Duni AB (publ)

Welcome to the DUNY Q3 presentation for 2026. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the CEO Robert Dackeskog and CFO Magnus Carlsen. Please go ahead.

Thank you and welcome everyone to DUNY Group's third corporate presentation. Our theme today is operational progress in a continued challenging market. We restore delivery stability and return to organic growth while logistic costs and weak European restaurant demand continue to affect profitability to the company. Today in the agenda, we'll cover the quarter's highlights, the logistic transition and developments in our offering, followed by market conditions. We will also review group and business area performance and will then discuss our strategy and targets and then a detailed financial run-through and our priorities for the rest of the year before opening for questions at the end. Q3 then in brief. So the quarter brought clear progress in delivery performance. Organic sales growth reached 1.7%, supported by Australia and higher napkin volumes in Europe. The growth was 3% including acquisitions and currency effects. And we have worked through the backlog during the summer, which supported sales as delivery capability improved in the quarter. The quarter then carries cost for that we have two warehouses solutions and distributions to customers remain less efficient than we want. Higher fuel prices added pressure. But yeah, our direction remains unchanged. We are completing the operational transition while developing the offering and working on strengthening our market positions going forward. So looking into the main activities in this quarter and of course the most important change since the second quarter is the greater stability of our logistic operation. By the end of July, we had cleared the backorders accumulated during the spring. The focus then shifted towards deliberate precision and improving the underlying logistic processes. We'll come back to that during this. We're also postponing the transfers of German volumes in Q2, which gave us a room to stabilize the operation. During Q3, we are resuming that transfer. and we will complete remaining German volumes during fourth quarter before year end. And then of course our service recovery and cost recovery follow a little bit different timelines here so we have resolved the earlier delivery issues but then of course dual warehouses arrangements and inefficient distribution still affect the income. Freight costs remain a priority to work with. The freight costs are driven by that the utilization in the tracks are not 100% and the broader fuel prices pressure that we can see in the market continues. We expect the transition-related effects to decrease over the coming quarters. Alongside this work, we continue the sales and administration efficiency program in announcing Q2. and of course our immediate priority is to complete the transfer now in a controlled way and improve efficiency without losing that delivery stability we have regained during the quarter. Other key activities is that in dining solutions we have pre-orders ahead of the Dunedin lighting solution platform which was launched in 1st of October and that indicates a strong initial interest from restaurants and wholesalers across several European markets. These are, of course, early indication of interest, rather than evidence of full quarter of launch dates, but that will come, of course. And also the recently introduced softdick and velvet products are also developed well in the south of Europe. Our concept Uniform brings together machines, packaging and service with advisory support for customers. A large part of the range transitions to pure polypropylene and monomaterial, improving recyclability and compatibility with existing recycling systems, which is very important. The new brand concept makes that integrated offer much clearer. The new PPWR-related requirements enter into force during the quarter, and we have prepared our operational portfolio over several years to meeting this, which we are doing. And if we move on to the market development, and I think this is a picture we all have seen before, it's the German numbers, the German DEHOGA numbers that shows that the market remains difficult, especially then for the food service restaurant. So same picture as in the past quarters. And if we also look into a little bit into the other countries than Germany. It's a little bit the same trend. It is the food service restaurants that continue to face pressure. We see that the European food service traffic remains broadly flat in the countries. We had the summer here. And there is one area that actually are going is the morning meal is actually gaining share globally. That's a maybe longer than term trend that we've seen. But still a challenging market. All right, if we look into the key financial for the group, net sales reached 2 billion 33 million compared with 1972 million last year. And that is 3% growth and 1.7 was organic and 0.3 came from acquisitions and then 1.1 from currency. And at the constant exchange rates, sales increased by 2%. The operating income was 133 million compared then versus last year with 168 million. And of course the higher sales therefore did not translate into the high profitability and as I said before logistic and freight cost together with a little bit the product mix explained that main pressure on the margins. If we look at a little bit into net sales and we can really do more detail for the group then on sales better delivery capability helped us clear the remaining back orders and Australia continued to perform well while European restaurant traffic remained weak and customers focused on controlling cost. We see that of course the Middle East remain under pressure from the geopolitics situation and lower activity in the hotels and restaurants in that area. On income, the extended warehouse implementation then created cost as mentioned before for the view of solutions. Freight cost also reflected both from fuel prices and less efficient distribution then. Savings program we have in Europe contributed positively and helped offset increased IT cost from ongoing investments. And Australia contributed positively while Middle East and did the opposite for that operating income. So all in all positive with organic growth in the quarter and that we clear the backlog but freight inefficiency and increase high fuel cost driving cost.

Now handing over to Magnus to go through a little bit the BAs. Thank you for that Robert and good morning everyone. So as usual I take you through the two business areas in a little bit more detail. I start off with dining solutions. So net sales as you can see amounted to 1.2 billion basically flat from last year. Operating income declined from 140 million SEK to 92 million. That's a decrease of 48 million. And the operating margin came in at 7.5% compared to a strong 11.5% last year. So dining solutions carries the largest share of the logistic transition cost, and this is the main explanations for the decline. So on the next slide, I will walk you through the main drivers here. So starting with sales, improved delivered performance allowed us, as Robert said, to clear the remaining back orders from the second quarter. And we saw an increased napkin volumes in Europe measured in pallets. So that was actually slightly positive. However, part of this volume that reflects the catch up from Q2, so underlying demand from our brand and premium assortment remains soft. So we also saw at the end of the quarter, once the backlog had been cleared. And as Robert said, the market itself gives no support. And if you look on the numbers, as Robert showed, visits to the full-service restaurants in Germany are actually down 6.1% from January to August. That's the latest number. And that is equal to now being around minus 25% versus 2019 levels, so quite significantly. So restaurants continue to face weak consumer demand and elevated cost for labor, food and energy. So against this backdrop, private label demand remains strong as customers continue to focus on the cost control. We are winning these volumes, but at a clearly lower margins than our branded products. Geographically, sales to Germany remain weak while we generate the growth in Italy, supported by our cooperation with safety. That's an acquisition we did two years ago. And this illustrates the value of being a more balanced geographically, having a more balanced footprint. Business in the Middle East continue to be negatively affected by the instability we all see. Turning to operating income, the decline of 48 million, as mentioned, is mainly explained by three factors. First, as we have mentioned several times, logistic cost, double warehousing and inefficiencies in the transition, combined with elevated fuel prices, that has led to clearly higher warehousing and transport costs. And the majority sits here in Dining Solutions. Second, mix of price, the shift within branded products towards value assortments, a higher share of lower margin private label deals and a higher customer rebates or put pressure on the gross margins. And third, Middle East, we see activity being at the distinctly lower level in this region. But there was also some commercial progress alongside these pressures. We secured several customer contracts in the core business, Softik and Velvik, as Robert mentioned. The Dunning Lightning solution launch adds another element to the offering. And these developments supports the future business, while current financial priority remains restoring a better relationship between the sales, the product mix, and the cost base. So if we summarize, delivered performance has somewhat normalized and volumes have recovered from a disrupted Q2. The challenge remains that the share of our branded sales, which together with the transition cost explains why margins are well below our ambition. So if we now move into the food packaging solutions, focusing on sustainable food packaging. So there we see that the net sales increased to 860 million from 751 last year. That's an increase of 5.1% in comparable currencies. We also see that operating income improved from 27 million to 41, and that's an increase in the margin from 3.7 to 5%. So if we look a little bit more in details, growth was driven by Australia and our acquired companies. In Europe, sales were broadly stable with growth in Denmark and Norway were offsetting a weaker development in Germany. Uniform has been mentioned a couple of times lately. That's our all-in-food packaging concept. It continues to outperform the rest of the takeaway portfolio. supported by the development in machines. We have services here and packaging solutions. So during the quarter, Uniform also launched a brand new concept and monomaterial solutions with improved recyclability, very important. So the improvement in operating income is mainly explained by gross margins, particularly in Europe, but also in Biopac Group continue to grow and improving their gross margins. But you can also see that the freight cost was burdening around 7 million only in Australia. We also have higher indirect costs here. And lastly, with the new PPWR, the Packaging Waste Regulation, these requirements coming into force We are well prepared. We have a portfolio that is predominantly fiber-based and that is a structural advantage versus competitors when we see that the regulation tightens. So if we just summarize quickly, food packaging showed a clear margin improvement versus last year. Margins remain below our target, must be said, but the improvement is driven by gross margin rather than one-offs. So I hand over back to Robert.