Duni AB (publ)

Hello and welcome to the DUNY Group Q4 Report 2024. Throughout the call, all participants will be in a listen-only mode, and afterwards, there will be a question and answer session. Please note, this call is being recorded. Today, I am pleased to present Robert Dakuskov, President and CEO. Please begin your meeting.

Thank you and welcome to the year-end report 2024 where we have the statement acquisition driven safe in continued soft market and if we go to the agenda today we'll have a brief highlights and then talk around market outlook general overview of the Q4 and then moving in more details into the two business areas dining solutions and food packaging solutions Then regarding our sustainability initiatives and then a little bit around our strategy ahead and then coming into the financial and the summary and then at the end question and answer session. So if we move into the next slide here highlights Q4 and it's been an acquisition driven sales in the quarter. We announced the acquisition of UK converter poppies and this will make UK to one of our biggest markets second to Germany in Europe. Low net debt and continued strong financial position in the quarter. And we reached 2025 climate KPI for scope one and two. We'll come back to that as well. So on the next slide, we talk around the market outlook. And there are signs of increasing consumer confidence after a year of low confidence among the consumers in the world. Restaurant owners continue to face challenges with higher costs for materials and energy. Also paying back tax to authorities, etc. Of course, there have been a lot of restaurants going bankrupt during the year in many countries. There are some positive signs. The table seating is slowly picking up globally, but Germany is still facing a weak recovery. We still anticipate a gradual recovery in the mid-term as we said before and a stable recovery in the long term for the global forex market. Germany then remains a bit uncertain of course. Globally we see that Southeast Asia and the Pacific are projected to grow more than other markets in the world. And then we're moving into next slide Q4 key financials. It's the highest quarterly sales actually in the company's history. Net sales increased by 4.4% to 2057 million and the operating income decreased to 178 million from 191. And we ended up with an operating margin at 8.7% versus 9.7 last year. If we look into the comments on the next slide, the increase was driven from the acquired companies, but also from the good development in Asia Pacific. Sales towards restaurants and hotels almost on par for business area dining solution, which is the napkins and table covers, after several quarters with weak numbers. This despite the still weak development in the Dutch German market. If we look at BiPAP Group, which is mainly our Australian business, came back to a double-digit growth in the last quarter. Look at the operating income, it was affected by continued high cost for PALT and Freight compared to the same period last year. The price for PALT flattened out during the quarter but was still high compared to the same period last year and that affected the margin negative. Margin was also affected by increased storage cost for the BIPAC group. We have reduced the indirect cost during the quarter in Europe and this mitigated the due diligence cost for the announced acquisitions and also the high cost a little bit outside of Europe. So now we're moving into the two business areas and a little more details and I'll hand over to Magnus.

thank you Robert and good morning everyone so I will now provide a more detailed overview of the two business areas starting with the dining solution the summary slide which covers our table setting products so looking at the numbers sales remain largely in line with previous year in absolute terms closing at 1.2 billion SEC operating income declined slightly from 75 million sets, 252 milliseconds, resulting in a margin of 12.6%. If we take the next slide, diving into the numbers, we observed slightly lower volumes compared to last year. However, of the several weak quarters in the Horeca segment, particularly in the DASH region, as we have said many times, Q4 nearly matched last year's performance. So overall organic growth was slightly negative around 3%, but this was partially offset by the acquisition of the Slovenian company City that we did in Q3. We have noted an increasing preference for private label products and some downgrading in product selection among certain customer segments. And this is due to the economic uncertainty and the high cost we see. And this trend continued in Q4. As a result, Duni has experienced a negative mix effect and in some cases has made strategic decisions to exit the low margin or unprofitable business. Pulse costs increased gradually in 2024. It has stabilized on historical high levels since autumn. However, a more significant challenge has been inflation, which has remained at exceptionally high levels for the last 40, 50 months or so. And additionally, we see rising salary costs are adding further pressure. So following a period of price reduction that started actually in 2023, due to the intense competition, and at that time, we saw a lower sea freight than raw materials. We've seen it already in our Q3 report that price adjustments were necessary to offset these higher costs. And these measures have now been prepared during the fourth quarter and will gradually have an effect from Q1 2025. So to mitigate inflationary pressures, we have also focused on improving internal efficiency. Our cost reduction efforts in 2024 are already yielding results in the quarter, as Robert mentioned, as we see a decline in our indirect costs, possibly impacting profitability. And this remains a key focus area moving forward. So if we take the next slide, just before Christmas, We announced the acquisition of Poppys, and we have now finalized the transaction. Poppys officially joins Dune Group and Dining Solutions as of February the 1st. And this acquisition significantly strengthens our presence in UK and Ireland, making it our second largest market after Germany. So Poppys alone is expected to contribute approximately 650 million in sales. And as Robert said, we see significant synergies and are excited about increasing our relevancy in UK. And that's clearly one of the Europe's largest and most dynamic food markets. If we take the next slide, turning into business area food packaging solutions, which focus on sustainable food packaging, we recorded a 12% sales increase this quarter on comparable exchange rates. This growth was primarily driven by acquisitions, but also supported by strong organic growth in Australia. Profit improved to 26 million with a margin of 3.1%. We take the next slide. Looking closely at the quarter, as said, sales increased double digits. Acquisitions done in the first half year further contribute to the sales increase. And volume growth remains strong outside Europe in Q4, particularly so in Australia. That's our largest market for food packaging. However, meanwhile, in Europe, we continue to struggle with weak demand and intense competition in the takeaway segment. We also see the loss of several major contracts over the past year has negatively impacted growth in this region. Additionally, it's fair to say that the sector faces complex regulatory challenges and ongoing shifts in technology to replace plastics. Despite these challenges, we remain positive and optimistic about the long-term growth in food packaging, particularly as regulatory clarity improves. A combination of sustainable driven consumer behavior and a demand for convenience will drive future success. So our focus remains on responsible and sustainable consumption. So while profitability improved in Q4, we still have progress to make to reach our historical levels and financial targets. We have been operating on a high cost environment with rising sea freight and material expenses. To stay ahead, we continue to update our product portfolio, ensuring that we have a market leading solution in place. The one key initiative has been the launch of non-peer-pass-added products introduced almost a year ago. More recently, we have been focusing on reducing food waste by providing ceiling solutions for fresh takeaway food that are both hygienic and environmentally superior. So these investments have temporarily increased costs, but position as well for future growth and customer relevance. So I now hand back to Robert to give an update on our ESG initiatives.