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Duni AB
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Ladies and gentlemen, welcome to the Duni Q4 Year-End Report. Today, I'm pleased to present President and CEO Robert Dackeskog; and CFO Magnus Carlsson. [Operator Instructions] I will now hand over to Robert Dackeskog. Sir, please go ahead.
Thank you. Yes, hello. Welcome to our presentation today. Yes, we'll kick off here with what happened in the -- in Q4 last year. Yes, as we all know, restrictions returned during the quarter but not that hard like it was in -- at the same period like last year. I think when we all were sitting here in October, we couldn't believe that a new variant would come, Omicron, and establish itself during the November-December here. So that's been a bit of a surprise maybe to many. And that meant, of course, more restrictions and lockdowns in some countries. But I think in general, we see a really clear correlation between restrictions and reduced sales. And on the other hand then in Q3 last year, we saw the opposite. So that's the -- there's very clear correlation between that. But of course, for the future here, we believe that people need to socialize and eat and drink and go out. So as the restriction is easing, then, of course, demand will come back as we saw in Q3. Our revenues are close to historic levels in Q4 here, driven a lot by the growth in business area BioPak and strong recovery in the retail sales. As we all know, raw material and sea freight are high, at record high, but are stabilizing. And of course also, energy prices continue upwards. If we look a little bit more closer to the Q4 highlights here. We had an increase of 34% versus last year in net sales, and that was despite rising COVID cases and new restrictions. And we know lockdowns in, for example, Austria, there was 12-day total lockdowns. And also, Germany, Holland had significant restrictions. And the business area Duni's sales grew significantly than -- versus last year as the restriction ending up was a bit less than last year. So positive there. BioPak growth continues in the fourth quarter as, of course, takeaway is, yes, still growing and demand is very high there. And also, we have taken a decision to increase our inventory to meet the challenges in delivery performance here for the quarter for business area BioPak then. If we look at the operating income, it has more than doubled. The significant increase then in sales volumes for Duni area gives good leverage there. And both business areas, especially BioPak, then is under strong margin pressure, especially due to container sea freight but also some raw materials. So we increased the operating income here from SEK 51 million to SEK 110 million in the quarter. If we look a little bit summarizing the full year then, we had a strong growth for BioPak and a sales recovery for Duni versus 2020. There were heavy restrictions in the first 5 months of the year, of course limiting a lot of restaurants and hotels to run business as usual, as we all know. But that also enabled growth for the takeaway segment. And of course, the restrictions, as we said for probably many times now, is -- the impact is high on the seated table and was very low. But then, in the end of May, it recovered really good. Of course, with the summer, everyone went out and so on, so we see that the Q3 was when people are coming back, Duni especially. The business area Duni is coming back. The BioPak area grew throughout the whole period, the whole year, actually. We had some problems with ensuring supplies, of course. And as I said in Q4, we're taking some steps to ensure that we have stock on value on the -- especially on the big sellers, of course. We have an improved operating margin despite the record cost levels. Higher sales volumes. We have some government support. And really strong cost control has strengthened the results. We see the increase in raw material, especially freight. And the container prices, electricity costs going up over the year. We are pushing for price increases, and they are initiated. They had a limited effect during the year but will increase gradually during Q1 next year. So here, we're ending up the full year on SEK 279 million in operating income versus SEK 149 million last year. Now I'm handing over to Magnus.
Thank you, Robert, and good morning, everyone. So I will now go through our two business areas a little bit more in detail, starting with business area Duni, representing our products to set the table like napkins and table covers and so on. Fourth quarter ended as the year started with new restrictions taking place all over Europe from mid-November. You can say the very important Christmas period with Christmas parties and Christmas dinners were once again canceled. Still, sales increase was quite broad, and that increased by almost 40% for the quarter. So that gives an indication that the restriction was not as bad as we saw in 2020. Another difference was that you were actually allowed to meet each other at home. And consequently, the retail channel experienced strong growth also if you compare it to the prepandemic levels. As indicated in previous quarters, we have seen an accelerating and rising trend of raw material costs, not least the energy cost in the fourth quarter. And this has managed -- this has been managed by price increases that only to a small degree had a positive effect in the quarter, but it should gradually positively impact the first quarter. Business area Duni, being vertically integrated with both converting factories and also paper mill, are, of course, very dependent on the utilization ratio. But I think we have been -- successfully been able to mitigate the negative effects from the lower volumes. And at the same time, we have ensured that we get satisfying operational leverage when we have seen the volume coming back. So if we jump over to BioPak segment or business area, which is offering sustainable food packaging. We have seen a strong growth throughout the whole year and also in the fourth quarter, growing almost 30%. It is clear that BioPak is boosted by the lockdowns and restrictions versus normal sit-downs restaurants. But the underlying demand for sustainable food packaging solutions that consist mainly of fiber solutions is huge. And I think BioPak contributes to the shift from plastic solutions product by product. And for every quarter that we're now moving forward, the share of these innovative, sustainable products increases and, consequently, that in itself contributes to the growth. Unfortunately, the margin were negatively influenced by the increase of raw materials, not least, as Robert mentioned, the sharp increase in logistics costs that fully impacted the quarter. And as for the business area Duni, BioPak has initiated price increases already during the third quarter but only with a gradual effect in the fourth quarter, and we should see an acceleration now moving into 2022 of these price increases. Some of the price increases are significant to compensate for the costs. And we spend quite of an effort in finding the best solutions for the different needs. We feel confident that there is a fundamental understanding that sustainable solutions in general is more expensive than plastic solutions, although we continue to work hard with cost reductions as well. If we move over to next page. And as stated by Robert, the year has clearly been a rollercoaster in terms of restrictions and lockdowns, heavily influencing all our markets in Europe but also outside. And as we speak, you can see on the map to the right, showing data from Google, mobility in retail and recreation area. And we have seen a very strong correlation towards business area Duni. And as you might see, we are still around minus 20% on the levels before pandemic, but the numbers are improving week by week. And we see more and more countries releasing their restrictions or at least indicating a date when they will be released, and that is very much linked to the graph to the right showing intensive care units and the pressure on hospitals. Germany, which is a very important market for us, was one of the last countries to set a date just some days ago where the German authorities indicate that during March, the restrictions valid for restaurants and hotels will be removed, and that opens up for a normalization and, of course, a prerequisite for the whole HoReCa segment to come back to volumes we have seen before pandemic. Another -- or rather, I think, in the third quarter, we indicated that the cost pressure will be severe going forward, and that is the main challenge for us at the moment. Unfortunately, this turned out to be very true, and the focus on price increases initiated mid last year will, of course, be very, very important for us. This represents by 2 graphs: Drewry index showing the extreme levels on the containers from Asia, which has a high impact on BioPak; and to the right, the general inflation, which has increased quite dramatically in the last quarter. We feel that there is an understanding and acceptance of price increases from our customers, although we are working hard to find the best solution for each and every customer and their budgets. So if we leave that area and moving into the financials, looking on the -- our income statement. Although 2021 is far from a normal year for us and still heavily impacted by the pandemic, the operating income doubled from previous year, and that is valid both for the quarter as for the whole year. Operating income ended on SEK 110 million in the fourth quarter. However, if you're looking on the EBIT, the outcome is more on par with previous year. And the difference relates mainly to restructuring program in Singapore, where we decided to accelerate our journey towards a fully sustainable portfolio. And that resulted in a closedown of our company, Duni Song Sen, mainly selling nonsustainable products, and we merged that with the remaining part with our other company, BioPak Singapore. So the cost is mainly a write-down of goodwill and customer relations of SEK 33 million and another SEK 12 million of various write-downs in inventory and also staff-related costs, to clarify. We move over to the business areas. And as we have mentioned, BioPak continues to show strong growth. That's very important but, again, in the fourth quarter, negatively influenced by the severe cost increase. So for the overall result, it ended almost at SEK 200 million for the full year, and that is a profit improvement by 30%. Business area Duni has gradually indicated an improvement on a rolling 12-month curve, it's going upwards, although operating income is naturally not close to the levels we have seen prepandemic. Moving over to the operational cash flow. It's positive for the fourth quarter and the full year. However, behind last year, there are mainly two reasons for that. First, we have an increase in the accounts receivable, more of a phasing between periods. When the sales indicated high volatility, you see these effects. However, the outstanding base has been kept stable in the period. And also, we do not see any high bad debt losses at all. The other reason and more important is the inventory. More than half of this, quite a big increase, comes from higher purchase costs. But we also have increased the stock in BioPak to ensure a high delivery performance going forward. And that has been a challenge for the whole industry, and we need to ensure that we get a competitive advantage here and can solve the customer needs and deliver products. Looking on our financial position and in our balance sheet. The net debt has been kept stable versus last year, although a year with high volatility. As just mentioned, inventory is part of the increase, but we also have other effects of low CapEx and so on keeping the debt stable. Return on capital employed, excluding goodwill, has strengthened and is now up to 14% and clearly moving in the right direction. So finally, our financial targets, and we are able to deliver on the growth targets, clearly above. However, of course, that is explained by a weak 2020. The operating margin is still behind our target and very much linked to business area Duni and the low levels we have seen throughout the year. And also, consequently, the proposal from the Board is that there should be -- no dividend should be paid for the year 2021. So with this, I hand over to Robert for the final comments.
Yes. And yes, during the quarter, we updated our strategy, and we actually call it Our Decade of Action. And we worked to develop a very clear purpose and vision for 2030 so we'll be fit for the future. And that's really important, so we have a -- really hard with that. During the year, actually, we also got a gold medal from EcoVadis sustainability rating, which is great and something we're working more and more on. We want to even go to the next level, of course, in that. We have defined three sustainability goals for 2030: it's becoming circular at scale, it's going net zero and living the change. And during the year, we started to work on a lot of things. And we are -- for example, for becoming circular at scale, we are switching from plastic to paper packaging for Duni products. We are starting that now. We have investment in the reuse solutions with Relevo and Bûmerang and also partnered up with &Repeat for collection systems. With the going net zero, we have committed now to a net zero goal for Scope 1 and 2 by 2030. We have switched to renewable electricity in our European operations factories. And we have also started to use biogas in our paper mill at Skåpafors, which is fantastic. And we are working a lot on becoming a trusted sustainability leader, and we have signed the UN Global Compact. We are working with a lot of, of course, and conduct audits in -- at all main suppliers and so on. And a lot of work with developing the whole sustainability agenda in Duni as well. So this is what we're looking forward to and targeting. And we're hoping now -- of course, we said that and maybe not to speculate too much about the future, but at the moment, it feels great that most countries have taken the decision to remove restrictions. And Germany especially is now also opening up here in March. That feels great. And we hope we don't get six variants, of course, in here. That's the main thing for us. All right. That's it from us. Thank you. And over to questions.
[Operator Instructions ] Our first question is from Gustav Hagéus of SEB.
Thank you, operator. Starting off with sort of the volume recovery scenario for the Duni segment. Your -- there's a listed company called [indiscernible] Professionals selling equipment to restaurants and hotels, as I'm sure you're aware, and they have been guiding for full volume recovery to 2019 level this year. And I assume your end markets are quite similar. So firstly -- my first question, I guess, is, do you see also a scenario where you can see a full volume recovery versus 2019 baseline already this year? That's my first question. Thank you.
I think we might be a bit different from them. But still, I think we are very dependent on the restrictions. So of course, if it opens up, really that's the main thing. And I think, as we've seen, we -- the correlation between restriction and our sales is very tight. So I think it's all about that, actually. That's the key here for us, that -- the restaurants opening up. And especially then, as you say also, the business area Duni here, it's napkins, it's table covering and all that. We -- and especially, if you look at table covering, events is very important in that part. So weddings, everything. So if that really takes off here, I think there's one -- a lot of people have maybe -- not been able to get married. So that's a -- I hope -- but I think answer is the restriction is the key here, actually. So that's what we probably -- yes. Yes, see.
Okay. But in a scenario then, if volumes were to recover to 2019, say, this year or sort of mid-half of this year, there's also a pricing component to sort of factor in when thinking about what is your normalized revenue for the Duni segment. You made SEK 3.8 billion in revenues, if I recall correctly, 2019. Is it fair to assume that on a like-for-like basis, factoring price/mix since then, you're more like at SEK 4.2 billion or a little bit more than that in sort of normalized sales when and if volumes recover in the Duni segment specifically now?
Yes. The price increase will drive growth in general, of course, and then you have the volume parameter. Price will be quite -- price increase will be quite substantial. We need to do that. As Robert said, if we're seeing restrictions being lifted, there is no reason to think that we should (sic) [ shouldn't ] come back also from a volume perspective to more normal levels. Then you can add the price effect on that. That is our main scenario.
And from sort of the price increases you've implemented 2020, 2021 and into 2022, is sort of -- are we at the 10% higher level now on the price/mix versus 2019 in the Duni? Or is it a bigger number than that? I'm just trying to think what your normalized revenue would be going forward. Is it fair to assume 10% or something like that magnitude versus 2019?
Yes, a very limited effect in '20 and '21 from price increases. So the main part comes in 2022. The number you're referring to is maybe on the high part but not too off, I would say.
Okay. So that brings me to a number in a normalized situation depending on where BioPak grows of around -- a normalized revenue then of closer to SEK 7 billion and SEK 6 billion on the top line. That's my number, you don't need to comment. But on -- then I guess another pyramid is the earnings power. If I recall correctly, 2018 and 2019, prepandemic, weren't great years for Duni. You had some -- several ongoing issues, and you also initiated several cost programs. So what I'm trying to understand now is what is the normalized margin you think post pandemic? You did sort of 9% EBIT margin '19/'20. But before that, you did more like 11%, 12%. So do you think that you're going in -- out of this pandemic lean with ability to have sort of in the range of 12% margins? Or are you more -- is '18 and '19 a better reference point of your underlying earnings power, do you think, in a normalized world?
I think if you add on '18, which was not a very good year, and if you look at '19, which were a record year, you get some kind of an average. We do have positive trends working in our favor. We have strong purchase power. We have been able to compensate quite well. On the other hand, we have some negative trends on the table covers, and we're not growing equally as much in some of the high-margin areas or geographies. So it's ups and downs. So if you take an average maybe on the '18/'19, that's maybe where a sustainable long -- level -- a long-term level. But we are optimistic and we are doing a lot of both cost reductions and price compensation measures to strengthen our margins for sure.
But 2018 wasn't a record year in terms of margin, was it? It was a record year in terms of earnings, but margins were not to the level that we saw... I'm not -- specifically asking about the margin.
Yes. Then I would say that it has gone down in the business area Duni. And will it likely to go up again? I'm careful of speculating in that. The reason why it went down in '19 margin-wise for the group is very much the mix effect to BioPak, which has a lower rate. It is slightly down for business area Duni as well mainly due to the reasons of losing on table covers its share, which is a high-margin product for us.
Okay. And sort of thinking about the evolution then of your business model throughout the pandemic, has your way of working with clients and selling product changed? I'm thinking maybe less traveling salespeople and more online or digital sales. Is there sort of cost potential as you see it going forward as your model has evolved during the pandemic? Or if you could talk a little bit about that, that'd be interesting.
Yes, I think it changed, definitely. It might be that when we go back now, it's a need, of course, to meet then and greet in that sense also. But I think for the future, it's that we maybe need to change our way of working. We need to focus a lot more on digitalization. And we have our customer experience and customer journey, how we work there where the customer is more digital, of course, but also focusing on sustainability, I think. So there might be a shift, maybe, where the resources are going. But of course, we need to also, of course, be more efficient in that. I think that's what we see. A bit of a change. I think there, we see that it's possible to actually do business more digital and so on. So -- and also, the customers are asking for maybe -- also buy products in a much simpler way also. And we are -- yes, we are launching in Switzerland, for example, our CX solution there. So there is a really good start there. So I think there will be a shift. I think in the beginning here, there is a need to meet also as in the old days probably.
Okay. But is there margin potential, you think, in this shift, the way you conduct business in a post-pandemic world from your end? Less salespeople would be one.
Hopefully, that's the target. However, it's -- moving from maybe physical resources and cost to digital is not necessarily meaning lower cost. It could mean higher efficiency per sales, euro, so to say. But that is clearly the target over longer term, to be more efficient in cost -- taking down costs, yes.
A few more, if I may. BioPak, obviously, has been a great benefiter of takeaway and lockdowns in restaurant. But I assume there are also some negatives in terms of less chairs, musical festivals, what have you not. Could you try to make an effort just to sort of quantify how big of a -- what's the net impact to your organic growth number this year from the pandemic? And what do you think is a more normalized growth trajectory when you think about '22 and onwards?
It's a good but tricky question to answer. If you look before the pandemic, there were various objective investigations showing that sustainable food packaging is growing with an average 15% to 20% a year. That's also what we experienced. Now we have seen higher levels during the pandemic. So in that case, you can say that half of the growth has been boosted by the pandemic effect. It is a bit of a speculation, and there are changes in the way we are ordering food, that is in favor for the BioPak model also after pandemic, which we, of course, hope will further trigger growth. But -- so to give you an idea of the shares here.
And also, I think we talked about that previously, that we are in -- have a pretty -- yes, there's a lot of job to do now to switch from plastic to more biopackaging in a lot of countries. And I think we have a big opportunity in a country like Germany, where our sales in Duni is very high and in the BioPak area it's lower. So there is also a part that we see that it's good way maybe to increase that, the growth that was before in a way. And I think the takeaway market will -- I mean, if you look maybe 10 years ahead or whatever, it will grow that part, yes. And then, of course, it's a number that is -- it's a hard one to pin. But yes.
Okay. And in terms of channel inventories and when the demand sort of picks up fully here. I recognize that you have raised your inventories. But what about your channel partners and your customers? Do they have intermediate inventories of your products that need to be sort of run through before they will order new ones? Or will there be an immediate response with a pickup in demand for going to restaurants and so forth for your products?
It's -- we try to stay very close to our customers. There is no full transparency on that. But we are ready to deliver, and we have learned from the pandemic levels that the order intake usually follows very well the restrictions. So when they are eased, people tend -- our customers tend to place orders for us. We estimate that, that would be the case as well here.
Like it was in Q3.
Yes.
Yes.
So we see a strong rebound in -- for business area Duni in that.
So very limited inventories in layers?
Yes. So the phasing should not be long. They'd need to order, yes, but -- or something, yes.
Okay. And lastly from me. But I recognize that you have divested or walked out of parts of your business now in BioPak in Singapore due to the fact they didn't fit in your green profile there. Could you give us an update on what your best assumption is of share of sustainable products now within BioPak specifically and within the company? I appreciate that it's a bit of a definition game, but still any number would be helpful.
Yes, I think -- I mean, we -- in a way, we went out from Duni Song Seng, which was actually the company we first bought in Asia, which was, in a way, the entry ticket into Asia. And I think without Duni Song Seng, we wouldn't have been BioPak today. So that -- and they were in plastics. What we've done is, in a way, we're removing the plastics there and, of course, then moving over into focusing on the BioPak products. And so that's what happened in Asia. And our share, I think if you say -- believe like SEK 200 million, so it's 5% of the total. And in BioPak, especially, yes, here in Europe then, we have a product called Duniform, of course, which is sealable packaging. We have -- like a pack. And there today, we're -- everyone is looking into getting into a barrier that actually can take maybe -- if you may provide crayfish, for example, today in the country, you get this pack they put the crayfish in. And of course, if you have that in a not solid then packaging, you will end up having that in your, yes, in your [indiscernible], whatever. But -- so that's an area where we still have some plastic. But we have put in targets now to reduce and put in targets, yes, for every year -- way to reduce that part. And actually, this year, we're launching ribbonized Duniform in fiber solutions as well. So we are on the move there.
I'm not sure if I understood your question, the last question, Gustav. Can you repeat that one so we'll answer?
If you could provide us with an update on the share of product you consider to be environmentally friendly as a percentage of your sales both within BioPak but perhaps more importantly of your total sales, that would be helpful.
Nonenvironmental friendly, you said?
Either or. I mean I can..
Okay.
I assume that...
You know what? We -- I'll describe it like this, that the -- of course this changes from quarter-to-quarter, linked to demand from customers, as well from legislation, and we try to be in the forefront. But it is clearly less than 50%. It's even less than that, maybe 20%, 10%. And -- but it's very different (sic) [ difficult ] to say because some products work very well in Germany, some might not work in Sweden, for instance, depending on national legislation. But we are trying to safeguard the whole portfolio rapidly to fit for every market, basically. So it's becoming less and less, that share.
Sorry, to be clear, so 25% of your combined sales related to products that you consider to be less environmentally friendly? And 75%...
For BioPak -- yes, for BioPak and for the total group, it's maybe now like 5%, 10% what I would say is in the plastic area. There is plastic that might be -- they're not forbidden, and -- but they are not in our definition or see it as sustainable.
So total group, it's 5-plus percent.
It's quite small. It's very small.
5%, yes. Okay. Right, okay. Cool.
Our next question is from Karri Rinta of Handelsbanken.
I have a few follow-ups on pricing and then a few follow-ups on the different geographies. But starting with pricing. We thank you for the indication of what kind of magnitude we are discussing when you talk about price increases, that it could be up to 10%. But the way you implement this, is this as you usually do it? I.e., increases in list prices or prices that you have agreed upon with your customers? Or is there any element of sort of energy-related surcharges that you can put in place faster and then maybe they go away once energy prices come down? So I guess the question is that are you implementing these price increases as you always do?
We try to do it in a manner that protects the customer and, of course, also mitigate the effects we have seen from our side on the cost. And that means that we are discussing customer by customer, product by product. Some experience high levels of price increase, some very low. And also, some part is related -- we have seen extreme levels on freights and also in some raw materials, and there is a certain aspect of the variable part in this. But we feel confident that we will be able to come through. We feel confident that we will be able to maintain a main part of this over time.
Okay. And then we're talking -- or when it comes to this delay in -- that it takes for it to start to have an impact on you, are we still talking about, I don't know, 1 quarter? And is there any difference between Duni and BioPak in this respect in terms of the length of the delay?
They have a similar approach in the way we are going to the customer in timing. So we are working very hard now in the first quarter to gradually increase the prices. And when we reach the end of this quarter, we should have come through to a high degree. Still, some part is left. But absolutely, the main part is implemented throughout Q1. That's the ambition for sure...
Yes.
All right. And...
For business areas.
Yes.
Good. Then a little bit about different geographies and markets. You have discussed Germany. And as you say, Germany is a big customer for the Duni division but less so for BioPak. So now when restrictions are relaxed, you should sort of get a big -- definitely a bigger uplift in Duni than any potential slowdown that you might see with BioPak when we talk specifically about Germany. But you mentioned that restrictions are being lifted in March. So -- but does that mean that if we compare first quarter with the fourth quarter, that there are more restrictions in Germany in the first quarter compared to fourth quarter? Or how do you see that situation?
I would say that for Germany specifically, I would say it's relatively the same up until March at least. If you look throughout Europe, it's slightly better situation. Now we see like Denmark being first out early February lifting their restrictions. You know the situation in Sweden, and the Nordic area basically lifted in February. So looking on Q1, Europe, compared to Q4, I think it is relatively similar situation because at the end of Q4, we had quite hard restrictions as -- and that was the start of Q1, which is now gradually being lifted, also in Germany in March, as you say.
Yes, I think because you had to have your COVID pass to enter a restaurant, and it changed to 3 -- you needed 3 shots in order to get in without taking any tests. So I think November, December, Jan and Feb is pretty similar in that sense.
Yes.
And then, of course, Q4 is a high quarter for us in that sense. There's a lot of Christmas markets that were canceled in December.
Right. Then about the -- some related companies have discussed that during these exceptional times, it has maybe been a bit more difficult to push the renewable products because they have been maybe more expensive and more difficult to get their hands on. But with these price increases that you are now putting through, are you sensing any sort of increased pushback from your customers or the argument that -- but these traditional solutions are so much more -- so much cheaper that why should we switch to the BioPak? Is that an issue?
In general, I think, actually, our customers are really into sustainability. And I think, especially in the countries maybe we operate in, our biggest market, it's really high on the agenda. So I think there is an understanding for that, definitely. And I think everyone is working now towards -- yes, with the whole sustainability agenda. So I don't really -- that comparison, maybe it's more about the general then increase in terms of especially from Asia with the container prices and all that, that has increased a lot on certain products and so on. But it's more about then the product in itself. And I feel that it's not about sustainability, not actually.
No. As you say, Rob, I think the understanding and acceptance -- an customer want to move into this area. But of course, having this quite dramatic price increases in the industry as in itself, that is related to risks, and we are carefully following them. There's always other competitors trying to take market share, so we need to watch out for sure.
Okay. And then a final geography-related question. I see that if I look at the BioPak sales by geography, I see that the rest of the world had really strong fourth quarter. And so is that all Australia and -- or the Australia and New Zealand? And how was the level of restrictions there in the fourth quarter?
It is absolutely the main part, is Australia and New Zealand. And in the fourth quarter, they lifted their restrictions, very -- and little influenced by that in the fourth quarter. So basically, I would say throughout the whole pandemic, they've also been in and out from lockdowns and restrictions, but they maintained a very good growth throughout this whole period, which gives you maybe some guidance on the strengths of their offer also outside their restrictions.
All right. Good. And then finally, about the dividend. So I understand that the Board -- or I guess the way to ask is that should there be a fantastic recovery in volumes and your earnings this year, is there any scope that the Board might come back during the year and reinstate dividend at some point during the calendar year 2022? Or is the decision to not pay out the dividend more related to your balance sheet and maybe to the -- or your debt repayment schedule and the government support that you have received?
Yes. I think that, Karri, suggesting then from the Board to the AGM here is not then to manage. But yes, it's hard. Of course, it comes -- but that's the proposal at the moment to the AGM. So that's, I think, where we stand at the moment.
Yes, you could add to that, that Duni is very much linked and associated to having a directly -- high direct yield historically, and that's important for the company identity. So of course, that's a Board question, but it's -- when we're coming back to normalization, of course there will be -- dividend is an important part for us, and it's one of our financial targets. So it's definitely something that I'm sure will be discussed.
But as a CFO, having full visibility into your covenants and debt repayment, and so is it even theoretically possible from your perspective? Or would you recommend or would you be against it, restating it during the calendar year 2022?
I cannot specifically say something of that since the uncertainty is still quite high on when and how we are progressing after the pandemic. But of course, we are working very disciplined with our headroom and our priorities and how to prioritize dividends against other areas where we can utilize now our cash flow. And as I said, I know that dividend is an important part, but I'm also sure that there will not be any risk taking of implementing maybe dividends too early. That's how I see it straight from my personal point of view.
We have a follow-up question from Gustav Hagéus.
Yes, a follow-up, sort of related to Karri's question on the balance sheet a little bit in a way. And thinking about M&A, if you could comment on sort of where you see the market progressing now and how you can calculate sort of cash flows throughout the year, your discussions with banks. Is there a financial room, you think, this year to do any constructive M&A? And if you could talk a little bit about the landscape. I assume some of your smaller peers have struggled a bit throughout the pandemic and maybe might be open for being acquired. And historically, you've been quite active in M&A, especially within the BioPak segment. So if you could elaborate a little bit on where you see those opportunities going forward.
Yes, of course, we -- during the pandemic, we have been -- had a small headroom to be active in the M&A, on the traditional M&A, I would say. As you say, we have done at least one every year. But we actually did a smaller minority stake in start-ups, and I think that will be a very important part for us in -- and it's not only linked to the headroom we have, it's linked to the strategic options of moving quite fast in certain areas. So yes, we will continue seeing that area as very important for us in the M&A agenda. But once the headroom is lifted in close correspondence on the prioritization on dividends and so on, there will be -- we will come back to a possibility of doing more normal acquisitions that will support our growth in both businesses.
[Operator Instructions] There are no further questions at this time, so I'll hand back over to our speakers.
Yes. Thank you for today. And yes, see you soon again. Yes. Thank you. Bye-bye.