Interim Report First quarter 2020 The Co-Development Company - PowerPoint PPT Presentation

Johan Westman, CEO Fredrik Nilsson, CFO Interim Report First quarter 2020 The Co-Development Company

Agenda 1 CEO update 2 Business area information CFO update 3 4 Concluding remarks Q&A 5 2 24/04/2020 The Co-Development Company

Highlights Q1 – Continued profit growth in a volatile market HIGHLIGHTS GROWTH & RETURNS Strong profit growth in the first quarter Q1 Adjusted Continued strong growth for Volume Plant-based Foods operating profit Foodservice, part of 569,000 MT SEK 546 million business area Food Ingredients, had significantly 2020 (down 1% y/y) lower sales to restaurants, (up 7% y/y, up 4% y/y*) hotels and airline catering during the latter part of the quarter Adjusted Strong customer campaigns in 2019 accelerated growth operating profit ROCE for CCF products filling fats per kilo and spreads in the first 14.5%** quarter this year SEK 0.96 Reported tax costs reduced to 24 percent (25) (up 8% y/y, up 4% y/y*) Earnings per share increased by 11 percent * Fixed FX ** Rolling 12 months incl. IFRS 16 effect 3 24/04/2020 The Co-Development Company

Update on the coronavirus situation Health and safety Our first priority during this unprecedented situation has been to secure the health and safety of our employees Critical food supply AAK is a key supplier of food ingredients, a critical supply chain with high priority across the globe All our production plants have strong contingency plans in place to secure operations as well as inbound/outbound logistics Business impact Foodservice had significantly lower sales to restaurants, hotels and airline catering during the latter part of the quarter In February, we were forced into an extended closedown of our operations in China Disruptions in India at the end of March continue to impact our business negatively into the second quarter In South Latin America several customers have shut down production facilities temporarily due to restrictions and volumes adjustments We expect a significant drop in demand for Foodservice and our non-food segments in the coming quarters which will have a material impact on earnings. In response, we are optimizing our cost base in affected segments without jeopardizing our long-term capabilities and strategic initiatives With local lockdowns and restrictions around the world, lowering of GDP estimates are evident. This can, for our other segments, lead to a direct or indirect negative impact on our earnings in the coming quarters 4 24/04/2020 The Co-Development Company

Acquisition in Russia Entering a market with great potential In early March, an agreement was signed to acquire 75 percent of NPO Margaron LLC, based in St. Petersburg, Russia Margaron has been a trusted toll manufacturer to AAK for more than a decade and had last year revenues of approximately SEK 280 million Russia and the CIS countries is one of the world’s largest chocolate and confectionery markets Significant potential for our Special Nutrition, Bakery, and Dairy segments 5 24/04/2020 The Co-Development Company

Food Ingredients SEK million SEK million Organic Revenue Operating Operating 380 1.500 volume growth profit profit per kilo 360 SEK million 340 (%) SEK million SEK 1.200 325 320 308 Operating profit 300 +6% +6% +9% -2% 900 280 4.924 378 325 0,88 369 308 4.649 260 0,81 600 240 220 300 20 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 20 SEK SEK Q1 19 Q1 20 Q1 19 Q1 20 Q1 19 Q1 20 Q1 19 Q1 20 Rolling 12 months Quarter 1,10 1,10 1,00 1,00 Business area development 0,88 0,90 0,90 0,81 Operating profit per kilo 0,80 0,80 Compared to the corresponding quarter last year, Plant-based Foods 0,70 0,70 0,60 0,60 doubled its volume and profit 0,50 0,50 INFAT™, one of our premium solutions within Infant Nutrition, reported 0,40 0,40 volume growth, supported by new local Chinese customers 0,30 0,30 0,20 0,20 Foodservice currently has a situation with under-absorption of costs. AAK’s 0,10 0,10 position within Food Ingredients is strong and the Foodservice demand will 0,00 0,00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 return, but during the corona restrictions earnings will take a material hit due 16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 20 to very low sales and under-absorption Rolling 12 months Quarter 6 24/04/2020 The Co-Development Company

Chocolate & Confectionery Fats SEK million SEK million Organic Revenue Operating Operating 240 1.000 volume growth profit profit per kilo 230 222 SEK million 220 206 (%) SEK million SEK 800 210 200 Operating profit 190 0% +6% +8% +8% 600 180 170 2.116 115 115 222 1,93 1.993 206 1,79 160 400 150 140 130 200 10 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 20 Rolling 12 months Quarter Q1 19 Q1 20 Q1 19 Q1 20 Q1 19 Q1 20 Q1 19 Q1 20 SEK SEK 2,20 2,20 Business area development 1,93 2,00 2,00 1,79 1,80 1,80 Operating profit per kilo Volume growth for Chocolate & Confectionery Fats was flat in the quarter 1,60 1,60 compared to the exceptional increase of 13 percent last year 1,40 1,40 1,20 1,20 The turnaround of operating profit per kilo continued in the first quarter, up 8 1,00 1,00 percent compared to last year 0,80 0,80 0,60 0,60 The volatility in the industry has in the short term increased due to the 0,40 0,40 coronavirus. Some markets have opted for more low-end solutions 0,20 0,20 0,00 0,00 Government lockdowns have forced some customers in Latin America and Asia Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 20 to close down temporarily. This can have a direct or indirect negative impact on Rolling 12 months Quarter earnings in the coming quarters 24/04/2020 7 The Co-Development Company

Technical Products & Feed SEK million SEK million Organic Revenue Operating Operating 50 180 volume growth profit profit per kilo 45 SEK million 160 40 38 (%) SEK million SEK 140 36 35 Operating profit 120 +8% +7% +6% -2% 30 100 25 85 415 38 0,46 0,45 36 389 80 79 20 60 15 40 10 20 5 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 20 Q1 19 Q1 20 Q1 19 Q1 20 Q1 19 Q1 20 Q1 19 Q1 20 SEK Rolling 12 months Quarter SEK 0,70 0,70 0,65 0,65 Business area development 0,60 0,60 Operating profit per kilo 0,55 0,55 0,50 0,50 0,46 0,46 Volumes increased by 8 percent with good contributions from both our feed 0,45 0,45 0,40 0,40 business and our fatty acids business 0,35 0,35 0,30 0,30 Due to the coronavirus, there was a lower demand in our fatty acids 0,25 0,25 business towards the end of the quarter, particularly for candles and 0,20 0,20 0,15 0,15 technical solutions. We expect this trend to continue until restrictions are 0,10 0,10 lifted in Europe 0,05 0,05 0,00 0,00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 20 Rolling 12 months Quarter 8 24/04/2020 The Co-Development Company

Key sustainability achievements 2019 Our ambitions Key achievements Launch of AkoPlanet™ – made with love for the people, plants and the planet Our Customers An umbrella brand for solutions in plant-based foods Be a leading and knowledgeable partner on A platform for co-developing oils and fats solutions for plant-based meat and dairy sustainability Made from responsibly sourced and traceable raw materials Growing our Kolo Nafaso program with 72 percent to 230,000 women Supporting sustainable development by: Our Suppliers Equal rights to economic resources – increasing the number of Progressing on sustainability microcredits and opening 4,249 bank accounts for each of our key raw Increasing agricultural productivity – training 96,650 women in materials cooperative business skills and good agricultural practices Ensure women’s full and effective participation and equal opportunities for leadership – increasing the number of female managers in Burkina Faso Increased resource efficiency and reduced climate impact: Our Planet Energy consumption: 7% decrease per processed unit vs 2018 Minimize our environmental Water consumption: 2.3% decrease per processed unit vs 2018 impact and increase resource GHG emissions: 4.4% decrease per processed unit since 2012 vs efficiency per processed unit our ambition of a 22% reduction by 2030 raw material 9 24/04/2020 The Co-Development Company

Q1 cash flow impacted by quarterly seasonality Cash flow Q1 2020 Comments Inventory SEK million 82 AP +8% 129 800 Other Accounts receivables impacted by: 68 722 700 666 Normal seasonality between quarters -531 AR 600 252 Increased share of sales to -252 500 Working Capital customers with longer payment 26 (-67) 400 terms 190 300 Positive impact from strong inventory -216 200 (-178) 158 management (-27) 100 (-296) (98) 183 0 -100 -87 EBITDA 2019 EBITDA Changes WC Paid interest CAPEX Other non- FCF and taxes cash items (LY) 10 24/04/2020 The Co-Development Company