Ladies and gentlemen, welcome to the Duni Group Third Quarter Interim Report 2024. Throughout the call, all participants will be in listen-only mode, and afterwards, there will be a question and answer session. Please note, this call is being recorded. I would now like to hand the conference over to our speaker today, Robert, President and CEO of Duni Group. Please go ahead.
Thank you. Yeah, hi, and welcome to our interim report, Q3 twenty twenty-four. Strong quarter meets high comparison numbers. Look at the agenda today. First, short highlights, and then talk a little bit around the markets, and then overview of the Q3 summary. And then we'll go into the two business areas we have, dining solutions and food packaging solutions. Then we'll talk a little bit around the innovations and sustainability, and then at the end, financials and the summary, and then you will have the opportunity to ask some questions to us. All right, great! Our highlights for this quarter is that we have a strong quarter, facing historically high comparison numbers. The revenue is the second best third quarter in history. We have a continued low net debt and strong financial position.
We made acquisition of Slovenian company, SETI, during the quarter, which we are very happy to further strengthen our position in Europe, and with SETI, mainly in the southeast of Europe. We also announced partnership investment to modernize our logistics setup in Germany, and together with CEVA Logistics, we will set up a new center in Germany, and this means that we can consolidate nine warehouses into one. What are the highlights? Going into a little bit the market outlook, it's there, still very volatile, and at the moment, the HoReCa market is declining, especially in Germany. If we're looking into numbers versus 2019, the turnover in HoReCa, Germany is still lower.
Looking at the latest data down right from April to June, the market in volume in real terms is down 10-15%, but nominally positive. Then, of course, we are down around 5% organically. The main thing about the price increases, of course, is that the VAT in Germany is one driver, as well as the inflation in the past years. Also, number of visits in Germany have not recovered yet since the pandemic, so people are not yet really back into the restaurants. Looking at OpenTable, the bookings top right graph here, that's also down for the year versus 2023, but actually showing some less deviation in the last weeks and better booking numbers.
Duni Group is in a good position to address the long-term opportunities in HoReCa market, which will stabilize and continue to grow in the long term. Looking in on the key financials, the group net sales amounted to SEK 1.9 billion versus SEK 1.910 billion, and then versus 9.935 versus last year. This is actually representing the second best in third quarter in the group's history. It is a decline with 1.3%, and organically, it is minus 5%. Operating income, comparing with an exceptionally high 2023, but strong versus historical numbers for Q3. According to you, operating margin ended up at 7.9%. Then going into a little bit more details around the quarter. The total sales decrease, as I said, was 1.3 in fixed currencies.
During the quarter, we acquired companies. The acquired companies, Decent Packaging and Huskee and SETI, contributed with SEK 73 million. So that means that organic growth is at -5%. The Group's net sales representing the second best in the third quarter in Group's history. Primarily, we see good progress driven by the expansion of the Impact Group and its acquisitions carried out in the Pacific region during 2024. The lower figure for organic net sales should be seen against the backdrop of an exceptionally high comparative figures following the easing of the pandemic restrictions, as well as a lower demand throughout 2024, with weaker purchasing power among consumers.
And in Germany, the restaurant market, as I said in the beginning, is developing more weakly than in the rest of Europe, and growth has been negative during the first nine months of the year. And as I said before, the VAT is a contributing factor on meals in Germany, has now then returned to 19%, after having been temporarily reduced to 7% for several years as part of the pandemic support. Looking at operating income amounted to SEK 151 million, versus SEK 225 last year, and the margin at 7.9%. And then operating margin was impacted primarily by lower sales volumes, as well as high cost of raw materials and sea freight compared to last year.
Also, pulp prices has gone up with 30%, compared with comparative period last year, and the cost of sea freight have increased gradually in the last 10 months due to increased geopolitical unrest. Now, I'm handing over to Magnus here to move into the two business areas.
Thank you for that, Robert, and good morning, everyone. I'll now provide a little bit more detailed overview of our two business areas, starting as usual with dining solutions, which covers our table setting products. Looking at the numbers, sales have decreased by SEK 87 million compared to last year, and that represents a 7.7% drop. Operating income has declined from SEK 170 million last year to SEK 125 million with a margin of 11.3%. We observe a similar trend for dining solutions as we have seen throughout the year, with sales down by approximately 6%-8%. This decline is partly due to price reductions in the highly competitive retail segment.
Despite maintaining and even improving volumes in the third quarter, this has led to a negative mix effect, as retail sales is now accounting for a larger share compared to last year. Market demand remains weak, as Robert said, in the professional segment of HoReCa, with a notable decrease in customer visits across Europe, particularly so in Germany and the DACH region, with decreases in volume that is even worse than we experience in our numbers. Raw material cost has been highly volatile over the past few years, rising through the end of twenty twenty-two. Then we saw slightly decreasing a year ago, and then climbing back again at the end of last year, and now we see a stabilization at historical high levels in the third quarter. So while inflation has slowed, wage increases remain historically high.
We mitigated some of these cost pressures through effective cost control in production, but towards the end of the quarter, we have introduced price compensation measures to reflect rising costs over the past year. However, I think the most critical factor remains, and that is the low volumes. And as Robert showed earlier, the number of visits continue to be significantly below the pre-pandemic levels. However, we continue to invest in being in the forefront of offering sustainable solutions to our customers, and one example is our paper mill, celebrating fifteen years of the FSC-certified pulp sourcing. This is, I think, a key milestone in ensuring sustainable forest management, promising and promotes diversity, biodiversity. If we move on, to business area, food packaging solutions, focusing on sustainable food packaging, we see a 9% sales increase this quarter, and that is primarily driven by acquisitions.
However, the profit has decreased to SEK 27 million from SEK 55 million last year. Looking more closely at the quarter, as I said, sales rose 9%, but again, if we exclude acquisitions made in the first half of the year, sales are more in line with last year's performance. Volume growth remains strong outside Europe, particularly in the APAC region, with Australia as our largest market. We have secured several major customers in the past year through, however, through product portfolio adjustments, we have led to significantly higher inventory levels compared to previous year, and that has resulted in higher storage costs. And this is the main factor in declining profitability this quarter, which remains below pre-pandemic levels. And especially, sea freight cost volatility has impacted pricing, and the pricing is below last year's levels.
If we look in Europe, the demand remains weak, with lower volumes compared to previous year. This is due to what we have mentioned, the overall weaker consumer demand and the ongoing transformation as we see also in the food packaging industry, which faces increasing regulation at both regional and national levels, and making it challenging for customers and producers to navigate. Despite this, we remain confident in the long-term outlook for sustainable solutions, particularly so on the fiber-based products, and we continue to invest in new solutions and materials through partnerships, in-house innovations, and close collaboration with suppliers and customers. During the quarter, as mentioned, Duni acquired a 70% stake in SETI. That is a Slovenia-based company that produces napkins, coasters, and other tabletop products made from tissue and airlaid materials.
This acquisition expands Duni Group's reach and footprint in Southeast Europe. SETI has an annual sales of approximately 100 million, and profitability in line with Duni Group's dining solution business area, and it has been consolidated in the group since first of September.
All right. Yeah, if we're looking into, we are continuing our investments on our journey to become the trusted sustainability leader in our industry, and to mention here is the cooperation with Notpla continues with our plastic-free food packaging made from kraft paperboard, coated with natural seaweed, which has been very positive from the market. We also decided in the quarter to consolidate our activities within reusable to Relevo in the quarter, so still moving on that path. Looking into our decade of action here, our sustainability initiatives, we have three: becoming circular at scale, going net zero, and living the change.
If we look into a little bit more details, and a lot of activities are going on, and I just wanna highlight the main things in the quarter is, as Magnus mentioned here, is the implementation of the drying system that will improve energy efficiency in Rexcell paper mill. Also, the decisions to invest in the new logistic solution will contribute to our net zero goal, and this will decrease our CO2 emission with around 700 tons, and the logistic solution will be CO2 neutral. So great investments from many aspects. Now we're moving to the financials.
Thank you, Robert. So if we look, start with the income statement. As you can see, it shows a significant drop in the gross margin, and this is attributed to SEK 125 million in restructuring costs related to the relocation of our warehouse to Meppen, and that is about 70 kilometers from our main factory in Europe, in Germany. This move is a critical step in securing future storage capacity, in a very cost-efficient and automated way, and also supports our journey towards Net Zero 2030. So by partnering with CEVA, a logistics provider, we've been able to consolidate our satellite warehouses, as mentioned earlier. But excluding these restructuring costs, the gross margin stands at 23.7%.
Despite lower volumes and rising costs over the past twelve months, the gross margin has remained stable due to strong cost discipline and efficient production adaptations. As seen in the breakdown of our business area, the profit is down in similar proportions, I would say, although the margins are holding up about 10% in Dining solutions, although we see a weak HoReCa market. The profitability for Food packaging solutions is fairly impacted by high storage costs in APAC region and the continuous weak demand in Europe. Year to date, we are on 7.7% versus last year of 9.1%. That's a drop of 1.4 percentage points, derived again from the low volumes in HoReCa, but also higher cost levels during 2024 versus 2023.
Looking on the operating cash flow, year to date is SEK 238 million and SEK 626 million in the last twelve months, and that indicates that the fourth quarter was strong last year from a cash flow perspective, but this is also historically the seasonal strongest one. We have in the quarter, a positive development in the inventory levels seen in the end of the quarter, and this is aligned with a positive level, development we see in APAC, and that comes from the high levels that were built up, especially so in the beginning of the year. Our financial position remains strong, with net debt reduced and, and now on par with previous year, although we have done four acquisitions in 2024 and, and dividends during the first nine months.
Net debt is close to one versus EBITDA and consequently continues with significant headroom for investments in growth and growing the company. Finally, some comments on our financial targets. Organic growth stands at minus 5.6%, largely due to two factors. The first is continuous weak consumption across all our markets, particularly so in the DACH region. I think the prolonged inflation has led to hesitation among consumers when it comes to dining out. We saw that consumer confidence in the euro area, the numbers published yesterday, that's a very important leading indicator for many industries, including ours, increased slightly by 0.4 points to minus 12.5% in October 2024. It is the highest since February 2022, although it remains clearly below long-term average and very low in Germany, continue to be so.
The second factor for the organic growth is selective pricing reductions we implemented over the past nine to 12 months to remain competitive in certain areas. Again, at the end of the quarter, we announced price increases to compensate for higher costs from inflation and raw materials we have seen recently. Our operating margin is at 8.2% on rolling 12 months basis. That is slightly below our 10% target. And finally, the dividend is set to five SEK, exceeding our target of distributing more than 40% of our net income. So thank you for this and listening, and I hand over now to Robert for his final comments.
Yeah, short summary here. I think, we have a strong quarter versus historical numbers. Also a strong quarter where we invested to strengthen our position in Europe with the acquisition of Seti and also the new logistical setup in Germany. And then, we operate in a market, the HoReCa market, that long-term will grow, so we see positive on the long-term horizon. All right, thank you. Then we move to questions.
Thank you, management. If you do wish to ask an audio question, please press star one on telephone keypad. If you wish to withdraw a question, you may do so by pressing star two to cancel. Once again, please press star one to register for a question. There will be a brief pause while these questions are being registered. Once again, as a reminder, to ask a question, please press star one on your telephone keypad. There are no questions on the line at the moment. I'll pass the conference call back to the management.
All right. Thank you. Yeah, busy day today with a lot of reports, so, yeah. So if no questions, yeah, I want to thank you for listening in and, yeah, we're coming back in the next quarter. Thank you.
This now concludes today's presentation. Thank you all for your attending. You may now disconnect.