Year-end Report for Duni AB (publ) 1 January – 31 December 2011

1 January – 31 December 2011

• Net sales amounted to SEK 3,807 m (3,971). Adjusted for exchange rate changes, net sales decreased by 0.8%.
• Earnings per share amounted, after dilution, to SEK 5.54 (6.52).
• The Board proposes a dividend of SEK 3.50 (3.50) per share.
• Higher investments to promote long-term growth.

1 October – 31 December 2011

• Net sales amounted to SEK 1,063 m (1,097). Adjusted for exchange rate changes, net sales decreased by 2.0%.
• Earnings per share amounted, after dilution, to SEK 2.09 (2.49).
• The operating margin almost on par with a strong quarter last year. Strong gross margin of 29.7% (28.4%) in the seasonally most important quarter.

Key financials

1)Underlying operating income; for link to reported operating income, see the section entitled "Non-recurring items".

CEO’s comments

“Duni ended 2011 with good profitability during the final quarter of the year, which includes the all-important Christmas season. Operating income was SEK 151 m (SEK 163 m) and the operating margin reached 14.2% (14.8%). This is somewhat below a very strong fourth quarter of 2010 and reflects a degree of cautious restraint on some of Duni's main markets.

Sales largely followed the pattern of the preceding quarter and were 2% lower at fixed exchange rates. This reflects a stable sales trend within the Professional business area, while we lost some sales within Retail and Tissue. As far as Retail is concerned, this is the due to the continued phasing out of the large private label account which has been commented on previously. In other respects, sales were stable and Duni has increased its market shares in the grocery retail trade, particularly in England but also in Benelux.

A degree of weakening was noted in the Tissue business area, which is partly attributable to inventory reductions at our customers. In terms of income, the trend within Tissue remained healthy; this is mainly due to productivity improvements.

For the Professional business area, the quarter was characterized by stability on the main markets in the Nordic region, Germany and Benelux. An operating profit of SEK 121 m (SEK 124 m) and an operating margin of 16.1% (16.4%) can be considered satisfactory in light of the fact that 2011 was a year of increased capital expenditures and marketing efforts aimed at profitable growth going forward.

Duni’s largest investment during the year has been in new technology for the production of a new premium material - Evolin®. A patent has been sought for the technology and the material, which is entirely unique, is aimed at the table cover market, with the goal being to reach the same quality level as linen, but with a more attractive total economy for the end customer. The interesting fact is that Duni is thereby entering a market segment which is significantly larger than our current addressable market. The product will be launched gradually during the first quarter of 2012, with an accelerated rollout thereafter. This represents an extremely exciting phase in Duni’s development, since the Company's successes are largely based on unique premium materials such as Dunilin® and Dunicel®.

We are also focusing on further improving efficiency in the operations. During 2012, we intend to carry out a program of measures to achieve increased efficiency within the organization as well as in production. Combined with our investments for growth, this is expected to result in improved profitability.

As regards the macro-economic perspective for 2012, we anticipate a degree of economic slowdown in Europe in light of the high sovereign debt problems in some countries and the related Euro crisis. This may have a degree of impact on volume growth, but it may also bring with it lower prices for input materials,” says Fredrik von Oelreich, President and CEO, Duni.