
The Brand / private label pendulum
Duni opportunity
 Brands are being re-introduced in
retail stores
 Non-food category is a key growth
driver for retailers
Today
 Table top of particular importance
Branded:
Late 1990s
50/50
Private label:
Peak 2004/05
 Leverage on Duni’s brand recognition
 Private label development stagnating
in Sweden: 17,1% value and 23,8%
volume (Source:GfK 2007)
• Retailers moving from private label to branded and premium gives opportunity for Duni
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Category Management
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Tissue
Sales and EBIT 1
Sales mix 2007
MSEK
650
14%
12%
600
External
49%
10%
550
Internal
51%
8%
500
6%
450
4%
400
2%
350
Tissue in-house provides competitive
advantage
Healthy underlying growth in hygiene
sector
0%
2005
2006
Sales
2007
LTM
EBIT margin
1) Excluding non-recurring costs and market valuation of derivatives
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Financials
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2008 Q3 Highlights
• Net sales increased with 0.7% to SEK 973 m
• Operating profit amounted to SEK 83 m (97)
• Includes market valuation of derivatives SEK -18 m (3)
• Operating margin amounted to 8.5% (10.0%)
• Excluding market valuation of derivatives 10.5% (9.8%)
• Continued growth in Professional and improved underlying
margins
- Good development in Central Europe
- Healthy growth in Duni FoodSolutions
• Weaker sales development in Retail
• Mainly UK and Nordics
• Slight improvement of underlying profit margin
• Tissue sales and underlying margin stable
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Top-Line Growth in Professional
LTM Sales
Sales growth
MSEK
MSEK
4 100
1 150
4 050
1 100
2006
2007
2007 9m
2008 9m
Professional
5.7%
6.3%
7.7%
5.1%
Retail
-6.2%
4.2%
9.5%
-3.0%
Tissue
4.5%
6.9%
6.5%
3.2%
Total
2.9%
5.9%
7.9%
3.3%
1 050
4 000
1 000
3 950
950
3 900
900
3 850
850
Q3
Q2
Q1
Q4
Quarter
Rolling 12 months
• Professional continue to demonstrate healthy development
• Weak sales in Retail; stepping out of private label contracts and tougher market conditions
• Transition towards new generation of products
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Underlying Margin Expansion
Operating profit (MSEK)
Operating margin
2006
2007²
2007
9m²
2008
9m²
Professional
11.7%
12.9%
11.9%
12.2%
Retail
-0.9%
0.6%
-2.9%
-1.9%
Tissue
8.5%
8.9%
8.5%
7.9%
Nonrecurring/
derivatives
-1.3%
0.0%
0.1%
-0.3%
Total
8.7%¹
9.9%
8.6%
9.1%
MSEK
400
10%
9%
350
8%
300
-7%
250
6%
200
5%
4%
150
3%
100
2%
50
1%
0
0%
2005
Reported
2006
2007
Non recurring items
LTM
EBIT margin
• Total margin impacted by market valuation of derivatives -9 MSEK (2)
• Increased underlying profit in Professional and Retail, Tissue is stable.
¹ Excluding non-recurring items
² Excluding market valuation of derivatives
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Income Statement
2005
2006
2007
LTM
3,656
3,762
3,985
4,078
-2,829
-2,812
-2,948
-2,980
827
950
1,037
1,098
22.6%
25.3%
26.0%
26.9%
-510
-185
0
20
-33
-459
-219
-6
44
-33
-446
-208
-13
57
-33
-461
-209
-20
54
-58
119
277
394
404
3.3%
7.4%
9.9%
9.9%
Non-recurring items
131
50
0
0
Operating profit (excl. non recurring
items)
250
327
394
404
6.8%
8.7%
9.9%
9.9%
Net sales
Cost of goods sold
Gross profit
Gross margin
Selling expenses
Adminstrative expenses
Research and development expenses
Other operating income
Other operating expenses
Reported operating profit
Operating margin
Operating margin (excl. non recurring
items)
25
Balance Sheet
(SEK in millions)
30/09/2008
30/09/2008
1,226
Shareholders’ equity
1,484
Tangible assets
456
Interest bearing debt
1,188
Financial fixed assets
375
Pension liabilities
Inventory
619
Other long term liabilities
Accounts receivable
700
Accounts payable
285
Other current receivables
180
Other current liabilities
468
Cash & cash equivalents
93
Intangible assets
Total assets
3,649
205
19
Total equity and liabilities
3,649
1,311
ROCE
17%
Net debt
ROCE (w/o goodwill)
33%
Net debt / equity
88%
Net debt / EBITDA
2.6x
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Financial Targets
LTM
∙ Organic growth of 5% over a business cycle
Sales growth > 5%
∙ Consider acquisitions to reach new markets or to
strengthen current market positions
∙ Top-line growth – premium focus
EBIT margin > 10%
2.7%
-
9.9%
∙ Improvements in manufacturing and sourcing
Dividend payout
ratio 40+%
∙ Board target at least 40% of net profit
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1,80 kr/share
(2008)
Duni – Summary
Focused – centered on the European professional segment, which has
always been profitable
Unique business model – based on strong sales force that
enables growth and premium pricing
Return driven – strong cash flow, organic growth and
add-on opportunities create the potential for long-term
shareholder returns
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