Interim Report First quarter 2019 The Co-Development Company - - PowerPoint PPT Presentation

▶

Aug 20, 2023 104 likes •369 views

Johan Westman, CEO Fredrik Nilsson, CFO Interim Report First quarter 2019 The Co-Development Company Agenda First quarter 2019 1 2 Key strategic activities Business area information 3 Q&A 4 2 23/04/2019 The Co-Development Company

SLIDE 1 The Co-Development Company

Interim Report First quarter 2019

Johan Westman, CEO Fredrik Nilsson, CFO

SLIDE 2 The Co-Development Company 23/04/2019 2

Agenda

1 2 3 4 First quarter 2019 Business area information Key strategic activities Q&A

SLIDE 3 The Co-Development Company

Highlights Q1 2019

3 Organic volume growth continued Gaining market shares All-time high operating profit for a first quarter Earnings per share increased by 9 percent Operating cash flow including changes in working capital was good Most of our geographic markets have seen good progress. US has come back after a challenging period As expected, the lower yield in

ur CCF business continued with

higher than normal production costs Reported tax costs corresponded to an average tax rate of 25 percent (27) due to a lower corporate tax rate in Sweden combined with further

ptimization of capital structure

in the Group * Excluding acquisition costs of SEK 9 million GROWTH & RETURNS HIGHLIGHTS

Q1 19

23/04/2019

Volume 572,000 MT

(up 4% y/y)

Operating profit SEK 509 million*

(up 11% y/y, up 6% y/y**)

ROCE 15.4%***

Operating profit per kilo SEK 0.87

(up 5% y/y, up 3% y/y**) ** Fixed FX *** Rolling 12 months incl. IFRS 16 impact

SLIDE 4 The Co-Development Company 23/04/2019 4

Operating profit, excl acquisition costs, for Q1 2019 was well in line with our historic trend lines

178 164 231 251 204 196 246 265 220 211 273 242 244 303 328 331 343 321 326 376 368 431 435 431 409 475 471 460 454 526 516 509 100 200 300 400 500 600 281 Q1 Q2 Q3 Q4 287 381 292 388 2010–2018 2019

SLIDE 5 The Co-Development Company 23/04/2019 5

Highlights Q1 2019

AAK AB has issued a senior unsecured bond for a total of SEK 500 million with a tenor of five years Floating interest rate of three months STIBOR plus 130 basis points The proceeds from the bond issue will be used to finance AAK’s recent acquisitions in Europe and earlier communicated investments The issue is part of an MTN program with a framework amount of SEK 4,000 million Total of SEK 1,600 million now issued (SEK 1,100 million + SEK 500 million) AAK issues bond for a total of SEK 500 million M&A During Q1, AAK made two acquisitions (further details on upcoming slides) Eighteen months after inaugurating our production facility in Zhangjiagang, China, we have decided on significant add-on investments to increase capacity and support volume growth for, in particular, our Special Nutrition and Bakery segments The processing plant for Special Nutrition will significantly strengthen the product and service offering for our end customers AAK has established a solid presence in the Chinese market and with these new investments we are very well positioned to continue to grow organically and capture market share AAK makes significant investments in China

SLIDE 6 The Co-Development Company

MaasRefinery acquired to accelerate growth, strengthen the European supply chain and to add operational capabilities

23/04/2019 6

 Increase capacity to enable accelerated growth of our business in Europe

MaasRefinery – a Dutch specialized vegetable oils refinery strategically located in Port of Rotterdam Capacity is approximately 40,000 MT with further room for expansion MaasRefinery is strategically located next to a deep-sea terminal in Rotterdam Established in 2009 and designed according to the latest process technology in order to maximize energy efficiency and minimize oil losses FSSC 22000 certified and compliant with Skal, Kosher, RSPO and GMP+ Strategic rationale

 Support existing European production footprint to optimize supply chain and save costs  Strengthen capabilities and flexibility for the production of organic oils and fats

Port of Rotterdam

SLIDE 7 The Co-Development Company 23/04/2019 7

BD Foods – a good strategic fit with our global Foodservice expansion

BD Foods – a British Foodservice company Produces bespoke chilled restaurant quality meal accompaniments including sauces, salsas, chutneys, vinaigrettes, infused oils and dressings Portfolio of over 3,000 products Wide range of customers including pubs, restaurants, hotels, airlines and airline caterers, other travel caterers, hospitality companies, wholesalers, retailers and food manufacturers Located in St Leonards-on-Sea (near Hastings), East Sussex Established in 2001

 Broad product and packaging offering including dip pots and hot filled products

Strategic rationale

 Extensive know-how in new product development and packaging design  Customer-focused innovation

SLIDE 8 The Co-Development Company 23/04/2019 8

FX exposure – translation impact positive in the quarter

Average rate 2018 Average rate Q1 2019 Movement vs SEK USD 8.71 9.11 EUR 10.26 10.36 GBP 11.58 11.88 MXN 0.45 0.47

SLIDE 9 The Co-Development Company 23/04/2019 9

Working capital days

Inventory

Receivables Flat Payables

Working capital days, rolling 12 months Development YTD

Other WC +1

30 35 40 45 50 55 60 65 70 75 Q3 2018 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q1 2019 Inventory Tot Net WC

Acc. Rec
Acc. Pay

SLIDE 10 The Co-Development Company 23/04/2019 10

Good cash flow for a first quarter

595 666 98 67 178 169 27 127 FCF EBITDA Other non- cash items Paid interest and taxes EBITDA 2018 Changes WC CAPEX

+12% Cash flow Q1 2019 Comments Continued volume growth impacted cash flow from working capital negatively by increased receivables as well as higher inventory. This was partly offset by increased payables CAPEX excluding acquisitions mainly related to regular maintenance investments and capacity increases 63 50

Working Capital Inventory AR AP Other (-643) (-129) (-130) (-219) (-526) (LY)

SLIDE 11 The Co-Development Company 23/04/2019 11

Return on Capital Employed (ROCE)

We target a gradual and continuous improvement

ROCE end Q4 2018* 15.4% EBIT LTM SEK million 1,996 Capital employed* SEK million 12,970

Growth and operating leverage to drive increase in ROCE

* ROCE: Return on Capital Employed calculated on rolling 12 months 14,5 15,0 15,5 16,0 16,5 Q3 16 % Q1 17 Q1 16 Q2 16 Q3 17 Q4 16 Q2 17 Q4 17 Q1 18 Q2 18 Q1 19 Q3 18 Q4 18 ROCE R12M Incl. IFRS 16 ROCE R12M Excl. IFRS 16

SLIDE 12 The Co-Development Company 23/04/2019 12

Loan and duration profile

SEK million Duration

Mortgage 531 13 years MTN bond 500 5 years MTN bond 1,100 3 years

SEK million Duration

Bilateral 638 4 months Bank loans 628 6 months

63% Long term 37% Short term

Total 3,397

SLIDE 13 The Co-Development Company 23/04/2019 13

Food Ingredients

Margin expansion Bakery in positive trend US regaining momentum Special Nutrition had lower volumes but improved mix with more concentrates and less blends 271 308 50 100 150 200 250 300 350 300 1.200 600 900 1.500 MSEK Q1 15 Q2 15 Q2 18 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q3 17 Q2 17 Q4 17 Q1 18 Q3 18 Q4 18 Q1 19 MSEK Rolling 12 months Quarter 0,72 0,81 0,50 0,60 0,70 0,80 0,90 0,50 0,60 0,70 0,80 0,90 Q2 16 SEK Q1 15 Q1 16 Q2 15 Q3 15 Q4 15 Q4 18 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q1 19 SEK Quarter Rolling 12 months Business area development Operating profit Operating profit per kilo Organic volume growth +1% Operating profit +14% Operating profit per kilo +13%

SLIDE 14 The Co-Development Company 23/04/2019 14

Chocolate & Confectionery Fats

Strong volume growth in the quarter Margin expansion on high-end products Effects of lower raw material yield remained in the quarter Capacity expansion investments progress according to plan 190 206 300 600 900 20 40 60 80 100 120 140 160 180 200 220 Q4 18 MSEK MSEK Q3 17 Q2 16 Q4 16 Q3 15 Q1 15 Q2 15 Q4 15 Q1 16 Q3 16 Q1 17 Q2 17 Q4 17 Q1 18 Q2 18 Q3 18 Q1 19 Rolling 12 months Quarter 0,00 0,50 1,00 1,50 2,00 0,00 0,20 0,40 0,60 0,80 1,00 1,20 1,40 1,60 1,80 2,00 2,20 SEK Q4 15 Q2 16 SEK 1,86 Q1 15 Q3 15 Q2 15 Q1 16 Q3 16 Q4 16 Q3 17 Q1 17 Q2 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 1,79 Rolling 12 months Quarter Business area development Operating profit Operating profit per kilo Organic volume growth +13% Operating profit +8% Operating profit per kilo

SLIDE 15 The Co-Development Company 23/04/2019 15 36 36 20 40 60 80 100 120 140 160 5 10 15 20 25 30 35 40 45 50 MSEK Q2 16 Q2 18 Q2 15 MSEK Q4 15 Q1 15 Q3 15 Q1 16 Q4 17 Q3 16 Q4 16 Q1 17 Q4 18 Q2 17 Q3 17 Q1 18 Q3 18 Q1 19 Rolling 12 months Quarter 0,48 0,46 0,00 0,05 0,10 0,15 0,20 0,25 0,30 0,35 0,40 0,45 0,50 0,55 0,60 0,65 0,00 0,05 0,10 0,15 0,20 0,25 0,30 0,35 0,40 0,45 0,50 0,55 0,60 0,65 SEK SEK Q2 15 Q2 18 Q1 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q3 18 Q3 17 Q1 17 Q2 17 Q4 17 Q1 18 Q4 18 Q1 19 Rolling 12 months Quarter

Technical Products & Feed

Operating profit Operating profit per kilo Volume growth in both our feed and fatty acids business Maintenance stop decreased production days Business area development Organic volume growth +5% Operating profit +0% Operating profit per kilo

SLIDE 16 The Co-Development Company 23/04/2019 16

The AAK Way – program execution highlights

Next level Creating Customer Value training We listen, We care, We act – global customer survey Training on oils & fats and customers’ industries Senior and Medical Nutrition businesses growing Penetrating the plant-based foods market Cross-regional collaboration for strengthened INNOBO-Products offerings Further progressing with multi-oil sustainability Global networks enabling best practice sharing on key production capabilities Continuous Improvement and Lean practices enabled by a strengthened toolbox

Go to Market Operational Excellence Special Focus Areas Innovation People

Market-driven innovation process Leadership development Preparing the organization for the future

SLIDE 17 The Co-Development Company 23/04/2019 17

Almost on target for our management ambition after 27 months

Average 10% year-over-year EBIT improvement* *Excluding acquisitions and at fixed FX

+9%

233 82 55

365 Food Ingredients Chocolate & Confectionery Fats Technical Products & Feed Group Functions AAK Group

+1% +21% +5% +10%

SLIDE 18 The Co-Development Company 23/04/2019 18

Concluding remarks

We offer plant-based, healthy, high value- adding oils and fats solutions by using our customer co-development approach and we see favorable underlying trends in our

markets. Thus, we continue to remain

prudently optimistic about the future.

SLIDE 19 The Co-Development Company 23/04/2019 19

Q&A

SLIDE 20 The Co-Development Company 23/04/2019 20

Financial calendar

Financial calendar 2019 May 15, 2019 Annual General Meeting 2019 July 16, 2019 Second quarter report 2019 October 24, 2019 Third quarter report 2019 November 20, 2019 Capital Market Day, Aarhus

SLIDE 21 The Co-Development Company 23/04/2019 21 Investor Relations contact:

Fredrik Nilsson

Chief Financial Officer Mobile: +46 708 95 22 21 E-mail: fredrik.nilsson@aak.com Further Investor Relations material can be found at aak.com/investors

SLIDE 22 The Co-Development Company

Supplementary information

Q1 presentation

SLIDE 23 The Co-Development Company 23/04/2019 23

IFRS 16 effect on key KPIs

Q1 IFRS 16 Q1 666 640 Q1 Q1 IFRS 16 497 500

EBITDA EBIT

SLIDE 24 The Co-Development Company 23/04/2019 24

Cocoa butter price

SLIDE 25 The Co-Development Company 23/04/2019 25

Raw material prices