Arne Frank CEO Fredrik Nilsson CFO Anders Byström Director IR AAK’s Interim Report First Quarter 2014
Agenda First quarter 2014 Business area information AAKtion Q & A The first choice for value-added vegetable oil solutions 2
First quarter 2014 + 3 % Volum e 400 (388) Organic ´ 0 0 0 MT - 1 % Sales + 3 % 4,129 (4,011) SEK m illion EBI T + 1 9 % SEK 287 (242) Fixed FX m illion + 1 8 % EBI T/ kg 0.72 (0.62) + 1 6 % SEK EPS 4.57 (3.78) + 2 1 % SEK Net debt 2,260 (Dec 13: 2,255) SEK + 0 % m illion The first choice for value-added vegetable oil solutions 3
First quarter 2014 Operating profit, AAK Group • Record high first quarter result • Operating profit was SEK 287 million (242), an improvement of 19 percent • Operating profit per kilo continued to improve at SEK 0.72 (0.62), an improvement of 16 percent Operating profit, business areas • Food Ingredients reached a result of SEK 174 million (158), an improvement of 10 percent • Chocolate & Confectionery Fats improved significantly by 38 percent to SEK 116 million (84) • Technical Products & Feed improved by 12 percent to SEK 29 million (26) The first choice for value-added vegetable oil solutions 4
Financial summary AAK Group - Volume AAK Group - Operating profit 450 1,800 350 1,400 425 1,700 Rolling 12 months, SEK million 300 Rolling 12 months, '000 MT 400 1,200 Quarter, SEK million 1,600 Quarter, '000 MT 375 250 350 1,500 1,000 200 325 1,400 300 800 150 1,300 275 250 1,200 100 600 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 Quarter Quarter Rolling 12 months Rolling 12 months AAK Group - Operating profit per kilo 0.80 0.80 0.75 0.75 0.70 0.70 Rolling 12 months, SEK/Kg 0.65 0.65 Quarter, SEK/Kg 0.60 0.60 0.55 0.55 0.50 0.50 0.45 0.45 0.40 0.40 0.35 0.35 0.30 0.30 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 Quarter Rolling 12 months The first choice for value-added vegetable oil solutions 5
Cash flow SEK m illion Q1 2 0 1 4 Q1 2 0 1 3 Full year 2 0 1 3 EBITDA 378 330 1,460 Paid interest -29 -26 -96 Paid tax -75 -97 -261 Non-cash items -17 2 -20 Change in working capital -176 4 217 Cash flow from operating activities incl change 8 1 2 1 3 1 ,3 0 0 in w orking capital Cash flow from investments -167 -95 -732 Free cash flow -8 6 1 1 8 5 6 8 Cash flow from operating activities incl. change in working capital amounted to SEK 81 million (213) • As earlier predicted and communicated working capital increased and the increase amounted to SEK 176 million (decrease by 4 last year) Working capital is expected to continue to increase due to the expected growth in Chocolate & Confectionery Fats The first choice for value-added vegetable oil solutions 6
Working capital days Rolling 12 months Change since year-end 2013 110 110 100 100 1 90 90 80 80 61 60 70 70 58 56 56 0 60 60 50 50 40 40 -1 30 30 20 20 10 10 0 0 0 -10 -10 -20 -20 0 -30 -30 -40 -40 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Inventory Accounts receivables Accounts payables Others AAK Group The first choice for value-added vegetable oil solutions 7
Raw material prices Price development - Palm oil and rapeseed oil 1,800 Rapeseed oil Palm oil 1,600 1,400 1,200 USD/ton 1,000 800 600 400 200 0 10 percent change in all raw material prices will effect working capital by + / - SEK 250 million Time lag of six to nine months The first choice for value-added vegetable oil solutions 8
ROCE – First quarter 2014 Quarter Q1 FY Q1 2 0 1 4 2 0 1 3 2 0 1 3 EBIT (R12M) 1,162 1,117 997 18,0% Fixed assets 4,525 4,427 4,032 Working capital 2,784 2,581 2,776 16,0% ROCE 15.9 15.9 14.6 14,0% 12,0% 10,0% 8,0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 Rolling 12 m onths Quarter The first choice for value-added vegetable oil solutions 9
Business trends first quarter 2014 Share of Share of Nord Nord W E W E UK UK USA USA CEE CEE CI S CI S Asia Asia LA LA volum e volum e Food Ingedients Food Ingredients 63% Chocolate & Chocolate & 19% Confectionery Confectionery Fats Fats Technical Technical 18% Products & Feed Products & Feed AAK Group AAK Group 100% The first choice for value-added vegetable oil solutions 10
Food Ingredients + 1 0 % First quarter 2 0 1 4 Operating profit improved by 10 percent to SEK 174 million (158) • Solid development for the speciality and semi- speciality products while the demand for commodity volumes were materially down Operating profit per kilo at SEK 0.69 (0.63). Relatively high during the quarter due to a favourable product mix Volume growth by 1 percent • For comparable units volumes decreased by 2 percent The first choice for value-added vegetable oil solutions 11
Food Ingredients – organic volume growth 2 0 1 4 2 0 1 3 2 0 1 3 Q1 FY Q1 Speciality & semi-speciality + 1 % + 7 % + 2 % Commodity -7 % -1 % -9 % Total - 2 % + 4 % -2 % The first choice for value-added vegetable oil solutions 12
Food Ingredients Food Ingredients -Operating profit 250 900 800 Rolling 12 months, SEK million 200 Quarter, SEK million 700 150 600 + 1 0 % 500 100 400 50 300 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 Quarter Rolling 12 months Food Ingredients -Operating profit per kilo 1.00 1.00 0.90 0.90 Rolling 12 months, SEK/kg 0.80 0.80 Quarter, SEK/kg 0.70 0.70 + 1 0 % 0.60 0.60 0.50 0.50 0.40 0.40 0.30 0.30 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 Quarter Rolling 12 months The first choice for value-added vegetable oil solutions 13
Chocolate & Confectionery Fats + 3 8 % First quarter 2 0 1 4 Operating profit improved significantly by 38 percent and reached SEK 116 million (84) • The CBE margins improved driven by the increase in cocoa butter prices Operating profit per kilo at SEK 1.51 (1.17) • Improved by 29 percent mainly due to ‒ Higher CBE margins ‒ Better product mix with increased volumes of CBE and Personal Care Total volume increased by 7 percent • Organic growth was less than 1 percent The first choice for value-added vegetable oil solutions 14
Chocolate & Confectionery Fats Chocolate & Confectionery Fats - Operating profit 140 600 Rolling 12 months, SEK million 120 500 Quarter, SEK million 100 + 3 8 % 400 80 300 60 40 200 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 Quarter Rolling 12 months Chocolate & Confectionery Fats - Operating profit per kilo 1.70 1.70 1.50 1.50 Rolling 12 months, SEK/kg 1.30 1.30 Quarter, SEK/kg 1.10 1.10 + 2 9 % 0.90 0.90 0.70 0.70 0.50 0.50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 Quarter Rolling 12 months The first choice for value-added vegetable oil solutions 15
Cocoa butter price Price development - Cocoa butter 10,000 9,000 8,000 7,000 6,000 USD/ton 5,000 4,000 3,000 2,000 1,000 0 For information regarding cocoa and cocoa butter please refer to information at www.icco.org The first choice for value-added vegetable oil solutions 16
Technical Products & Feed + 1 2 % First quarter 2 0 1 4 + 9 % Operating profit improved to SEK 29 million (26) • Improvements in the more cyclical parts of this business area Volumes increased by 6 percent Technical Products & Feed - Operating profit 50 150 45 Rolling 12 months, SEK million 40 130 35 Quarter, SEK million 30 110 25 + 1 2 % 20 90 15 10 70 5 0 50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 10 10 10 10 11 11 11 11 12 12 12 12 13 13 13 13 14 Quarter Rolling 12 months The first choice for value-added vegetable oil solutions 17
Business area guidance Food Ingredients • We continue to remain optimistic for the future of this business area considering the speciality and the semi-speciality strategy and the strong health profile. Operating profit growth for the full year 2014 is expected to be, with certain quarterly variations, approximately at the 2013 growth rate Chocolate & Confectionery Fats • The performance of this business area is expected to continue to improve compared to the same quarters last year, however not necessarily with the same pace as the first quarter 2014 Technical Products & Feed • For 2014, the 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 18
Sales Innovation Service Customer co-developm ent Quality Productivity Ahead of plan On plan Behind plan The first choice for value-added vegetable oil solutions 19
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