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

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Oct 07, 2022 310 likes •568 views

Johan Westman, CEO Fredrik Nilsson, CFO Interim Report Second quarter 2019 The Co-Development Company Agenda Second quarter 2019 1 Key strategic activities 2 Business area information 3 Q&A 4 2 16/07/2019 The Co-Development

SLIDE 1 The Co-Development Company

Interim Report Second quarter 2019

Johan Westman, CEO Fredrik Nilsson, CFO

SLIDE 2 The Co-Development Company 16/07/2019 2

Agenda

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

SLIDE 3 The Co-Development Company

Highlights Q2 – strong profit growth and strategic launch of our portfolio for plant-based alternatives

3 Organic volume growth continued All-time high operating profit for a second quarter R12M operating profit above SEK 2 billion for the first time Reported tax costs reduced to 25 percent (27) Earnings per share increased by 18 percent Good operating cash flow Strong trend and improved mix in Food Ingredients As expected, the lower yield in our CCF business continued with higher than normal production costs GROWTH & RETURNS HIGHLIGHTS

Q2 19

16/07/2019

Volume 565,000 MT

(up 3% y/y)

Operating profit SEK 518 million

(up 14% y/y, up 10% y/y*)

ROCE 15.5%**

Operating profit per kilo SEK 0.92

(up 11% y/y, up 6% y/y*) * Fixed FX ** Rolling 12 months incl. IFRS 16 effect

SLIDE 4 The Co-Development Company 16/07/2019 4

Operating profit for Q2 2019 was well in line with our historic trend lines

178 164 231 251 204 196 246 265 220 211 273 242 244 303 328 331 343 321 326 376 368 431 435 431 409 475 471 460 454 526 516 509 518 100 200 300 400 500 600 Q2 Q1 Q3 Q4 287 381 281 292 388 2010–2018 2019

SLIDE 5 The Co-Development Company 16/07/2019 5 During Q2, AAK launched AkoPlanet™, a new portfolio with tailor- made solutions for food manufacturers developing plant-based alternatives within the meat, dairy and ice cream segments AkoPlanet™ will not only enable food manufacturers to meet a variety of industry opportunities, such as health, nutrition and sustainability, but also the fast-growing demand for plant-based products among consumers Sustainable sourcing is a crucial aspect for the plant-based movement and all raw materials used in the AkoPlanet™ portfolio are, as a minimum standard, traceable to the growing region AkoPlanet™

Key product launches Q2

COBAO™ Pure Newly launched COBAO™ Pure is a unique, patented solution that delivers significantly improved bloom-retarding effects, extending a chocolate product’s shelf life with up to 400 percent, without impacting the product The AAK solution delivers significantly improved bloom

retarding

effects in all kinds of applications including milk and dark chocolate tablets, coated and filled products, and dark chocolate with nuts COBAO™ Pure is not subject to regulations that limit the use of vegetable fats in chocolate products

SLIDE 6 The Co-Development Company 16/07/2019 6

FX exposure – translation impact positive in the quarter

Average rate 2018 Average rate YTD 2019 Movement vs SEK USD 8.71 9.25 EUR 10.26 10.47 GBP 11.58 11.96 MXN 0.45 0.48

SLIDE 7 The Co-Development Company 16/07/2019 7

Working capital days up two days since year-end

Inventory

Receivables Flat Payables

Working capital days, rolling 12 months Development YTD

Other WC Flat

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

Acc. Rec

Inventory

Acc. Pay

Tot Net WC

SLIDE 8 The Co-Development Company 16/07/2019 8

Q2 cash flow benefited from low raw material prices

595 688 128 101 125 111 54 169 Changes WC EBITDA 2018 Other non- cash items

EBITDA Paid interest and taxes CAPEX FCF +16% Cash flow Q2 2019 Comments Good inventory management as well as continued low raw material prices impacted cash flow from inventory and accounts receivables positively. This was offset by lower accounts payables. CAPEX related to regular maintenance investments and capacity increases amounted to SEK 169 million. Acquisitions related to the increased ownership in AAK Kamani amounted to SEK 111 million. 54 148

AR Inventory

Working Capital AP Other (65) (-164) (-174) (-99) (222) (LY)

SLIDE 9 The Co-Development Company 16/07/2019 9

Return on Capital Employed (ROCE)

We target a gradual and continuous improvement

ROCE end Q2 2019* 15.5% EBIT LTM SEK million 2,060 Capital employed* SEK million 13,315

Growth and operating leverage to drive increase in ROCE

* ROCE: Return on Capital Employed calculated on rolling 12 months 15,0 15,2 15,4 15,6 15,8 16,0 16,2 % Q2 16 Q3 16 Q2 17 Q4 16 Q1 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 19 Q3 18 Q4 18 Q1 19 ROCE R12M incl. IFRS 16 ROCE R12M excl. IFRS 16

SLIDE 10 The Co-Development Company 16/07/2019 10

Loan and duration profile – good duration in the loan portfolio

SEK million Duration

Mortgage 539 13 years MTN bond 500 5 years MTN bond 1,100 3 years Bilateral 550 3 years Club loan 250 2 years

SEK million Duration

Bilateral 155 4 months Bank loans 606 6 months

79% Long term 21% Short term

Total loans 3,699 Cash 744 Net 2,955

SLIDE 11 The Co-Development Company 16/07/2019 11

Food Ingredients

Strong growth in the Bakery and Dairy segments Special Nutrition continued to have a favorable mix Higher sale of concentrated solutions compared to blended ones Foodservice improved profitability while volumes were slightly negative Strong volume growth in Asia combined with a very favorable development of the product mix in North Latin America, South Latin America and the US 600 200 350 300 250 300 900 1.200 1.500 Q4 15 346 Q1 17 MSEK MSEK Q2 15 Q3 15 Q1 16 Q2 16 Q3 16 Q4 16 292 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Quarter Rolling 12 months 0,05 0,75 0,00 0,85 0,75 0,70 0,80 0,85 0,00 0,90 0,90 0,70 0,80 0,95 0,65 0,05 0,65 0,95 Q2 16 Q2 18 Q3 16 Q3 15 Q1 17 Q2 17 Q3 17 Q3 18 Q4 16 Q1 19 Q2 19 0,77 SEK Q2 15 SEK 0,91 Q4 15 Q1 16 Q4 17 Q1 18 Q4 18 Rolling 12 months Quarter Business area development Operating profit Operating profit per kilo Organic volume growth +1% Operating profit +18% Operating profit per kilo +18%

SLIDE 12 The Co-Development Company 16/07/2019 12

Chocolate & Confectionery Fats

There was good volume growth for high-end semi- speciality products and strong volume growth for low- end semi-speciality products The lower operating profit per kilo was due to higher production costs and the proportionately stronger volume growth for low-end semi-speciality products as mentioned above Effects of lower raw material yields remained Slightly positive price development on high-end solutions in the quarter Capacity expansion investments progress according to plan 200 400 600 800 180 150 100 10 110 120 130 140 210 170 160 190 200 Q2 19 Q3 15 Q1 19 Q2 15 Q4 15 MSEK MSEK Q1 16 Q2 16 Q3 16 Q4 18 177 Q1 17 Q4 17 Q2 17 Q3 17 Q4 16 Q2 18 Q3 18 169 Q1 18 Rolling 12 months Quarter 0,00 0,20 0,40 0,60 0,80 1,00 1,20 1,40 1,60 1,80 2,00 2,20 1,70 1,80 0,20 1,90 0,10 2,10 1,40 1,50 1,60 2,00 0,00 SEK Q1 19 SEK Q1 16 Q2 15 1,58 Q4 17 Q3 15 Q4 18 Q2 18 1,74 Q1 18 Q1 17 Q4 16 Q3 17 Q2 16 Q2 17 Q4 15 Q3 16 Q2 19 Q3 18 Rolling 12 months Quarter Business area development Operating profit Operating profit per kilo Organic volume growth +15% Operating profit +5% Operating profit per kilo

SLIDE 13 The Co-Development Company 16/07/2019 13 35 20 40 60 80 100 120 140 160 180 5 10 15 20 25 30 35 40 45 50 Q1 19 Q2 16 Q3 15 Q3 17 MSEK Q2 15 Q2 19 Q4 16 MSEK Q4 15 Q1 16 Q3 16 Q1 17 Q3 18 Q2 17 Q4 17 Q1 18 Q2 18 Q4 18 Rolling 12 months Quarter 0,43 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 0,70 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 0,70 Q1 16 Q2 18 SEK Q4 15 0,49 SEK Q3 15 Q2 15 Q4 16 Q2 16 Q3 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q3 18 Q4 18 Q1 19 Q2 19 Rolling 12 months Quarter

Technical Products & Feed

Operating profit Operating profit per kilo The fatty acids business continued its volume growth The feed business had a slightly negative volume development but higher sales of high- end solutions Business area development Organic volume growth

Operating profit +9% Operating profit per kilo +14%

SLIDE 14 The Co-Development Company

Progress and good results for The AAK Way – strong foundation for our next company program

Continuous training on Creating Customer Value Follow up on global customer survey – We listen, We care, We act Training on oils & fats and customers’ industries Senior and Medical Nutrition business growing Launch of AkoPlanet™ – AAK portfolio with solutions for plant-based foods Cross-regional collaboration for strengthened INNOBO-Product 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 16/07/2019 14

SLIDE 15 The Co-Development Company 16/07/2019 15

Almost on target for our management ambition after 30 months

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

+9%

268 74 58

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

+3% +20% +4% +10%

SLIDE 16 The Co-Development Company 16/07/2019 16

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 17 The Co-Development Company 16/07/2019 17

Q&A

SLIDE 18 The Co-Development Company 16/07/2019 18

Financial calendar

Financial calendar 2019 October 24, 2019 Third quarter report 2019 November 20, 2019 Capital Market Day, Aarhus January 30, 2020 Fourth quarter and year-end report 2019

SLIDE 19 The Co-Development Company 16/07/2019 19 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 20 The Co-Development Company

Supplementary information

Q2 presentation

SLIDE 21 The Co-Development Company 16/07/2019 21

IFRS 16 effect

Q2 Q2 IFRS 16 658 688 Q2 Q2 IFRS 16 513 518

EBITDA EBIT

YTD YTD IFRS 16 1.354 1.298 Q2 Q2 IFRS 16 1.011 1.018

EBITDA EBIT

SLIDE 22 The Co-Development Company 16/07/2019 22

Cocoa butter price

SLIDE 23 The Co-Development Company 16/07/2019 23

Raw material prices

SLIDE 24 The Co-Development Company 16/07/2019 24

YTD cash flow benefited from low raw material prices

226 168 303 280 81 296 EBITDA 2018 EBITDA FCF Changes WC Paid interest and taxes 1.190 CAPEX Other non- cash items 1.354

+14% Cash flow Q2 2019 Comments Continued volume growth impacted cash flow from accounts receivables negatively. Lower raw material prices had a favorable impact

n cash flow from inventory. However, the

lower raw material prices had a negative impact on cash flow from accounts payables. CAPEX related to regular maintenance investments and capacity increases amounted to SEK 296 million. Cash flow from acquisitions (MaasRefinery B.V., BD Foods Ltd., and an increased

wnership in AAK Kamani) amounted to SEK

280 million. 120

Other AR Working Capital Inventory

AP (-579) (-293) (-304) (-318) (-304) (LY)