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Arne Frank CEO
Fredrik Nilsson
CFO
Anders Byström Director IR
Interim report Third quarter 2014
Agenda
The first choice for value-added vegetable oil solutions 2
Third quarter 2014
Business area information
AAKtion
Q & A
Third quarter 2014
The first choice for value-added vegetable oil solutions 3
Volume ´000 MT
Sales SEK
million
EBIT SEK
million
EBIT per kilo
SEK
EPS SEK
Net debt SEK
million
+6%
0%
+12%
+6% Organic
-3%
+10%
442 (416)
331* (313*)
4,715 (4,206)
5.36 (4.86)
0.75* (0.75*)
+28% 2,886 (Dec 13: 2,255)
* Excluding acquisition costs and non-recurring items
Third quarter 2014
The first choice for value-added vegetable oil solutions 4
Operating profit, AAK Group • Operating profit, excluding acquisition costs and
non-recurring items, reached SEK 331 million (313), an improvement of 6 percent. The currency translation impact was positive SEK 16 million
• Operating profit per kilo excluding acquisition costs and the non-recurring items, remained stable at SEK 0.75 (0.75) despite the dilutive impact of the recent acquisitions and our challenges for InFat® in China
Operating profit, business areas • Food Ingredients remained stable at SEK 211
million (211) compared to the very strong third quarter 2013
• Chocolate & Confectionery Fats improved significantly, by 19 percent, and reached SEK 125 million (105)
• Technical Products & Feed remained stable at SEK 24 million (24)
Financial summary – AAK Group
5 The first choice for value-added vegetable oil solutions
1,200
1,300
1,400
1,500
1,600
1,700
1,800
250
275
300
325
350
375
400
425
450
475
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
Rolling 12 m
onths, '000 MT
Qua
rter
, '0
00 M
T
Volume
Quarter Rolling 12 months
0.30
0.35
0.40
0.45
0.50
0.55
0.60
0.65
0.70
0.75
0.80
0.30
0.35
0.40
0.45
0.50
0.55
0.60
0.65
0.70
0.75
0.80
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
Rolling 12 m
onths, SEK
/Kg
Qua
rter
, SEK
/Kg
Operating profit per kilo
Quarter Rolling 12 months
600
800
1,000
1,200
1,400
100
150
200
250
300
350
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
Rolling 12 m
onths, SEK
million
Qua
rter
, SEK
millio
n
Operating profit
Quarter Rolling 12 months
The first choice for value-added vegetable oil solutions 6
Cash flow
Operating cash flow in the third quarter came out as expected and amounted to negative SEK 52 million (positive 303 million)
• As predicted and communicated previously, working capital increased
Working capital is expected to be relatively stable during the fourth quarter 2014. However, in the first quarter 2015 we do expect material improvements following today’s low prices on our main raw materials
SEK million Q3 2014
YTD 2014
Q3 2013
YTD 2013
Full year
2013
EBITDA 442 1,185 390 1,049 1,460
Paid interest -29 -90 -27 -80 -96
Paid tax -100 -239 -55 -209 -261
Non-cash items 4 -15 7 -3 -20
Change in working capital (WC) -369 -644 -12 335 217
Cash flow from operating activities incl change in WC -52 197 303 1,092 1,300
Cash flow from investments -352 -661 -329 -589 -732
Free cash flow -404 -464 -26 503 568
The first choice for value-added vegetable oil solutions 7
Working capital days Rolling 12 months
+3
+8
-5
0
+6
Change since year-end 2013
58 56 56 59 62
-50-40-30-20-100102030405060708090100110120
-50-40-30-20-10
0102030405060708090
100110120
Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
Inventory Accounts receivables Accounts payables Others AAK Group
Raw material prices
The first choice for value-added vegetable oil solutions 8
10 percent change in all raw material prices will effect working capital by +/- SEK 250 million
Time lag of six to nine months
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
USD
/ton
Rapeseed oil Palm oil
8%
10%
12%
14%
16%
18%
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
Rolling 12 months Quarter
9
ROCE – third quarter 2014
Quarter Q3 2014
Q3 2013
FY 2013
EBIT (R12M) 1,231 1,060 1,117 Fixed assets 5,223 4,285 4,427 Working capital 3,406 2,481 2,581 ROCE 14.3 15.7 15.9
The first choice for value-added vegetable oil solutions
Business trends - third quarter 2014
The first choice for value-added vegetable oil solutions 10
Share of volume
Nord WE UK USA CEE CIS Asia LA
Food Ingedients
Chocolate & Confectionery Fats
Technical Products & Feed
AAK Group
Share of volume
Nord WE UK USA CEE CIS Asia LA
Food Ingredients
65%
Chocolate & Confectionery Fats
19%
Technical Products & Feed
16%
AAK Group
100%
Food Ingredients
The first choice for value-added vegetable oil solutions 11
Third quarter 2014 Operating profit remained stable at SEK 211
million (211) compared to the very strong third quarter 2013. The FX impact was positive SEK 10 million
Operating profit per kilo declined, as expected, from SEK 0.78 to SEK 0.71
• Operating profit per kilo excl. the dilutive impact of the acquisitions would have been SEK 0.08 higher
All in all, a stable quarter • There was a negative effect from the new
additional direct tax in Mexico
• Dairy solutions reported high single-digit growth and Infant Nutrition, product range Akonino®, also grew very strongly while InFat® and commodity volumes continued to decrease
• For comparable units, volumes were negative by 3 percent
0%
Food Ingredients – organic volume growth
The first choice for value-added vegetable oil solutions 12
-3%
-10%
+1%
2014 Q2
-7%
+1%
2014 Q1
-3% -2%
Speciality & semi-speciality
Commodity
Total
-7%
-1%
2014 YTD
-1%
+7%
+4%
2013 FY
-2%
-3%
2014 Q3
-3%
300
400
500
600
700
800
900
50
100
150
200
250
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
Rolling 12 m
onths, SEK
million
Qua
rter
, SEK
millio
n
Operating profit
Quarter Rolling 12 months
Food Ingredients
13
The first choice for value-added vegetable oil solutions
0%
-9%
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
Rolling 12 m
onths, SEK
/Kg
Qua
rter
, SEK
/Kg
Operating profit per kilo
Quarter Rolling 12 months
Chocolate & Confectionery Fats
The first choice for value-added vegetable oil solutions 14
Third quarter 2014 As expected, operating profit improved
significantly, by 19 percent, and reached SEK 125 million (105)
• Margins continued to improve driven by the dramatic increase in cocoa butter prices since 2013
• The currency translation impact was positive SEK 7 million
Operating profit per kilo improved by 17 percent to SEK 1.59 (1.36)
Volumes increased by 2 percent • The product mix improved strongly with high
double-digit growth in speciality products ‒ In Ukraine volumes continued to decline, while in
Russia volumes continued to grow
• For comparable units, volumes decreased by 2 percent due to reduced low-end product volumes
+19%
Chocolate & Confectionery Fats
15 The first choice for value-added vegetable oil solutions
+17%
+19%
200
300
400
500
600
40
60
80
100
120
140
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
Rolling 12 m
onths, SEK
million
Qua
rter
, SEK
millio
n
Operating profit
Quarter Rolling 12 months
0.50
0.70
0.90
1.10
1.30
1.50
1.70
0.50
0.70
0.90
1.10
1.30
1.50
1.70
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
Rolling 12 m
onths, SEK
/kg
Qua
rter
, SEK
/kg
Operating profit per kilo
Quarter Rolling 12 months
Cocoa butter price
16
For information regarding cocoa and cocoa butter please refer to information at www.icco.org
The first choice for value-added vegetable oil solutions
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
USD
/ton
Technical Products & Feed
17
Third quarter 2014 Operating profit remained stable at
SEK 24 million (24) Volumes decreased by 5 percent compared to
the corresponding quarter in 2013 • Mainly related to lower sales of technical products
0%
The first choice for value-added vegetable oil solutions
+0%
50
70
90
110
130
150
0
5
10
15
20
25
30
35
40
45
50
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
Q3 14
Rolling 12 m
onths, SEK
million
Qua
rter
, SEK
millio
nOperating profit
Quarter Rolling 12 months
Business area guidance
18
Food Ingredients • Operating profit for the full year 2014 is expected
to improve compared to last year
Chocolate & Confectionery Fats • The performance of this business area is expected
to continue to improve significantly compared to the same quarters last year
Technical Products & Feed • For 2014, operating profit is expected to be stable
or to improve slightly compared to the prior year
The first choice for value-added vegetable oil solutions
The first choice for value-added vegetable oil solutions 19
Sales
Customer co-development
Innovation Service
Quality
Productivity
Ahead of plan On plan Behind plan
Specializes on vegetable oils and fats for the bakery segment
Revenues of approximately SEK 270 million in 2013
Annual volume of 30,000 tonnes Employs 155 people
Limited impact on 2014 operating profit Will fully contribute starting January 2015 Slightly dilutive impact on EBIT per kilo
The first choice for value-added vegetable oil solutions 20
Fabrica Nacional de Grasas S.A. (FANAGRA)
AAK investing in China
The first choice for value-added vegetable oil solutions 21
A new speciality and semi-speciality edible oils factory in Zhangjiagang
• The region has the highest GDP per capita in mainland China
• One of the biggest Chinese centers for inbound and outbound logistics for efficient national coverage
The investment is expected to amount to approximately SEK 400 million over a two-year period
The start-up of the new factory is planned for the beginning of 2016 and fully utilized capacity is approximately 100,000 MT with room for expansion
The plant will be able to serve our Bakery, Dairy, Infant Nutrition and Chocolate & Confectionery Fats segments
Concluding remarks from CEO
22
Based on AAK’s customer value propositions for • Health and reduced costs
• Customer product co-development and solutions approach
We continue to remain prudently optimistic about the future
The main drivers are • Continued positive underlying development in
Food Ingredients
• Continued improvement in Chocolate & Confectionery Fats
The first choice for value-added vegetable oil solutions
Questions & answers
The first choice for value-added vegetable oil solutions 23
Financial calendar
The first choice for value-added vegetable oil solutions 24
Financial calendar 2014/2015 November 12, 2014 Capital market day –
Karlshamn, Sweden
February 3, 2015 Fourth quarter and year-end report 2014
April 22, 2015 First quarter report 2015
July 17, 2015 Second quarter report 2015
October 29, 2015 Third quarter report 2015
February 2, 2016 Fourth quarter and year-end report 2015
Arne Frank Chief Executive Officer and President Phone: +46 40 627 83 00 Fredrik Nilsson Chief Financial Officer Phone: +46 40 627 83 34 Mobile: +46 708 95 22 21 E-mail: [email protected] Anders Byström Director External Accounting and Investor Relations Phone: +46 40 627 83 32 Mobile: +46 709 88 56 13 E-mail: [email protected] Further Investor Relations material can be found at www.aak.com/en/Investor
Investor Relations contacts
The first choice for value-added vegetable oil solutions 25
The first choice for value-added
vegetable oil solutions
