Duni AB (publ)

Hello and welcome to the DUNY Group Q3 Interim Report 2025. 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 Dakishkog, President and CEO. Please begin your meeting.

Hi everyone and welcome to this Q3 report for 2025. The headline for this quarter is improved operating profit despite continued challenging market conditions. And if we move into the agenda today, as always we go through the highlights, the market and the outlook and the summary of Q3 and then we'll go into our two business areas a little more deeper. and then we're looking in at our sustainability targets for 2025 and then we will go through our updated targets for 2026 both for the financial and sustainability targets and then at the end we'll finish off with a q a as always so um highlights for q3 um our operating profit improved by just over 10 percent during the quarter And this was despite continued challenging market conditions. Net sales grew by 7.9% during the period in fixed currencies and in variable currency, 3.3%. And the acquired companies in the UK and Slovenia continued to contribute positively, and they were driving both our top line, the net sales, and operating profits. And now we're halfway through our decade of action and we are updating the targets for the financial and sustainability targets. We'll come back to that later on in the presentation. So if we look at the market, yeah, the market remains weak. It's a persistent inflation and the challenging consumer climate in the world and Europe. We have a general decline in the hotel and restaurant sector. where price increases haven't offset reduced volumes. And if we look on the right bottom corner, you can see the German numbers here for the restaurant industry. And in volume, which is the real number for the quarter two there, it's very red. And in our main area, gastronomy, it's minus 3.5%. and actually struggling also in nominal terms. As we all know, the European economic sentiment is pretty tough, and the employment expectation, as you see on the left graph, is lower, going downwards. So it's a challenging time, of course. But there is an uneven recovery in the European food service. So some countries show signs of rebound, others continue to lag, making pan-European growth difficult to sustain then. And you can see that a little bit UK struggles, Germany on the other hand is emerging with growth prospects and expects with numbers from SICARNA, expects to have a 1.6% increased visits for 2026 and hopefully then Germany has bottomed out. And lowering the VAT from January in Germany should hopefully help the German restaurants industry in 2026 and going forward. Italy and Spain has been more stable last year and has a moderate decline last year. They depend more on tourists, which has probably been quite good for those countries. And if we look a little bit ahead, it's a muted growth outlook. So the European food service sector faces a slow and uneven recovery, shaped by economic caution and shifting consumer priorities. Looking at the key financials, we have a net sales of 1.972 million SEK. And the net sales amounted last year to 1.910 billion, so an increase. And operating income ended up at 168 million versus 158 last year. And the operating margin was up from 7.9 to 8.5%. So a little bit summary there. Moving a little bit more into the details then on the comments here. Net sales then increased 3.3%, but we had an increase of almost 8% in fixed currencies, mainly driven then from the acquired companies like poppies in the UK and also price increases. The organic growth is flat, and comparing, for example, to the German restaurant market, where that market is down 3-4%, it seems that we are taking some shares in the market. We see the trend of focus on cost, of course, in the market environment, and where maybe restaurants are choosing a little bit less premium products, so there's a mixed change there. We have a gradual impact of price increase in Europe, and in Australia, buy-back groups continue to grow in local currency, so weak Aussie dollar is impacting the translation to the SEC here. If we look at the operating income, it ended up at 8.5%, and our acquired companies are driving the operating income in the quarter. We have some lower volumes, and mixed effects continue to have a little bit negative impact on the result but with good cost control and efficiency improvements has a positive impact mitigating. Also the actions in our sales and marketing cost resulted in lower levels and our change now to focus specialized sales teams for each business area has been implemented. If we look at the inventory level, it has decreased in beer pack, but we have some higher indirect costs, and the weak Aussie dollar has had a negative impact in Australia. And then I will move into the business area, which Magnus will come into.

Thank you, Robert, and good morning, everyone. So as usual, I will now provide a little bit more detailed overview of the two business areas. Start off with dining solutions, which includes our table-setting products. Despite currency headwinds, sales increased by 120 million compared to previous year Q3, reaching 1.22 billion SEC. And this growth was primarily driven, as Robert said, by acquisitions completed earlier this year and at the end of last year. Profit improved year over year, slightly improved margin of to 11.5%. So as we touched on earlier, the market continues to face challenges. Based on the macroeconomic data and what we're seeing across our own markets, it appears we reached a floor in the Horeca segment with some signs of stabilization, maybe an improvement compared to last year. The retail segment, however, remains more volatile. For us, it's largely influenced by tenders, whether won or lost. And in the third quarter, we saw a slightly negative development in retail, while Horeca showed modest improvement. We continue to observe a general trend of down trading with lower prioritization of premium products. This isn't unusual in tougher economic times, but it does put pressure on us to meet demand while being even more cost conscious and efficient in our production processes. So pricing, we've seen a positive effect from price increases of around 1.5%. While this is below our initial expectations, it's still a step in the right direction. On the cost side, pulp and some other raw materials remain below last year's levels. However, we're seeing significantly higher inflationary effects in logistics and also on indirect costs, particularly salaries, which have increased well above historical norms. So these cost types now have greater impact than pulp alone. Outside Europe, growth has been a key driver for both business areas. During 2025, that growth has clearly slowed. Some markets are significantly down, while others continue to show strong performance. But what's common across all of them is the increased presence of low-cost Chinese products flooding the market, especially as the US has essentially closed its doors through high tariffs. So despite these headwinds in the quarter, we managed to grow during the quarter and improve our results, thanks in part to our recent acquisitions. We're also beginning to see healthy synergies gradually taking effect. So turning to the business area food packaging solutions, which focuses on sustainable food packaging, sales declined by 7%. And as for the previous quarter, the main reason is significant FX effects from the weak Australian dollar versus the Swedish SEC. Profit was stable at 27 million SEC. And that means slightly better margin ending on 3.7%. There are essentially two main reasons behind the weak sales performance this quarter. First, we adjust for the negative currency effects. Sales were actually on par with previous year. Looking at our business in Europe, volumes are slightly down. However, we're seeing growth in areas where we believe we can build a competitive advantage. We have mentioned before that Uniform is a good example. It focuses on food packaging solutions that help customers reduce food waste and costs while still maintaining superior sustainable offering. But the challenge in terms of volume and one reason for continued pressure on our margin is the takeaway segment. And this market continues to attract many new players, often offering plastic-based, lower-cost alternatives So while there has been a lot of regulation in recent years, we welcome the increased focus on sustainable solutions and strongly encourage stricter follow-up and enforcement of these systems. Second, Biopack Group continues to show improvement. Inventory levels, as Robert said, have come down, already starting in the second quarter, and now we're further optimizing in the third quarter. Gross margin improved, although some of the gains were offset by temporary higher indirect costs. Finally, during the quarter, we made a small but strategically important acquisition through BuyGreen, which is based in Australia. And this moves, strengthens, and complements our fiber-based product offering in what is currently our most important market for this business area. So I hand over to Robert again.