Fourth Quarter and Full-year 2010 - AAK · 2017. 10. 30. · Fourth quarter 2010 Fourth Quarter and Full-year 2010 3 Net sales amounted to SEK 3,930 million (3,788). • The fourth

Fourth Quarter and Full-year 2010

Arne FrankCEO

Anders ByströmCFO

Fredrik Nilsson Head of IR

Today`s agenda

Fourth Quarter and Full-year 2010 2


Business Area information

Major Events Q4 and full-year 2010

AAK Acceleration

Other items

Q & A

Fourth quarter 2010


Net sales amounted to SEK 3,930 million (3,788).

• The fourth quarter showed volume growth for the two main business areas Food Ingredients and Chocolate & Confectionery Fats.

• The earlier reported market conditions have continued.

• Negative currency translation impact of SEK 149 million.

Operating profit reached SEK 251 million (289). As earlier commented the fourth quarter 2009 included several non repeatable exceptional items. Hence this is a satisfactory result, in line with our long term improvement plans.

For comparable units, adjusted for divestments and fixed exchange rates, the operating profit amounted to SEK 258 million (287).

4Fourth Quarter and Full-year 2010 444

Fourth quarter – Business Area summary

Food Ingredients

• Operating profit reached SEK 137 million (143) a decline entirely due to negative translation impacts.

• The fourth quarter 2010 showed volume growth of 1 percent.

• The positive development continued in all speciality product areas such as Infant Nutrition (Baby Food), Bakery and Bakery Services, Dairy Industry and Food Service.

Chocolate & Confectionery Fats

• Reported an operating profit of SEK 106 million (147).

• The general market conditions for the first nine months of 2010 have continued during the fourth quarter.

• Volumes increased by 1 percent.

Technical Products & Feed

• Operating profit at SEK 31 million (31).

-4 %

-28 %

+0 %

Highlights full year 2010


Operating profit reached SEK 824 million (827).

Adjusted for divestments and at fixed exchange rate operating profit was up 6 percent to SEK 855 million (810).

Earnings per share has improved by SEK 4.01, up 40 percent from SEK 10.14 to SEK 14.15.

Proposed dividend of SEK 4.50 (4.25), an increase by SEK 0.25, or 6 percent.

Financial summary


Focus the analysis on:

• Volume

• Gross Margin per kilo

• Operating profit per kilo

• Improvement in Operating profit

• Return on Net Operating Assets

• Net Debt / EBITDA0

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AAK Group - Volume

Quarter Rolling 12 months

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AAK Group - Gross Margin per kilo


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AAK Group - Operating profit per kilo


Financial summary


Focus the analysis on:

• Volume

• Gross Margin per kilo

• Operating profit per kilo

• Improvement in Operating profit

• Return on Net Operating Assets

• Net Debt / EBITDA 0

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Rolling 12 m

onths, SE

K m

illion

Qua

rter,

SE

K m

illio

n

AAK Group - Operating profit


6,0%

7,0%

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9,0%

10,0%

11,0%

12,0%

13,0%

14,0%

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Q1 07

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Return on Net Operating Assets - Rolling 12 months

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Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

NET DEBT/EBITDA

Translation impact of a stronger SEK

The result for full-year 2010 includes negative translation effects of SEK 31 million.


8,00

8,50

9,00

9,50

10,00

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11,00

11,50

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EUR/SEK

6,00

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10,00

USD/SEK

10,00

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14,00

GBP/SEK

Average 2010

9.55Average 2010

7.19

Average 2010

11.10


Food Ingredients

Fourth quarter 2010

In the largest business area, Food Ingredients, operating profit reached SEK 137 million (143) a decline entirely due to negative translation impacts.

The positive development continued in all speciality product areas such as Infant Nutrition (Baby Food), Bakery and Bakery Services, Dairy Industry and Food Service.

Actions to reduce costs and improve the competitive positions are currently being executed and the business area continued to benefit from the on-going rationalisation programme. Realised cost savings have partly been matched by increased investments in organic growth outside Scandinavia.

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Food Ingredients - Operating profit



Food IngredientsEBIT per kg, SEK, rolling 12 months

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Food Ingredients - Operating profit per kg




Fourth quarter 2010

The operating result of SEK 106 million (147) was below last year mainly due to lower prices.

Prices have been stable during 2010.

The general market conditions for the first nine months of 2010 have continued during the fourth quarter.

Volumes increased by 1 percent compared to last year.

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Chocolate & Confectionery Fats - Operating profit


Presentatör

Presentationsanteckningar

The global recession has underlined the strong incentives to reduce costs and therefore drives further the substitution of expensive cocoa butter implying continued significantly increased CBE volumes. - This fact has however stimulated important investments in additional manufacturing capacity in the industry

121212

Chocolate & Confectionery Fats - EBIT per kg, SEK, rolling 12 months


0,000,200,400,600,801,001,201,401,601,802,002,202,40

0,000,200,400,600,801,001,201,401,601,802,002,202,40

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Chocolate & Confectionery Fats - Operating profit per kg



Technical Products & Feed

Fourth quarter 2010

Operating profit at SEK 31 million (31) was in line with the fourth quarter 2009 despite an exceptional Q4 2009.

Volumes in the fourth quarter 2010 were basically in line with the corresponding quarter 2009.

Technical products, particularly environmental friendly bio lubricants, continued to experience signs of market recovery.

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Technical Products & Feed - Operating profit


Ongoing rationalization programmes

The rationalisation programmes are progressing and are at least in line with plan in all business areas as previously communicated.

SEK 100 million (annualised) in cost savings was realised in late 2010, and an additional SEK 200 million (annualised) will be realised in the latter part of 2011.


SEK 200 million2005 – 2007

First wave of synergies

Second wave

SEK 100 million2007 – 2010

Additional SEK 200 million2010 – 2011

Third wave

= Total savings SEK 500 million, 2005 – 2011

++

Without any expected additional non-recurring cost Aarhus

CBEfocus

KarlshamnMulti-oil

factory

Volumes

Volumes Volumes

Volumes

ZaandijkNiche

Balance sheet


SEK million 31 Dec 2010

31 Dec 2009

Total Assets 9,252 8,513

Equity 3,188 2,949

Net interest bearing debt 2,634 3,186

The equity/assets ratio amounted to 34 percent (35 percent as at 31 December 2009).

Cash flow


SEK million Q 4 2010

Q 4 2009

YTD 2010

YTD2009

Cash flow from operating activities 347 327 1,155 1,073

Paid tax -58 -49 -281 -78

Change in working capital 243 472 -117 1,270

Cash flow from operating activities inclchange in working capital

532 750 757 2,265

Cash flow from investments -87 -110 -331 -313

Free cash flow 445 640 426 1,952

Cash flow from operating activities reaching SEK 757 million (2,265).

• The ongoing internal working capital improvement project continued to impact positively.

• The majority of the strong cash flow 2009 was due to a significant decline in raw material prices which led to reduced working capital.

2 265

1 000

130

1 135

83450

11

757

Full-year 2009 Raw material prices 2009

Deferred tax payments

"Normalized" cash flow 2009

Operating activities

Raw material prices 2010

Other Full-year 2010

Cash flow bridge year to date


Raw material prices

A 10 percent change in all raw material prices will effect workingcapital by +/- SEK 250 million.

As a consequence of the policy of back-to-back hedging of raw materials there is a time lag between movement in the spot price and the cash flow impact.


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SEK

/ton

Raw material prices palm and rapeseed, January 1, 2008 -

Rapeseed Palm

+45 %

AAK’s refinancing completed

The Group’s net borrowings as at 31 December 2010 amounted to SEK 2,634 million.

AAK has signed two new fully committed credit facilities. The new loan terms also includes significantly enhanced flexibility.

The Group now has committed credit facilities aggregating SEK 6,000 million with a maturity of five years or more.


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Investment Grade Pricing - Interestmargin

~80-90 bps

20Fourth Quarter and Full-year 2010

Elimination of IAS39 effects

AAK has implemented procedures permitting to eliminate the IAS39 from October 1, 2010.

Q4 included a positive IAS 39 effect of SEK 140 million.

Commencing the first quarter 2011 there will be no IAS 39 effect.


AAK Acceleration – 3 Priority Areas


Growth Efficiency People

AAK Acceleration - Growth


Growth

Bakery

Dairy


Infant Nutrition

Food Service

Merger & Acquisitions

Fast-growing Economies

AAK Acceleration – Efficiency


Efficiency

Purchasing

Productivity

AAK Acceleration – People


People

Sales Management & Sales Processes

Mobilize Ourselves

Internal Communication

26

Octavio Díaz de LeónDavid SmithTorben Friis LangeAnne Mette OlesenRenald MackintoshAnders ByströmArne FrankKarsten NielsenBo SvenssonEdmond BoritJean-Marc Rotsaert

AAK Executive Committee


Major events 2010, Summary

Record high, like for like, operating profit with

• Food Ingredients reported record high annual operating profit.

• Stabilized margins in Chocolate & Confectionery Fats.

• Strong recovery in Technical Products & Feed.

• Execution of the ongoing Scandinavian rationalisationprogramme in line with plan.

Rolled out company program AAK Acceleration

• Based upon our speciality strategy.

• Actionable execution oriented.

• Mid and long term growth and profit evolution.

• Growth-Efficiency-People.

New global organization with strengthened and more international Executive Committee.


Major events 2010

Investment by executives and key managers in a stock option program at market price.

Commencing first quarter 2011 there will be no IAS 39 effect to report.

Finalized long term refinancing of SEK 4,200 million, with much better flexibility, making up a part of a total committed facilities of SEK 6,000 million for five years or more.


Concluding remarks from CEO

Operating profit for 2010 was in line with our expectations.

We now have a very strong foundation for our mid- and long-term, the “AAK Acceleration programme”.

Focus areas are Growth, Efficiency and People. The prioritized growth areas are; Bakery & Bakery Service, Dairy Industry, Chocolate & Confectionery Fats, Infant Nutrition (Baby Food), Food Service, Fast-growing economies (e.g. China and Brazil) and Merger & Acquisitions.

For 2011 we have a cash flow challenge because of significant raw material price increases that occurred in 2010 but with a time lag affecting 2011.

We are pleased that we have been able to finalize the refinancing, with improved financial flexibility and we have now total committed facilities of SEK 6,000 million for five years or more


Questions & Answers



The first choice for value-addedvegetable oil solutions

Presentatör

Presentationsanteckningar

Vi är världens ledande tillverkare av vegetabiliska specilafetter

Investor Relations Contacts

Further Investor Relations information is

available from the company homepage at

http://www.aak.com/en/Investor/


Anders ByströmChief Financial Officer

Phone: +46 40 627 83 32

Fredrik NilssonHead of Investor Relations andGroup Financial Manager

Phone: +46 40 627 83 34Mobile: +46 708 95 22 21E-mail: [email protected]

Arne FrankChief Executive Officer and President

Phone: +46 40 627 83 10

Appendix

Financial calendar


Year Date Event

2011 May 4 Q1 2011 Interim report

2011 May 17 Annual General Meeting, Malmoe

2011 July 20 Q2 2011 Interim report

2011 November 4 Q3 2011 Interim report

2011 November 15 Capital Market Day Stockholm


Cocoa Butter


Raw material price development

Operating EBIT vs Legal EBIT including the IAS 39 effect


2009 2010

827

578

70

1 475

Operational EBIT 2009

IAS 39 Insurance compensation

Legal EBIT 2009

Documents

Fourth Quarter and Full-year 2010 - AAK · 2017. 10. 30. · Fourth quarter 2010 Fourth Quarter and Full-year 2010 3 Net sales amounted to SEK 3,930 million (3,788). • The fourth