Duni — Interim / Quarterly Report 2015

Jul 10, 2015

Interim Report for Duni AB (publ) 1 January – 30 June 2015

(compared with the same period of the previous year)

10 July 2015

Continued improved earnings

1 April – 30 June 2015

• Net sales amounted to SEK 1 002 m (922). Adjusted for exchange rate changes, net sales increased by 4.2%.
• Earnings per share, for continuing operations, after dilution amounted to SEK 1.44 (1.40).
• Table Top reported earnings in parity with 2014, other operating business areas improved over the previous year.
• Decision to invest SEK 110 m in upgrading two paper machines in Skåpafors for increased capacity.
• Hygiene production in Skåpafors is now closed, and hygiene business and changeover work in the Materials & Services business area are reported as discontinued operations as from the second quarter 2015. This is reported on a line in the income statement before "Net income". The consolidated income statement has been recalculated from 2013 and reports only continuing operations.

1 January – 30 June 2015

• Net sales amounted to SEK 1 987 m (1 739). Adjusted for exchange rate changes, net sales increased by 8.5%.
• Earnings per share, for continuing operations, after dilution amounted to SEK 2.94 (2.39).
• Net debt amounted to SEK 916 m, compared with SEK 1,164 m for the same period last year.

Key financials1)

	3 months	3 months	6 months	6 months	12 months	12 months
	April‐	April‐	January‐	January‐	July‐	January‐
	June	June	June	June	June	December
SEK m	2015	2014	2015	2014	2014/2015	2014
Net sales	1 002	922	1 987	1 739	4 118	3 870
Operating income 2)	104	93	211	159	504	452
Operating margin 2)	10.3%	10.1%	10.6%	9.2%	12.2%	11.7%
Income after financial items	90	90	185	154	446	414
Net income	68	66	138	112	327	302

1) For continuing operations.

2) For bridge to EBIT, see the section entitled "Operating income ‐ Non‐recurring items".

Bridge continuing operations

Net sales
	Q1	Q2	Q3	Q4		Q1	Q2	Q3	Q4		Q1	Q2
SEK m	2013	2013	2013	2013	2013	2014	2014	2014	2014	2014	2015	2015	2015
Duni Total	852	914	936	1 102	3 803	921	1 017	1 100	1 211	4 249	1 046	1 022	2 067
‐ Discontinued
operations	112	104	131	107	454	104	95	103	77	379	61	20	81
Continuing operations	740	810	805	995	3 349	817	922	997	1 134	3 870	985	1 002	1 987

Operating income
	Q1	Q2	Q3	Q4		Q1	Q2	Q3	Q4		Q1	Q2
SEK m	2013	2013	2013	2013	2013	2014	2014	2014	2014	2014	2015	2015	2015
Duni Total	55	91	88	152	385	73	101	132	169	475	112	105	216
‐ Discontinued
operations	4	3	8	1	17	6	8	3	5	23	4	1	5
Continuing operations	50	89	79	150	369	67	93	129	164	452	107	104	211

CEO's comments

"Despite a late and cold spring, with an unfavorable calendar effect, quarterly earnings improved by SEK 11 m as compared with last year.

Hygiene production has now been completely closed and the previously announced production move from Dals Långed to Skåpafors is continuing according to plan. The project will be fully completed during the fourth quarter of 2015. In order to clarify the effects from the discontinued hygiene business, the accounts and reporting will from now distinguish between "continuing operations" and "discontinued operations".

The Group's overall structural effects in the second quarter are largely neutral due that the hygiene production is completed and Paper+Design, which was acquired on 11 June 2014, entails relatively small effects on earnings as the second quarter is the year's weakest.

Net invoicing for the second quarter amounted to SEK 1,002 m (922), corresponding to growth of 8.7% as compared with last year. Operating income for continuing operations is SEK 104 m (93) and the operating margin was strengthened to 10.3% (10.1%). Net debt at the end of the quarter amounted to SEK 916 m (1,164).

Organic growth during the quarter is lower than the previous quarter. A disadvantageous calendar effect with an early Easter, together with a late and cold spring in central and northern Europe, led to demand during the period which was weaker than expected. A consequence of this is a lower leverage effect in terms of earnings within the supply of goods.

During the quarter, the decision was taken to invest SEK 110 m in the paper mill in Skåpafors. The investment, with installation anticipated to be fully completed during the second quarter of 2016, yields an increase in capacity of approximately 15% and, in addition, creates a new platform for product development, not the least in the area of environmentally‐adapted material.

The Table Top business area increased net invoicing to SEK 563 m (552) during the quarter; adjusting for currency sales for the business area fell by 2.6%. The decline is explained by calendar effects and worse spring weather in several of our main markets. Western and Southern Europe report continued good growth but this does not compensate for the decline in our more important business regions. The operating income for the quarter were SEK 87m (87) and the operating margin was 15.5% (15.7%).

The Meal Service business area continues to grow at a stronger rate than the market. Net invoicing for the quarter increased to SEK 163 m (148) and the operating income increased to SEK 13 m (7). The business area reports positive growth throughout all markets and the consistent investment in innovation and environmentally‐adapted concepts continues to have a positive impact on both sales and earnings.

The Consumer business area continues to contribute to a significant increase in sales as a result of the acquisition of Paper+Design. Net invoicing for the quarter increased to SEK 212 m (161) and the operating income improved to SEK ‐1 m (‐5). The operating margin was strengthened to ‐0.3% (‐3.2%). Seasonally, the second quarter is weak for this business area; few holidays and a mix of relatively simple products has resulted in the second quarter having the lowest percentage over the year in terms of earnings.

In the New Markets business area, we are seeing a more stable currency situation in Russia while, at the same time, demand in the restaurant and hotel sector has declined heavily. We see satisfactory growth in other markets. Net invoicing during the quarter amounted to SEK 55 m (48) and the operating income increased to SEK 4 m (3).

In the Materials & Service business area, hygiene business has been discontinued and are reported for the quarter as "discontinued operations" outside of Materials & Services. Net sales for the business area, i.e. "continuing operations" for the quarter amount to SEK 10 m (13), with an operating income of SEK 0 m (1).

Although the weather was working against us, we experienced positive growth on most of our markets and our on‐going projects continue to contribute to better profitability in the continuing operations", says Thomas Gustafsson, President and CEO, Duni.

Net sales for the quarter amounted to SEK 1 002 m

1 April – 30 June

Net sales increased by SEK 80 m to SEK 1,002 m (922) compared with the same period last year. Adjusted for exchange rate changes, net sales increased by SEK 38 m, or 4.2%. Duni's increase in sales during the quarter is primarily explained by translation effects resulting from a continued weak Swedish krona and structural effects in Consumer. This is the last quarter with a positive structural effect from the acquisition of Paper+Design; corrected for this, Consumer is at the same level as last year. Table Top reports somewhat weaker growth. On the other hand, Meal Service and, in part, New Markets, report continued growth with positive developments on essentially all markets.

1 January – 30 June

Net sales increased by SEK 248 m to SEK 1,987 m (1,739) compared with the same period last year. Adjusted for exchange rate changes, net sales increased by SEK 148 m, or 8.5%. The first half of the year was characterized by reduced demand on the main markets. Sales, which after the first quarter were at satisfactory levels within Table Top, are now back in parity with last year. This is on a level with the HoReCa market as a whole. However, segments such as take‐away continue to show growth. Retail, which showed weak growth at the end of 2014, has fallen back and shows only a marginal increase as compared with last year.

SEK m	3 months April‐ June 2015	3 months April‐ June 20152) recalculated	3 months April‐ June 2014	Change in fixed exchange rates	6 months January‐ June 2015	6 months January‐ June 20152) recalculated	6 months January‐ June 2014	Change in fixed exchange rates
Table Top	563	538	552	‐2.6%	1 075	1 018	1 030	‐1.1%
Meal Service	163	159	148	7.1%	299	290	271	6.9%
Consumer	212	203	161	25.9%	488	462	318	45.3%
New Markets	55	51	48	6.7%	102	95	91	4.2%
Materials & Services	10	10	13	‐22.3%	23	23	29	‐21.2%
Continuing operations	1 002	960	922	4.2%	1 987	1 887	1 739	8.5%

Net sales, currency effect1)

1) For continuing operations. 2) Reported net sales for ²⁰¹⁵ recalculated at ²⁰¹⁴ exchange rates.

Operating margin of 10.3% in the quarter

1 April – 30 June

The operating income for continuing operations amounted to SEK 104 m (93) with a gross margin of 28.4% (27.4%). The operating margin was 10.3% (10.1%). Adjusted for exchange rate changes, operating income increased by SEK 2 m compared with last year. The earnings for the second quarter are in line with growth in sales, and increased by slightly more than 10%. A feature common to those business areas which strengthened their earnings is that they succeeded in creating growth in the segments in which they operate. Pulp prices remain at a high level in Euros, driven by a strong US dollar. New Markets, which had a challenging start to the year with Russia in focus, stabilized during the second quarter.

Income after financial items amounted to SEK 90 m (90). Income after tax amounted to SEK 68 m (66).

1 January – 30 June

The operating income for continuing operations amounted to SEK 211 m (159) with a gross margin of 28.8% (28.0%). The operating margin amounted to 10.6% (9.2%). Adjusted for exchange rate changes, operating income increased by SEK 32 m compared with last year. Growth in earnings was positive during the first half of the year, but demand on the mature markets has been somewhat weaker in recent months, above all in Table Top. Although most raw material costs were high during the year, particularly those with a strong correlation to the US dollar, gross margins continue to develop in a positive direction. Internal efficiency in the production chain continues to be a deciding factor for maintaining this trend.

Income after financial items amounted to SEK 185 m (154). Income after tax amounted to SEK 138 m (112).

SEK m	3 months April‐ June 2015	3 months April‐ June 20151) recalculated	3 months April‐ June 2014	6 months January‐ June 2015	6 months January‐ June 20151) recalculated	6 months January‐ June 2014
Table Top	87	81	87	165	150	150
Meal Service	13	12	7	15	14	6
Consumer	‐1	‐1	‐5	23	20	1
New Markets	4	3	3	7	6	0
Materials & Services	0	0	1	1	1	2
Continuing
operations	104	95	93	211	191	159

Operating income, currency effect1)

1) For continuing operations.

2) Reported net sales for 2015 recalculated at 2014 exchange rates.

Operating income – Non‐recurring items

Duni manages its operations based on what Duni refers to as operating income. 'Operating income' means operating income before restructuring costs, non‐realized valuation effects of currency derivatives, fair value allocations and amortization of intangible assets identified in connection with business acquisitions. See the table below.

'Operating income' is a designation which is being used as from 1 January 2014 and corresponds to Duni's previously communicated 'underlying operating income'. For all periods up to and including 31 December 2013, operating income corresponds to the previously communicated 'underlying operating income'.

In those cases where derivative instruments have a value, they are reported in the income statement under 'Other Income' or 'Other Expenses'. For details of restructuring costs, see Note 4.

Bridge between operating income and EBIT1)

SEK m	3 months April‐ June 2015	3 months April‐ June 2014	6 months January‐ June 2015	6 months January‐ June 2014	12 months July‐ June 2015	12 months January‐ December 2014
Operating income	104	93	211	159	504	452
Restructuring costs	0	0	0	0	0	0
Unrealized value changes, derivative instruments	‐	0	‐	0	0	0
Amortization of intangible assets identified in connection with business acquisitions	‐7	‐1	‐13	‐1	‐26	‐14
Fair value allocation in connection with acquisitions	‐	‐	‐	‐	‐4	‐4
EBIT	97	92	198	158	473	433

1) For continuing operations.

Reporting of operating segments

Duni's operations are divided into five operating segments, which are referred to by Duni as business areas.

The Table Top business area offers Duni's concepts and products primarily to hotels, restaurants and the catering industry. Table Top primarily markets napkins, tablecoverings and candles for the set table. Duni is the market leader within the premium segment in Europe. The business area accounted for approximately 54% (59%) of Duni's net sales during the period 1 January – 30 June 2015.

The Meal Service business area offers concepts for meal packaging and serving products for, e.g. take‐away, ready‐ to‐eat meals, and various types of catering. Customers mainly comprise companies operating within the restaurant sector, catering or food production. As a niche player, Duni enjoys a leading position within this area in the Nordic region and has a clear growth agenda on identified markets in Europe. The business area accounted for approximately 15% (16%) of Duni's net sales during the period.

The Consumer business area offers consumer products to, primarily, the retail trade in Europe. Customers mainly comprise grocery retail chains, but also other channels such as various types of specialty stores, for example garden centers, home furnishing stores, and DIY stores. The business area accounted for approximately 25% (18%) of Duni's net sales during the period. As from June 2014, the Paper+Design acquisition is included as part of the Consumer business area.

The New Markets business area offers Duni's concepts regarding attractive quality products and table top concepts as well as packaging, with a focus on new markets outside Europe. In addition to customer segments such as hotels, restaurants and catering, the business area also aims its offering at the retail trade. The business area accounted for approximately 5% (5%) of Duni's net sales during the period.

The Materials & Services business area comprises those parts which are not accommodated within the other business areas. Most of the business area comprises external sales of tissue. Production of hygiene products ceased at the end of March 2015 and is thus no longer included in the business area. Instead, hygiene business is reported as a discontinued operation. The income statement for the business area and the consolidated income statement from 2013 have been recalculated and contain only continuing operations. Hygiene business accounted for 88% of Materials & Services' sales for 2014. The business area accounted for approximately 1% (2%) of Duni's net sales during the period.

With the exception of Materials & Services, the business areas largely have a joint product range. However, design and packaging solutions are adapted to suit the different sales channels. Production and support functions are largely shared by these business areas.

Group management, which is the highest executive and decision‐making body in Duni, decides on the allocation of resources within Duni and evaluates the results of the operations. The business areas are directed based on operating income after shared costs have been allocated between the business areas. For further information, see Note 4.

Split on net sales between business areas

Table Top business area

1 April – 30 June

Net sales amounted to SEK 563 m (552). Adjusted for exchange rate changes, this corresponds to a drop in sales by 2.6%. Germany, which is the dominant market, had a weak quarter and declined somewhat compared with last year. Spring was very cold in much of northern Europe, which probably had a negative impact on demand. On the other hand, we see positive growth in Italy and Spain, which have recovered well since the crisis a few years ago; however they still constitute a small percentage of the business area as a whole.

Operating income was SEK 87 m (87), and the operating margin was 15.5% (15.7%). Earnings for the quarter are in parity with last year and the absence of growth has not resulted in any operational leverage effects. Notwithstanding continued high raw material costs, the gross margin has been strengthened somewhat. Trends in the European currencies, particularly the strong British pound, have had a certain positive impact on earnings.

1 January – 30 June

Net sales amounted to SEK 1,075 m (1,030). Adjusted for exchange rate changes, this corresponds to a drop in sales by 1.1%. The market, and demand as a whole, continue to be weak with the exception of a small number of countries, including Sweden. The premium segment has strengthened its share of sales while the business segment faces a more challenging situation for standard products such as simpler napkins. Standard products often face stiff price pressure from competitors where Duni does not have the same competitive advantages. However, they are an important component to maintaining a favorable production volume and it is therefore important that this area is also successful.

Operating income was SEK 165 m (150), and the operating margin was 15.3% (14.6%). Earnings were strengthened during the year through a combination of positive currency effects and a strong focus on internal efficiency. Despite increasing competition in several segments, Table Top has nevertheless defended its margin through, among other things, strict cost controls and increased internal efficiency. Despite a generally static market, there are possibilities using more customer‐adapted solutions and focused campaigns to take additional steps towards profitable growth.

	3 months	3 months	3 months	6 months	6 months	6 months	12 months	12 months
	April‐	April‐	April‐	January‐	January‐	January‐	July‐	January‐
	June	June	June	June	June	June	June	December
	2015	20151	2014	2015	20151)	2014	2014/2015	2014
SEK m		recalculated			recalculated
Nordic region	85	85	86	161	161	163	350	352
Central Europe	373	351	366	734	684	696	1 516	1 478
South & East Europe	104	101	100	180	173	171	358	348
Total	563	538	552	1 075	1 018	1 030	2 224	2 179

Net sales, Table Top

1) Reported net sales for 2015 recalculated at 2014 exchange rates.

Meal Service business area

1 April – 30 June

Net sales amounted to SEK 163 m (148). Adjusted for exchange rate changes, this corresponds to an increase in sales of 7.1%. Stable growth, like that of the two past years, proves that the business area is successful in exploiting the dynamic within the take‐away segment. During the quarter, sales of machines for packaging solutions within catering have been especially successful, but growth is broad within most areas and customer segments.

Operating income was SEK 13 m (7) and the operating margin was 7.9% (4.7%). The second quarter was positively affected by lower prices for component materials, such as various qualities of plastic. Unfortunately, this was a temporary contribution, since the prices for the second half of 2015 have bounced back and remain at the high levels which prevailed last year.

1 January – 30 June

Net sales amounted to SEK 299 m (271). Adjusted for exchange rate changes, this corresponds to an increase in sales of 6.9%. Unlike the Table Top business area, which faces a major challenge in respect of underlying demand, the Meal Service market shows healthy growth. Moreover, the market share is significantly less on the European continent. Investments in innovation and environmentally adapted solutions are advantageous in this competition and are a good concept for continued increases in the market share.

Operating income was SEK 15 m (6) and the operating margin was 5.1% (2.2%). Meal Service has continually increased its gross margin through more efficient purchasing and a great ability to develop new customer‐ adapted solutions. In this respect, focus is primarily on the premium segment, a smaller percentage of the total market. The goal during the year has also been to achieve success with simpler products, which are characterized by high volumes but low margins. The combination offers a possibility for continued improvement in earnings, both relatively and in absolute figures.

SEK m	3 months April‐ June 2015	3 months April‐ June 20151) recalculated	3 months April‐ June 2014	6 months January‐ June 2015	6 months January‐ June 20151) recalculated	6 months January‐ June 2014	12 months July‐ June 2014/2015	12 months January‐ December 2014
Nordic region	77	77	73	142	142	134	278	270
Central Europe	53	50	48	100	94	87	197	184
South & East Europe	32	31	28	57	55	51	108	101
Total	163	159	148	299	290	271	583	555

Net sales, Meal Service

1) Reported net sales for 2015 recalculated at 2014 exchange rates.

Consumer business area

1 April – 30 June

Net sales amounted to SEK 212 m (161). Adjusted for exchange rate changes, this corresponds to an increase in sales by 25.9%. The growth is explained by Paper+Design, which was acquired in June 2014 and, as from the next quarter, there will be no further structural effects resulting from the acquisition. Corrected for this, growth is stable as compared with last year. Napkins continue to be the dominant element in sales and it is also there that the increase in sales has been tangible during the quarter. There were fewer campaigns than last year, which benefited from occasions such as the football World Cup and a warm spring.

Operating income was SEK ‐1 m (‐5) and the operating margin was ‐0.3% (‐3.2%). The second quarter is the seasonally least significant quarter for the business area, with few holidays and, in percentage terms, the lowest amount of sales. The improved result can be attributed to the acquisition of Paper+Design. Despite greater internal efficiency with, on the whole, a lower share of costs, the second quarter suffered from a disadvantageous product mix which primarily comprised simpler napkins, while the number of premium products within table coverings was lower.

1 January – 30 June

Net sales amounted to SEK 488 m (318). Adjusted for exchange rate changes, this corresponds to an increase in sales by 45.3%. The acquisition of Paper+Design is the most important explanation for the increase in sales. During the year, UK contributed most to the increase in sales as compared with comparable units. The Nordic region also initially had strong growth but, during the second quarter, encountered the transactions which were gradually secured during 2014. Like the Table Top business area, Germany shows a wavering trend during the year. The explanation is probably similar, that is to say a somewhat weaker market, but also includes greater competitive pressure.

Operating income was SEK 23 m (1) and the operating margin was 4.7% (0.2%). Like the second quarter, the improvement during the year primarily reflects structural effects. For Consumer as well, it is important to balance the need for volume products with unique and high‐quality articles since these provide satisfactory coverage in production.

SEK m	3 months April‐ June 2015	3 months April‐ June 20151) recalculated	3 months April‐ June 2014	6 months January‐ June 2015	6 months January‐ June 20151) recalculated	6 months January‐ June 2014	12 months July‐ June 2014/2015	12 months January‐ December 2014
Nordic region	33	32	32	73	72	59	161	147
Central Europe	145	138	113	343	322	234	739	630
South & East Europe	17	16	11	37	35	19	87	69
Rest of the World	17	17	5	34	33	6	72	43
Total	212	203	161	488	462	318	1 059	889

Net sales, Consumer

1) Reported net sales for 2015 recalculated at 2014 exchange rates.

New Markets business area

1 April – 30 June

Net sales amounted to SEK 55 m (48). Adjusted for exchange rate changes, this corresponds to an increase in sales by 6.7%. The Russian market, which is one of the major markets in the business area, stabilized somewhat during the second quarter. Despite the fact that the restaurant market declined significantly in, above all, Moscow and in other major urban areas, Duni's sales as compared with last year are only marginally lower. Other markets, including Singapore, have had almost double digit growth during the quarter.

Operating income was SEK 4 m (3) and the operating margin was 6.9% (5.6%). The program of measures which was instituted at the end of last year in order to respond to turbulence on the Russian market has had good results. The stabilization of the Russian ruble has also been an important factor since this is reflected in purchasing costs. The earnings for the business area have therefore increased at a rate consistent with general growth.

1 January – 30 June

Net sales amounted to SEK 102 m (91). Adjusted for exchange rate changes, this corresponds to an increase in sales by 4.2%. New Markets continues to be the business area (together with Meal Service) where high growth is expected and this has also been the case during the year. Asia continues to be a very important market outside of Europe, where Duni's concept regarding premium solutions for table setting is still in the initial stages. South America and the Middle East also continue to increase their shares, however from low levels.

Operating income was SEK 7 m (0) and the operating margin was 6.9% (0.0%). For the full year, earnings are stronger as compared with last year. The above mentioned measures in Russia, including among other things price increases, have resulted in Russia stabilizing and having good prospects also in the medium‐long term. Other markets outside of Europe have had good growth during the first half of the year.

Net sales, geographical split, New Markets

Materials & Services business area

1 April – 30 June

Net sales amounted to SEK 10 m (13). Adjusted for exchange rate changes, this corresponds to a decline in sales by 22.3%. Hygiene business has been removed from this business area. In accordance with IFRS 5, the discontinued operations are reported on a line below net income for the year. The continuing operations in the business area comprise external sales of tissue and certain services.

Operating income was SEK 0 m (1) and the operating margin was 2.5% (10.1%). Earnings for the quarter are somewhat lower than last year, and reflect the lower volumes.

1 January – 30 June

Net sales amounted to SEK 23 m (29). Adjusted for exchange rate changes, this corresponds to a decline in sales by 21.2%. The customer base is significantly more limited when compared with the other business areas and the somewhat lower sales partially reflect the fact that some of the sales during the first half of 2014 were delivered to Paper+Design, which is now part of the Duni Group.

Operating income was SEK 1m (2) and the operating margin was 5.3% (8.5%).

Cash flow

The Group's operating cash flow for the period 1 January – 30 June was SEK 208 m (122). Accounts receivable amount to SEK 686 m (748); accounts payable amount to SEK 325 m (330); and inventory is valued at SEK 531 m (531). Cash flow, including investing activities amounted to SEK 156 m (‐307). Last year includes the acquisition of Paper+Design for SEK 397 m.

Net capital expenditures for the period for continuing operations amounted to SEK 47 m (32). Amortization/depreciation for the period, for continuing operations was SEK 63 m (55). During the quarter, the decision was taken to invest SEK 110 m in increased tissue capacity and new qualities. This investment has not, however, encumbered the second quarter and the investment level for the period continues to be relatively low.

The Group's interest‐bearing net debt as of 30 June 2015 was SEK 916 m, compared with SEK 1 164 on 30 June 2014. Net debt increased by SEK 80 m from last quarter, but declined by SEK 248 m from the same period last year.

Financial net

The financial net for continuing operations for the period 1 January – 30 June was SEK ‐12 m (‐4). The translation effects for the period were negative compared with positive effects last year.

Taxes

The total reported tax expense for the period 1 January – 30 June for continuing operations amounted to SEK 47 m (41), yielding an effective tax rate of 25.4% (26.6%). The tax expense for the year includes adjustments and non‐recurring effects from the previous year of SEK 0.2 m (‐4.3). The deferred tax asset relating to loss carryforwards was utilized in the amount of SEK 19 m (19).

____________________________________________________________________________________________________________________________________________

Earnings per share

The earnings per share for continuing operations before and after dilution amounted to SEK 2.94 (2.39).

Duni's share

As per 30 June 2015 the share capital amounted to SEK 58,748,790 divided into 46,999,032 shares, each with a quotient value of SEK 1.25.

Shareholders

Duni is listed on NASDAQ Stockholm under the ticker name "DUNI". Duni's three largest shareholders are Mellby Gård Investerings AB (29.99%), Carnegie fonder (9.49%) and Polaris Capital Management, LLC (8.79%).

Personnel

On 30 June 2015 there were 2,094 (2,089) employees. 915 (903) of the employees were engaged in production. Duni's production units are located in Bramsche and Wolkenstein in Germany, Poznan in Poland and Bengtsfors in Sweden.

Acquisitions

No acquisitions were made during the period.

New establishment

No new establishments were carried out during the period.

Risk factors for Duni

A number of risk factors may affect Duni's operations in terms of both operational and financial risks. Operational risks are normally handled by each operating unit and financial risks are managed by the Group's Treasury department, which is included as a unit within the Parent Company.

Operational risks

Duni is exposed to a number of operational risks which it is important to manage. The development of attractive product ranges, particularly the Christmas collection, is extremely important in order for Duni to achieve good sales and income growth. Duni addresses this issue by constantly developing its range. Approximately 25% of the collection is replaced each year in response to, and to create new, trends. A weaker economy over an extended period of time in Europe might lead to fewer restaurant visits, reduced consumption at consumer level and increased price competition, which may affect volumes and gross margins. Fluctuations in prices of raw materials and energy constitute an operational risk which may have a material impact on Duni's operating income.

Financial risks

Duni's finance management and its handling of financial risks are regulated by a finance policy adopted by the Board of Directors. The Group divides its financial risks between currency risks, interest rate risks, credit risks, financing and liquidity risks. These risks are controlled in an overall risk management policy which focuses on unforeseen events on the financial markets and endeavors to minimize potential adverse effects on the Group's financial results. The risks for the Group are in all essential respects also related to the Parent Company. Duni's management of financial risks is described in greater detail in the Annual Report as per 31 December 2014.

Duni's Contingent Liabilities have risen since the start of the year by SEK 26 m to SEK 82 m (56) due to a new cashpool in Switzerland.

____________________________________________________________________________________________________________________________________________

Transactions with related parties

No transactions with related parties took place during the second quarter of 2015.

Major events during the period

A new three‐year loan agreement was signed on 15 April 2015.

On 17 June, a press release was issued announcing that Duni had decided to invest approximately SEK 110 m in an upgrade of the two tissue machines in Skåpafors. The investment is being made in Duni's subsidiary, Rexcell Tissue & Airlaid AB in Skåpafors, and will increase the capacity of the tissue machines by approximately 15% per year. The plan is for the new technology to be installed during the second quarter of 2016.

Major events since 30 June

No significant events have occurred since the balance sheet date.

Interim reports

Quarter III	21 October, 2015
Quarter IV	12 February, 2016

Duni Board

All of the directors were reelected to Duni's Board of Directors at the Annual General Meeting held on 5 May. Anders Bülow was reelected Chairman of the Board.

Parent Company

Net sales for the period 1 January – 30 June amounted to SEK 566 m (552). Income after financial items amounted to SEK 0 m (‐2). The net debt was SEK ‐559 m (‐468), of which a net asset of SEK 1,385 m (1,569) is held by subsidiaries. Net investments amounted to SEK 12 m (5).

Accounting principles

The interim report for the Group has been prepared in accordance with IAS 34 and the Swedish Annual Reports Act. The parent company' reporting is prepared in accordance with RFR 2, Reporting for Legal Entities, and the Swedish Annual Reports Act. Accounting principles have been applied as reported for the Annual Report per 31 December 2014.

There is no holding without controlling influence in Duni.

Information in the report

The information is such that Duni AB (publ) is to publish in accordance with the Swedish Securities Markets Act and/or the Financial Instruments Trading Act. The information will be submitted for publication on 10 July at 7.45 AM CET.

The interim report will be presented on Friday, 10 July at 10.00 AM CET at a telephone conference which also can be followed via the web. To participate in the telephone conference, please dial +46 8 566 426 95. To follow the presentation via the web, please visit this link:

http://event.onlineseminarsolutions.com/r.htm?e=1013382&s=1&k=D9CC3FB4F79D7DF4D6877E1D0EE2F10B

This report has been prepared in both a Swedish and an English version. In the event of any discrepancy between the two, the Swedish version shall apply.

____________________________________________________________________________________________________________________________________________

This report has not been the subject of an audit by the Company's auditors.

Report from the Board and the CEO

The Board and the CEO certify that this report provides a true and fair view of the Group's financial position and results and describes the material risks and uncertainties facing the Group and the companies included in the Group.

Malmö, 9 July 2015

Anders Bülow, Chairman of the Board

Pauline Lindwall, Board Member Alex Myers, Board Member

Pia Rudengren, Board Member Magnus Yngen, Board Member

Per‐Åke Halvordsson, Employee representative PTK Henry Olsen, Employee representative LO

Thomas Gustafsson, President and CEO

Additional information is provided by:

Thomas Gustafsson, President and CEO, +46 40 10 62 00 Mats Lindroth, CFO, +46 40 10 62 00 Tina Andersson, Corporate Marketing & Communication Director, +46 734 19 62 24

Duni AB (publ) Box 237 201 22 Malmö Tel.: +46 40 10 62 00 www.duni.com Registration no: 556536‐7488

Consolidated Income Statements

	3 months	3 months	6 months	6 months	12 months	12 months
	April‐ June	April‐ June	January‐ June	January‐ June	July‐ June	January‐ December
SEK m (Note 1)	2015	2014	2015	2014	2014/2015	2014
Net sales	1 002	922	1 987	1 739	4 118	3 870
Cost of goods sold	‐718	‐669	‐1 416	‐1 252	‐2 900	‐2 736
Gross profit	284	253	571	487	1 219	1 134
Selling expenses	‐116	‐112	‐241	‐225	‐472	‐456
Administrative expenses	‐60	‐50	‐117	‐96	‐232	‐211
Research and development expenses	‐3	‐2	‐5	‐5	‐11	‐11
Other operating incomes	0	8	7	5	6	4
Other operating expenses	‐9	‐4	‐17	‐7	‐37	‐27
EBIT (Note 5)	97	92	198	158	473	433
Financial income	1	2	1	3	0	5
Financial expenses	‐8	‐3	‐13	‐7	‐27	‐24
Net financial items	‐7	‐1	‐12	‐4	‐27	‐19
Income after financial items	90	90	185	154	446	414
Income tax	‐22	‐24	‐47	‐41	‐119	‐113
Net income for continuing operations	68	66	138	112	327	302
Net income for discontinued operations	1	7	4	11	11	18
Net income	69	73	142	124	338	319
Income attributable to:
Equity holders of the Parent Company	69	73	142	124	338	319
Earnings per share, continuing operations,
SEK Before and after dilution	1.44	1.40	2.94	2.39	6.97	6.42
Earnings per share, discontinued
operations, SEK
Before and after dilution	0.02	0.14	0.09	0.24	0.22	0.38
Earnings per share, attributable to equity holders of the Parent Company, SEK
Before and after dilution	1.46	1.54	3.03	2.64	7.19	6.80
Average number of shares before and after dilution (´000)	46 999	46 999	46 999	46 999	46 999	46 999

Statement of Comprehensive Income

	3 months April‐ June	3 months April‐ June	6 months January‐ June	6 months January‐ June	12 months July‐ June	12 months January‐ December
SEK m	2015	2014	2015	2014	2014/2015	2014
Net income of the period	69	73	142	124	338	319
Other comprehensive incomes:
Items that will not be reclassified to profit or loss:
Actuarial loss on post‐employment benefit obligations	18	‐12	‐3	‐17	‐27	‐40
Total	18	‐12	‐3	‐17	‐27	‐40
Items that may be reclassified subsequently to profit or loss:
Exchange rate differences – translation of subsidiaries	‐3	1	8	2	12	6
Cash flow hedge	2	0	1	0	‐3	‐4
Total	‐1	1	9	2	9	2
Other comprehensive income of the period, net after tax:	17	‐11	6	‐15	‐18	‐38
Sum of comprehensive income of the period	86	62	148	109	320	281
Sum of comprehensive income of the period attributable to: Equity holders of the Parent
Company	86	62	148	109	320	281

All elements within comprehensive income refer to continuing operations.

Consolidated Quarterly Income Statements in brief

SEK m	2015			2014 2013
Quarter	Apr ‐ Jun	Jan ‐ Mar	Oct ‐ Dec	Jul ‐ Sep	Apr ‐ Jun	Jan ‐ Mar	Oct ‐ Dec	Jul ‐ Sep
Net sales	1 002	985	1 134	997	922	817	995	805
Cost of goods sold	‐718	‐698	‐782	‐702	‐669	‐583	‐690	‐576
Gross profit	284	287	353	295	253	234	305	229
Selling expenses	‐116	‐125	‐122	‐108	‐112	‐113	‐117	‐103
Administrative expenses	‐60	‐58	‐57	‐58	‐50	‐46	‐48	‐45
Research and development expenses	‐3	‐2	‐2	‐3	‐2	‐3	‐4	‐3
Other operating incomes	0	8	0	1	8	0	4	0
Other operating expenses	‐9	‐10	‐15	‐7	‐4	‐6	‐3	‐3
EBIT	97	101	157	119	92	66	139	74
Financial income	1	0	1	1	2	1	2	2
Financial expenses	‐8	‐6	‐11	‐6	‐3	‐4	‐4	‐9
Net financial items	‐7	‐5	‐10	‐5	‐1	‐3	‐2	‐7
Income after financial items	90	95	147	114	90	63	136	67
Income tax	‐22	‐25	‐42	‐30	‐24	‐17	‐32	‐15
Net income continuing operations	68	70	105	84	66	46	105	52
Net income discontinued operations	1	3	4	2	7	5	1	7
Net income	69	74	109	87	73	51	106	59

Consolidated Balance Sheet in brief

	30 June	31 December	30 June
SEK m	2015	2014	2014
ASSETS
Goodwill	1 459	1 463	1 493
Other intangible fixed assets	289	311	273
Tangible fixed assets	825	851	835
Financial fixed assets	118	140	162
Total fixed assets	2 690	2 765	2 762
Inventories	531	503	531
Accounts receivables	686	743	748
Other operating receivables	93	112	108
Cash and cash equivalents	185	205	215
Total current assets	1 495	1 563	1 602
TOTAL ASSETS	4 185	4 328	4 364
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity	2 130	2 193	2 021
Long‐term loans	838	11	1 134
Other long‐term liabilities	384	388	345
Total long‐term liabilities	1 222	399	1 479
Accounts payable	325	341	330
Short‐term loans	‐	818	‐
Other short‐term liabilities Total short‐term liabilities	508	578	534
	833	1 737	864
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES	4 185	4 328	4 364

Change in the Group's shareholders' equity

	Attributable to equity holders of the Parent Company
	Share	Other injected		Cash flow	Fair value	Profit carried forward incl. net income	TOTAL
SEK m	capital	capital	Reserves	reserves	reserve1)	for the period	EQUITY
Opening balance 1 January 2014	59	1 681	49	‐1	13	298	2 099
Sum of comprehensive income of the period	‐	‐	2	0	‐	107	109
Dividend paid to shareholders	‐	‐	‐	‐	‐	‐188	‐188
Closing balance 30 June 2014	59	1 681	51	‐1	13	217	2 020
Sum of comprehensive income
of the period	‐	‐	4	‐4	‐	172	172
Closing balance 31 December 2014	59	1 681	55	‐5	13	389	2 193
Sum of comprehensive income of the period	‐	‐	8	1	‐	139	148
Dividend paid to shareholders	‐	‐	‐	‐	‐	‐211	‐211
Closing balance 30 June 2015	59	1 681	63	‐4	13	318	2 130

1) Fair value reserve means a reappraisal of land in accordance with earlier accounting principles. The reappraised value is adopted as the acquisition value in accordance with the transition rules in IFRS 1.

Consolidated Cash Flow Statement

	1 January – 30 June	1 January – 30 June
SEK m	2015	2014
Current operation
Operating income continuing operations	198	158
Adjusted for items not included in cash flow etc.	72	24
Paid interest and tax	‐29	4
Change in working capital	‐49	‐77
Discontinued operations	16	14
Cash flow from operations	208	122
Investments
Acquisitions of fixed assets continuing operations	‐52	‐32
Sales of fixed assets	0	0
Acquisitions*	‐	‐397
Change in interest‐bearing receivables	0	0
Cash flow from investments	‐52	‐429
Financing
Taken up loans1)	130	967
Amortization of debt1)	‐94	‐492
Dividend paid	‐211	‐188
Change in borrowing	‐1	8
Cash flow from financing	‐176	295
Cash flow from the period	‐20	‐12
Liquid funds, operating balance	205	225
Exchange difference, cash and cash equivalents	0	2
Cash and cash equivalents, closing balance	185	215

1) Loans and amortizations, within the credit facility, are reported gross for duration above 3 months according to IAS 7.

*Acquisitions consist of payment of shares and repayment of shareholder loans.

Key ratios in brief

	1 January – 30 June 2015 Continuing operations	1 January – 30 June 2015 Duni total	1 January ‐ 30 June 2014 Continuing operations	1 January ‐ 30 June 2014 Duni total
Net sales, SEK m	1 987	2 067	1 739	1 937
Gross profit, SEK m	571	577	487	502
Operating income, SEK m 1)	211	216	159	174
EBITDA, SEK m 1)	274	280	215	230
Net debt	916	916	1 164	1 164
Number of employees	2 094	2 094	2 089	2 089
Sales growth	14.3%	6.7%	12.2 %	9.7%
Gross margin	28.8%	27.9%	28.0 %	25.9%
Operating margin 2)	10.6%	10.5%	9.2 %	9.0%
EBITDA margin2)	13.8%	13.5%	12.3 %	11.9%
Return on capital employed1)2)	17.2%	17.7%	12.9 %	13.7%
Net debt / equity ratio	43.0%	43.0%	57.6 %	57.6%
Net debt / EBITDA1)2)	1.45	1.42	2.36	2.20

1) Calculated based on operating income.

2) Calculated based on the last twelve months.

Parent Company Income Statements in brief

SEK m	3 months April‐ June	3 months April‐ June	6 months January‐June	6 months January‐June
(Note 1)	2015	2014	2015	2014
Net sales	287	283	566	552
Cost of goods sold	‐250	‐249	‐498	‐492
Gross profit	37	33	69	59
Selling expenses	‐32	‐34	‐63	‐65
Administrative expenses	‐38	‐35	‐75	‐67
Research and development expenses	‐1	‐1	‐3	‐3
Other operating incomes	60	56	116	104
Other operating expenses	‐41	‐40	‐80	‐79
EBIT	‐16	‐22	‐37	‐51
Revenue from participations in Group Companies	30	40	30	40
Other interest revenue and similar income	9	8	18	15
Interest expenses and similar expenses	‐9	‐1	‐12	‐6
Net financial items	31	47	37	49
Income after financial items	15	25	0	‐2
Taxes on income for the period	‐2	‐8	‐5	‐8
Net income for the period	13	17	‐5	‐9

Parent Company Statement of Comprehensive Income

SEK m	3 months April‐ June 2015	3 months April‐ June 2014	6 months January‐ June 2015	6 months January‐ June 2014
Net income of the period	13	17	‐5	‐9
Other comprehensive income1): Items that may be reclassified subsequently to profit or loss:
Exchange rate differences – translation of subsidiaries	1	‐1	2	‐1
Cash flow hedge	2	0	1	0
Total	3	‐1	3	‐1
Other comprehensive income of the period, net after tax:	3	‐1	3	‐1
Sum of comprehensive income of the period	16	16	‐1	‐10
Sum of comprehensive income of the period attributable to:
Equity holders of the Parent Company	16	16	‐1	‐10

____________________________________________________________________________________________________________________________________________

1) The Parent company does not have any items that will "not be reclassified to profit or loss".

Parent Company Balance Sheet in Brief

	30 June	31 December	30 June
SEK m	2015	2014	2014
ASSETS
Goodwill	150	200	250
Other intangible fixed assets	28	29	29
Total intangible fixed assets	178	229	279
Tangible fixed assets	34	31	33
Financial fixed assets	2 451	2 513	2 539
Total fixed assets	2 663	2 773	2 851
Inventories	83	93	94
Accounts receivable	110	96	111
Other operating receivables	155	186	218
Cash and bank	107	140	129
Total current assets	455	515	552
TOTAL ASSETS	3 118	3 288	3 403
SHAREHOLDERS' EQUITY AND LIABILITIES
Total restricted shareholders' equity	83	83	83
Total unrestricted shareholders' equity	1 595	1 808	1 670
Shareholders' equity	1 678	1 891	1 753
Provisions	106	107	109
Long‐term financial liabilities	828	‐	1 121
Other long‐term liabilities	4	‐	‐
Total long‐term liabilities	832	0	1 121
Accounts payable	53	64	58
Short‐term loans	‐	818	‐
Other short‐term liabilities	449	408	361
Total short‐term liabilities	502	1 290	419
TOTAL SHAREHOLDERS' EQUITY, PROVISIONS AND LIABILITIES	3 118	3 288	3 403

Definitions

Cost of goods sold: Cost of goods sold including production and logistic costs.

Gross margin: Gross profit as a percentage of net sales.

Operating income: operating income adjusted for restructuring costs, non‐realized valuation effects of currency derivatives, fair value allocations and amortization of intangible assets identified in connection with business acquisitions.

EBIT: Reported operating income.

EBIT margin: EBIT as a percentage of net sales.

EBITA: Operating income before amortization of intangible assets.

EBITDA: Operating income before depreciation and impairment of fixed assets.

EBITDA margin: EBITDA as a percentage of net sales.

Capital employed: Non‐interest bearing fixed assets and current assets, excluding deferred tax assets, less non‐ interest bearing liabilities.

Return on capital employed: Operating income as a percentage of capital employed.

Return on shareholders' equity: Net income as a percentage of shareholders' equity.

Number of employees: The number of employees at end of period.

Currency adjusted: Figures adjusted for changes in exchange rates related to consolidation. Figures for 2015 are calculated at exchange rates for 2014. Effects of translation of balance sheet items are not included.

Earnings per share: Net income divided by the average number of shares.

Net Interest‐bearing debt: Interest‐bearing liabilities and pensions less cash and cash equivalents and interest‐ bearing receivables.

HoReCa: Abbreviation for hotels, restaurants and catering.

Private label: Products marketed under customer's own label.

Notes

Note 1 • Accounting and valuation principles

Since January 1, 2005, Duni applies International Financial Reporting Standards (IFRS) as adopted by the European Union. For transition effects see notes 45 and 46 in the Annual Report of 30 June 2007.

This interim report has been prepared in accordance with IAS 34, Interim Reporting. The consolidated financial statements have been prepared in accordance with IFRS as adopted by the EU and with the related reference to Chapter 9 of the Annual Accounts Act. The parent company's financial statements are prepared in accordance with RFR 2, Reporting for Legal Entities, and the Annual Accounts Act. The accounting principles are the same as in the Annual Report as per 31 December 2014.

Note 2 • Financial assets and liabilities

Duni has derivative instruments valued at fair value and held for hedging purposes; all derivative instruments are classified on level 2. Level 2 derivative instruments consist of currency forward contracts and interest rate swaps, which are used for hedging purposes. Valuation of currency forward contracts at fair value is based on published futures prices on an active market. The valuation of interest rate swaps is based on futures interest rates produced based on observable yield curves. The discounting has no material impact on the valuation of derivative instruments on level 2. No financial assets or liabilities have been moved between the valuation categories. The valuation techniques are unchanged during the year.

As described in greater detail in the Annual Report per 31 December 2014, the financial assets and liabilities comprise items with short terms to maturity. Thus, the fair value is considered in all essential respects to correspond to the book value.

Note 3 • Discontinued operations

On 28 March 2015, production of hygiene products in Skåpafors ceased. The hygiene business which was previously reported in the Materials & Services business area are reported as from the second quarter of 2015 as discontinued operations. This affects only the income statement which has been recalculated from 2013 to show continued operations. Discontinued operations are reported on a separate line following net income for continuing operations.

Note 4 • Segment reporting, SEK m

April – June

2015‐04‐01 – 2015‐06‐30	Table Top	Meal Service	Consumer	New Markets	Materials & Services	Continuing operations
Total net sales	563	163	212	55	147	1 140
Net sales from other segments	‐	‐	‐	0	137	137
Net sales from external customers	563	163	212	55	10	1 002
Operating income	87	13	‐1	4	0	104
EBIT						97
Net financial items						‐7
Income after financial items						90

2014‐04‐01 – 2014‐06‐30	Table Top	Meal Service	Consumer	New Markets	Materials & Services	Continuing operations
Total net sales	552	148	161	48	144	1 053
Net sales from other segments	‐	‐	‐	‐	131	131
Net sales from external customers	552	148	161	48	13	922
Operating income	87	7	‐5	3	1	93
EBIT						92
Net financial items						‐1
Income after financial items						90

January – June

2015‐01‐01 – 2015‐06‐30	Table Top	Meal Service	Consumer	New Markets	Materials & Services	Continuing operations
Total net sales	1 075	299	488	102	303	2 267
Net sales from other segments	‐	‐	‐	0	280	280
Net sales from external customers	1 075	299	488	102	23	1 987
Operating income	165	15	23	7	1	211
EBIT						198
Net financial items						‐12
Income after financial items						185

2014‐01‐01 – 2014‐06‐30	Table Top	Meal Service	Consumer	New Markets	Materials & Services	Continuing operations
Total net sales	1 030	271	318	91	300	2 010
Net sales from other segments	‐	‐	‐	‐	271	271
Net sales from external customers	1 030	271	318	91	29	1 739
Operating income	150	6	1	0	2	159
EBIT						158
Net financial items						‐4
Income after financial items						154

No material changes have taken place in the segments' assets compared with the annual report of 31 December 2014.

Quarterly overview, by segment:

Net sales
	Q2	Q1	Q4	Q3	Q2	Q1	Q4	Q3
SEK m	2015	2015	2014	2014	2014	2014	2013	2013
Table Top	563	513	604	545	552	477	576	497
Meal Service	163	136	144	140	148	123	132	126
Consumer	212	276	322	249	161	157	220	123
New Markets	55	47	54	50	48	43	56	47
Materials & Services1)	10	13	10	13	13	16	12	11
Continuing operations	1 002	985	1 134	997	922	817	995	805
Discontinued operations	20	61	77	103	95	104	107	131
Duni total	1 022	1 046	1 211	1 100	1 017	921	1 102	936

Operating income
	Q2	Q1	Q4	Q3	Q2	Q1	Q4	Q3
SEK m	2015	2015	2014	2014	2014	2014	2013	2013
Table Top	87	77	126	97	87	64	116	78
Meal Service	13	2	6	8	7	‐1	4	3
Consumer	‐1	24	32	22	‐5	6	27	‐4
New Markets	4	3	0	1	3	‐3	3	2
Materials & Services1)	0	1	1	1	1	1	0	1
Continuing operations	104	107	164	129	93	67	150	79
Discontinued operations	1	4	5	3	8	6	1	8
Duni total	105	112	169	132	101	73	152	88

1) For continuing operations.

Note 5 • Reporting of restructuring costs

Presented below is a specification of the lines on which restructuring costs are reported in the income statement.

	3 months	3 months	6 months	6 months	12 months	12 months
Restructuring costs	April‐	April‐	January‐	January‐	July‐	January‐
	June	June	June	June	June	December
SEK m	2015	2014	2015	2014	2014/2015	2014
Cost of goods sold	‐	‐1	‐	‐1	‐	‐1
Selling expenses	0	‐2	0	‐2	0	‐2
Administrative expenses	‐	‐	‐	‐	‐	‐
Other operating expenses/income	‐	2	‐	2	0	2
Total	0	0	0	0	0	0

All restructuring costs refer to continuing operations.