Duni AB (publ)

Hello and welcome to the JuniGroup Second Quarter Interim Report 2026. 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 Bablu Zakashku. You may begin.

Thank you. Hi, and welcome to JuniGroup's report for Q2. Yeah, the headline is, it's been a challenging quarter impacted by the ongoing logistic transition. We'll come back to that, of course. If we look at the agenda, we'll go through some highlights and then the key activities in Q2, what we have been doing, a little bit around the market outlook, and of course, the financial performance within both business areas. and looking into our sustainability and our long-term targets as a company and then at the end a little more deeper dive into the financials and the summary and the Q&A at the end. So, if we take the headlines here in Q2, of course, logistic transition is the big, big thing, of course, impacting our sales and operating income in the quarter. And, of course, we've done a lot of work here and tried to stabilize, of course, during the quarter. We'll come back to that. Positive was that Germany remained stable, and they were unaffected by the transition. We haven't moved those volumes yet to the new warehouse. And we continue to work on our strategic priorities with the special uniform and lighting in focus. So if we look at the logistic transition here and a little bit of background, what we have done here is that we are creating a new modern logistic setup. Yeah, before we had ten warehouses. Now we're moving to one warehouse. It's a state of the art distribution center in Meppen. and we have chosen an outsource operation with a logistic partner there. And, of course, it will be expected improved scalability here and, of course, reduce the long-term cost for us, just thinking around going from 10 to 1 warehouses, of course. And, of course, we had some delivery disruptions in the beginning, especially the outbound. Inbound has worked very well. and of course this has resulted in lost space and increased costs in form of dual inventories and more expensive transport solutions in the quarter. We have delayed the German volumes which are still delivered then from our old warehouse and it's been working very well and we see that we've got good traction in the German market this quarter. And the situation has gradually improved during the first end of June but also the first day here of July. of course not fully normalized yet. But the reduction of our outstanding back-ordered orders now is contributing positively to the earnings and helps offset the remaining inefficiencies that continue to affect the operation. So if we look in a little bit what kind of activities we have done in the quarter to stabilize is that, of course, as I mentioned, we postponed the German transition. We worked a lot with improving the capacity and efficiency work in the warehouse and the delivery flows, done some small changes that have actually had a great impact now on getting delivery performance up. And we are working really tight with our partner here in order to stabilize the operation, which is working at the moment. So that is positive. We'll come back to this later on in the Q&A here, of course, and in the financial run-through. A little bit also, we haven't just worked with this in the quarter, and there are some other activities, of course, focusing on one of our strategic areas is that we want to expand our offering through innovation and collective growth initiatives. and there we have a completed acquisition of SoulServe to the concept Uniform which then adds service and machines to our concept which is really great and also some new launches in packaging products that are really interesting for the market And we had a big launch of Unilighting solutions that was introduced here in Milan and Copenhagen in the first. And that will now be launched in September, the first step of the Unilighting. And the one big milestone is also that we've been to actually serve a in a lot of major events in Europe. So that's also a great achievement in terms of innovation. other really interesting areas that we mentioned before of course is that we're working really hard to turning of course sustainability into scalable solutions and we have actually completed our case out of the PFAS in all products we launched a carbon footprint calculator that is a big help for our customers the big ones especially And we have now launched a reuse system in a market in Munich town. And it's a really interesting project now and really good investment from the municipality in Munich and a lot of other municipalities is looking into this in Germany. So we'll see how that works, but it looks very interesting. And, of course, also working with composting, which we've done at Swinorock Festival and Västeröland Bicycle Event in Sweden, which also is very interesting, where napkins and packaging turn into composting and soy in the end. Really great concept. Yeah, if we look a little bit on the market development, of course, it's been a week, a year, and we had anticipated a little bit stronger year this year, more visits actually from before the year started. But with everything that happens, of course, in the Middle East, it's definitely the market. And especially I think it's interesting to look at the bottom graph on the right side where you have the restaurants and hotels and markets and where actually the conclusions of those numbers is that the VAT now has come down then from 19 to 7 percent but it looks like maybe the restaurant hasn't lowered the full scale so there's the difference between minus 5.5 and almost two percent in nominal terms value then so that's really interesting in a way that's pretty good for us in Dune because we want to have restaurants that actually EARN MONEY AND ACTUALLY CAN BUY QUALITY PRODUCTS THAT'S THAT'S THE POSITIVE THING OF COURSE BUT STILL OF COURSE IT'S A BIT OF A CHALLENGING MARKET AS WE KNOW IN MOST COUNTRIES IN EUROPE AND IF WE JUST LOOK AT THE OTHER SLIDE HERE THE DEMAND OVERALL the data we get is for the big five markets in Europe and of course it's less visits than anticipated as I said in those five markets so far this year in the first six months which then dampens. We believe this was supposed to be 1% plus up, but it's minus 1%. That's maybe the same trend that we've seen in the past quarters now in Europe. And hopefully, of course, it looked a little bit better here with the Iran war. We thought it was ending, but now it's back again. And of course, that dampens a bit and creates a lot of uncertainty again. So that's maybe the conclusions of that. If we look at the top financial, we'll come back to this. We were down on net sales, and of course, we had a big profit drop of 58 million in operating income. Come back to the effect of that. And the margin was, of course, lower than versus last year . Going more into comments and of course if net sales and operating income are affected by the same things, I mean, sales goes down two percent in six currencies and of course the The whole transition where we moved the warehouse in Germany to a new place and started up has really caused problems, of course, and affected both operating income and the next stage. And actually, on the positive side then, actually, the German volumes, they stayed in the old warehouse, which we postponed the move. And there we've seen a really stable pace. So that's positive in that sense that actually then the problems are logistic in the states that take markets that are affected. And of course the Middle East is putting pressure also. And we saw some light there actually, but then of course the last week here has dampened that as well. and we have some higher IT and energy costs affecting the operating income but also we are offsetting that by savings in safety marketing. Positive is the food packaging turned around here and Australia grew slightly and the income development was more positive and creating better markets. That's the highlight, and now Magnus will go into a little bit more deeper.

Thank you, Robert, and good morning, everyone. So as usual, I will take you through our two business areas in more detail. I'm starting off with dining solutions, our table setting offer. So the net sales amounted to 1 billion 45 million compared to 1 billion 138 million last year, and that is a decline of 93 million. And the single largest explanation is the temporary constrained delivery capacity that we have talked about during the scale-up of our new external logistics setup in Methen. And that meant that we could not fully serve the demand that was actually there. Operating income decreased from 99. to 31 million, and the operating margin declined to 3% compared to 8.7 last year. I will talk you through the drivers on the next slide. So in fixed currencies, sales declined by 6.2%. I want to be clear about the nature of this decline. Again, it is primarily a delivery issue, not a demand issue. The limited outbound capacity during the warehouse transition meant we could not fully meet demand during this period. And the clearest evidence of this that we have mentioned is Germany. German distribution has not yet moved to the new logistic setup, and Germany delivered a stable development on par with last year in both sales and earnings in an otherwise weak market, we must say, as we saw on the previous page. And that contrast with the rest of Europe underlines that the shortfall is transition-related rather than a loss of market position. So beyond logistics, which has dominated, of course, this quarter, I think three factors shaped the quarter. First, we have the mix shift and that continued. A higher share of sales come from lower-priced products. and our customers' own brands within Horeca, and that weighs on the sales value and gross margin. Second, we have the Middle East, and that declined sharply due to the geopolitical situation and reduced travel. We saw some stabilization towards the end of the quarter. Let's see what will happen in the future. And third, on the cost side, we carry double warehouse structures and more expensive transport solutions during the transition, in addition to higher energy costs and rising input prices. So to summarize styling solutions, it is, of course, dominated by a temporary transition-related delivery constraint with an underlying market position that Germany shows remains intact. So the negative effect remains at the start of Q3, but are expected to decrease now gradually as operations stabilize and consequently clearly lower negative impact versus outcome in Q2. Returning now to food packaging solutions, our sustainable food packaging offer. So here the net sales amounted to close to 780 million compared to 746 million last year. Operating income improved from 22 to 34 million SEX and operating margin strengthened to 4.3% compared to 3% last year. So a quarter of clear profit improvement despite the European logistic headwind as we also see here. If you look a little bit more on the details, sales grew by 4.3% in fixed currencies, driven by contributions from recently acquired companies and the continued positive development in Biopac Group. So in Australia, we see slightly positive organic growth that is supported by a regulatory tailwind from more strict plastic restrictions, but also increased sales to new customers. Europe was negatively impacted by the logistic transition in the same way as dining solutions. However, the uniform showed a relatively more resilient development, and that is aligned with the previous quarters where we believe very much in this concept. On profitability, margins improved in both Europe and Biopark. In Europe, lower volumes were more than offset by improved margins and a continuous focus on profitability. BioPact delivers a strong gross contribution supported by both the sales growth and improved margins, but also higher indirect costs absorb part of that effect. But all in all, the net impact on earnings was clearly positive. And as Robert mentioned, during the quarter, we also completed the acquisition of Zooloft, consolidated from 1st of April. The company was around 50 million SEK in annual revenue. And that strengthens the uniform offering with machines, service capacity, and of course, an established customer base. And that takes the uniform clear step into the industrial segment in Sweden, but also in Nordics. So if we summarize food packaging solutions, continued top-line growth, improved margins, and a strengthened platform through SolSol. The rolling fair amount profitability trend continues to move in the right direction. With that, I hand back to Robert.

Right, yeah. And, yeah, just to remind ourselves here is that despite all the struggles with the logistics at the moment, we have an aim for the future mission to become a trusted sustainability leader, and I think that the main thing for doing here is that We are enabling people to enjoy good food and actually meet in restaurants and actually get the food to their houses and help out today and of course for generations to come. That's the main thing and we have three strategies and I think going into them is that You know, expanding innovation is important and there as Magnus was also talking about the reform here and lighting are the two ones we're really focusing on now for the coming months here and the years coming. Of course, the strengthening of market position in Europe and Asia has been our two focus geographic area. and of course Asia-Pacific has been a bit struggling of course especially the Middle East and what that does to Thailand and so on but that is in the long run we really believe in that and the middle class in Asia-Pacific is growing a lot so that's a very interesting market and of course what we're working on and why we do the logistic move is that we need to enhance our efficiency operational efficiency and we're doing yeah shorter things there and long-term things and of course Our ESG agenda then adds to this, and we have seven targets that we measure. And if we take the next slide, how it looks at the moment. And of course, if we comment on sales growth, which we know it's been a negative sales development over the past 12 months. And of course, that's explained as we talked about quite a lot recently in general wheat market. And of course, now with the logistic situation, that has even further taken that number down, of course. And I can mention, and of course the market goes in line with that, and I can mention that the climate target actually, we have reached that actually already, and are down 2% versus the target of minus 57 versus 19, which is great. We have a little bit of a higher index now this quarter, because we are using a little bit more LPG gas in Skopafors. and also great that we have a good traction in suppliers who have signed the code of business conduct and increasing that and that they cover from biopipers group that have signed more code of conduct contracts with us so that's good progress on those all right moving into financials

Thank you, Robert. So if we start with the income statement here, net sales declined by 3.2% in the period and by 2% in fixed currencies. And organic growth was minus 3%. And as we said, the delivery constraint from the logistic transition is a single largest factor for this. If we look on the gross margin, it declined to 20.9% from 23.1%. However, the operating gross margin was 21.9% close to last year. But there is a pressure, and that comes from lower volumes, the negative mixed effect we talked about, and of course, the transition cost of the good sold, as mentioned previously. On indirect cost, the pattern from previous quarter continues. Selling expenses are contained by the realization of previously announced cost savings in sales and marketing. while we see administrative expenses increased. That is IT costs linked to our own ongoing digital investments, including the ERP program, as we also have mentioned previously. Energy costs also developed negatively in the quarter. Reported EBITDA of 70 million includes a restructuring cost of 33 million. There are two items on this cost for the unutilized part of the new external warehouse in Meppen. We haven't moved everything, as mentioned. But it's also an effective efficiency program within sales and admin costs with an expected annual saving of around 30 million Swedish crowns full effect, and that will be from the fourth quarter. The restriction is excluded from operating income and reports items affecting comparability together with acquisition-related amortization, just to be clear. The financial net was minus 27 million compared to minus 24 last year. Two effects to be aware of, several interest rate swaps or favorable levels. I showed you the period, and then we have the new met and lease annual interest cost of around 28 million. At the end, if you also look on the tax, the year-to-date effective rate is 48.8%. that, of course, looks very high, and it is closer to 30% excluding prior year adjustments. So the mechanics are straightforward. In periods where a group profit before tax is close to zero, and when the BioPax group's share of profit becomes proportionally larger, that lifts the blended rate of tax. I think we touched upon this a couple times before. Net income for the quarter was minus 15 million SEK, and earnings per share to the parent company was minus 44 EUR compared to 1.25 EUR last year. To move over to the business area, the slide summaries that we have covered, I think, For the first half year, dining solutions at 5.4% operating margin, that is a decline from 8.9%. Food packaging solution improves to 3.4%. And the groupings at 4.6%. On rolling 12-month basis, it is now to 6.6%. The gap to our 10% target remains primarily as a function of volumes, that is still a challenge in tough times, and also the branded share of sales, not the structurally weak gross margins or excessive indirect costs. So with volume recovery, operational leverage will support margins clearly, and in the meantime, we continue to adapt the cost base to new efficiency programs that should underline this.

We looked a little bit on the cash flow.

Operating cash flow in the quarter was positive at 90 million compared to 150 million last year. I think that's a resilient outcome given the earnings dip supported by working capital release of 43 million in the quarter. Higher accounts payable and other working capital more than offset in the receivables. For the first half, operating cash flow was compared to 43. Last year, the deviation is explained by two factors, lower EBTA, 245 million versus 307, and the higher capital expenditure of 107 million. So I want to highlight the inventory discipline that has been a concern, actually, for us since the pandemic. So despite carrying double stock structures during this transition period, the inventory bill year-to-date was contained at 32 million. And that's an optimization work from the last year, and that, I think, is now paying off. On a rolling 12-month basis, operating cash flow was 362 million compared to 446 million for the full year 2025. a level we expect to recover as the transition costs subside and earnings normalize. If we take the last slide on the financial position, I think the balance sheet reflects two distinct things in the quarter, one structural and one temporary. In the structural item, in January, we gained access to the new logistic facility method, which is recognized as a financial lease of approximately 600 million over 15 years. This is the dominant driver of the increased net debt to $2.5 billion from 1.6 last year at the year end. And it's not an increase in traditional interest-bearing debt, and it reflects a long-term capacity commitment that secures our delivery structure for many years. Very important for us. The temporary part is the working capital build and the weakening earnings in the quarter, which we expect to normalize again, as mentioned. when the logistics situation stabilized. On financing, I can comment a little bit on that. We have strengthened the structure during the period. In March, I think already communicated, we signed a new long-term revolving credit facility, 200 million euros, with a free plus one plus one year tenure. And as of now, end of the quarter, the facility sustainability as well. In June, we also converted the existing 200 million loan into a three-year facility of 25 million euros. So together, I think this gives us a robust and also diversified financing platform throughout the transition period. Finally, I can just mention return on capital employed is going down. We focus very much on this year and, of course, the protect the earnings dip and, again, a figure we expect to recover when the logistic situation normalizes. So to summarize the financial position, the balance sheet has absorbed a major structural investment in our logistic capacity and the temporary operational disturbances in the same quarter. The financing is secured. Working capital remains controlled, I must say. outside the transition effect and the leverage increase is explained and should be understood and expected to reverse direction of earnings recover. So thank you for listening, going through the numbers, and I now hand back to Robert for some concluding remarks.

Yeah, after a short summary then, concluding here that of course the quarter has to dominate by the logistic transition then and the performance there. There's been a lot of measures taken in the quarter that actually have supported now a good gradual stabilization. And we've seen the backlog really drop here in July as well, which is great and following the plan. So the implementation of the measures has been positive. We have actually also worked a lot with the strategic initiatives, and despite all this, around this, and doing progress in special lighting and , which is great. And then, of course, all focus remains then on the improved profits and the cash flow and our competitiveness in the market with our product. All right, then we open up for Q&A.

Thank you. If you wish to ask another question, please press star 1 on your telephone keypad. If you wish to withdraw your question, you may press star 2. Once again, that is star 1 for questions and star 2 to withdraw. Your first question is from Johan Fred from SAB. Your line is now open.

Thank you and good morning Robert and Magnus. Startinging off with a question on the warehouse transition. You state that the situation is essentially gradually improved during July but still of course has not normalized. When do you expect the outbound capacity to be fully normalized and is there a risk of the sort of excess logistics costs extending into Q4 and offset the potential efficiency savings that you've guided for in the same quarter?

Yeah, thank you for the question. Yeah, regarding the state there is that the The plan is that the backlog then will end here in the end of July and then in a way it will be a normal position and then next phase in that is our German volumes yeah and those of course we want to move as soon as possible but we will not move them until we are 100% sure that we have a stabilized you know warehouse and operations So that's the plan for that. And, yeah, regarding cost, of course, there will be some extra cost here going into Q3 because we haven't moved all the volumes from Bramsø. That will prolong. Then, of course, it depends on when we move the German volumes. That's the key, and, yeah. and the aim is to move it as soon as possible so if we get the right answers here in July now and beginning yeah and the KPIs are right and then we can stabilize that maybe a few weeks then it will go pretty fast and on the other hand you never know you know so then it could take a bit longer but yeah that's I think

Yeah, so base cases that the German volumes will be moved during Q3, then.

Yeah, that's the base case, and maybe more mid-end, because we're already in, of course, mid-July here. So that's the best case, and then, yeah.

Got it, got it. And a follow-up on the same topic. You stated that the overall financial impact in Q3 is expected to be significantly less than in Q2. How large was the impact from the logistics disruption specifically in Q2, and how much is significantly less here, sort of using the Q2 number as a reference point?

Yeah, Magnus here. Value questions, and as we indicate, the deviation we had in Q2 was 15 million versus last year, and 50 to 70 million. And we state that the majority comes from the logistic cost. I think there are two components in the logistic services. One is the direct cost, where it's more easy to quantify this. We measure it and log every single item here. And then, of course, you can say it was roughly more than half of the deviation from last year, the direct cost. The other component in logistics is the loss of revenue. Part of it is more temporary, move it forward, backlog, and then it comes back. Part of it is lost. So talking about the number for Q2 and Q3, of course, it is. closer to the lower part of what we indicated of the deviation in Q2. And when we say significantly less in Q3, we talk about maybe one-third or something like that, 20 to 30 percent of the cost as we see now mid-July versus Q2. So that gives you a little bit of the span of the cost we're talking about. And hopefully, regarding the revenue, once we stabilize the situation, we will also not have an issue with loss of revenue. So that will disappear, and that's super important.

That's very helpful, Magnus. Thank you. And a final question on the sort of mixed shift towards lower-priced product here. It's been an ongoing headwind, and from what I gather, also affecting Q2. Firstly could you by any chance quantify the impact from negative mix on organic growth in the quarter and then secondly do you see this as a cyclical trade down that potentially could reverse as consumer confidence improve or is this more sort of a permanent repricing of the category in your opinion?

I can start with the last question here then. I think historically I think we talked around this before but I think we also went out actually we've done some surveys with our customers and especially some who actually have changed then from higher quality to lower and most of them say that they will go back when times are getting better so I think that's something we really believe in I think historically that has been the case as well when it's been downturned that we really believe in and also Yeah, more from our side then. Everything we do now in our sales force, everything is focusing really hard, you know, to help the customers and also really push Profile Print, for example, with the high premium quality in there in order to, yeah, get the customers actually to trade back as well. So we have a big focus with our sales force on that as well to help the customers coming back maybe sooner than later.

Yeah, maybe I'll just jump in on the first part of the question you went on, the profitability impact of this. It is important for us to sell our brands. It's a product that is profitable for us. It's something we work with and something we invest in, in our machinery part, but also in the whole commercial setup and marketing setup. So we invest a lot, and we take part in that. And it's also reflected in the gross margin. And just to give you an idea, our brand product is roughly double gross margin than the private label. So it is a significant difference. And of course, we bring a lot of value into that, that we try to convince our customers. And there's no question that it's appreciated in the market, but in tough times, we see the challenges. So, yes, it has an impact, and I'm sure you can do the calculation when you set it up that this mix effect has a toll on it, our P&L.

Got it. Thank you so much for taking the time. I will get back in the queue now. Thank you.

Thank you. Thank you.

Thank you. Once again, that is star one. Should you wish to ask a question? And your next question is from Eric Sandstedt from Kepler Liberal. Your line is now open.

Hi there. Thanks. Eric Sandstedt here at Kepler. Just a follow-up question on the answer to the earlier question about logistics. Did I understand it correctly that the significantly lower impact that you refer to in Q3 versus Q2, Basically, it's around one-third of the impact you had in Q2, so one-third of the 50 to 70 million.

Yeah, that's a little bit. I mean, you should take the lower part of the 50 to 70, because we say the majority of the deviation in Q2 is related to logistics. There are some other components we talked about that had a negative impact, so it is a lower part, and if you take one-third of that, then you get the rough idea. I think it's important to state that this is what we see today. We are in the 14th of July. It's two weeks into. The trends are clearly improving. All the curves are going in the right direction, but we will not move, as Robert said, the German volumes until we are Yeah, perfect. Thanks for clarifying.

If I understand it correctly, it seems that the logistic disruptions are primarily a Q2 and Q3 issue, then, with limited impact in Q4, assuming, of course, that the remaining transition of the German goods is completed successfully. Is that the right way to think about timing?

Yeah, I would say so, absolutely. Yeah, that's our, yeah, what we think that of.

Yeah, perfect. Thanks. And finally, just on the logistics side, I think you elaborated on it, but how has this impacted your business relationships, basically? I mean, have you talked about permanent losses of sales and so forth, but what has the customer interactions been?

Yeah, of course, it's been tough for the customers. I mean, they expect good delivery, like they always get from doing historically, so it's been tough. And of course, some customers had to find other suppliers, of course, short term. And of course, that would be a little bit, we need to get them back, of course. Most have had delays in their deliveries. And I think the main thing for us there is to be very clear, even if it's delayed, when do you get it? And that has been a little bit hard in the beginning to sort that out. So I think that's and maybe put some constraints on the relationship as well, because if you can't answer that's the main problem. But I think that's something we now have stabilized, and we are much more in control over that. So I think a lot of also customers had their fair share of maybe moves to warehouses. Some are quite understanding as well, but of course they want the product on time. So yeah, we have a long relationship with many, so I hope Yeah, perfect.

Thanks. Then just finally on your long-term financial targets, if we assume that the logistics issues are sort of stabilized eventually, what do you see as the biggest obstacles to reaching these targets?

The biggest obstacle is the macroeconomic climate. I mean, we are dependent to get some, you know, that the increase in demand from the market. It is tough to save ourselves to 10% target. That should be recognized. So we have dropped, now you can see it in the German official numbers, that the number of businesses down 20% before the pandemic. And even a small part of that would be extremely helpful to come back to a little bit better numbers. It has been a pretty tough year from a consumer perspective, and we need some help from the market. And we know when we get that, we will have a very good operational leverage. And that's a good part of being vertically integrated. We get that, but it's also a tough part when the volumes are going down. So I would say the market situation needs to improve and the consumer needs to feel a little bit better and dare to go out and eat. That's number one, I would say.

Yeah, makes sense. And then finally, actually, could you just share some details on your Middle East exposure?

It is limited in the sense of share of group sales. We're talking about, you know, very few percent. But, of course, the decline in Q2 and also in Q1, the first half year has been dramatic, I would say. I mean, nobody has went over to Dubai or that area, but also we've seen in Thailand, our factory in Thailand and so on and all of Asia has been impacted by less traveling overseas. So it is a share. Yeah, I understand.

Perfect. Thank you very much. Thank you.

Thank you. Once again, that is star one. Should you wish to ask a question? There are no further questions at this time. Please proceed with the closing remarks.

Yeah, thank you everyone for listening in for great questions as well, and I wish everyone a great summer, and thank you for listening in. Bye.