Johan Westman, CEO Fredrik Nilsson, CFO Interim Report First quarter 2019 The Co-Development Company
Agenda First quarter 2019 1 2 Key strategic activities Business area information 3 Q&A 4 2 23/04/2019 The Co-Development Company
Highlights Q1 2019 HIGHLIGHTS GROWTH & RETURNS Organic volume growth continued Q1 19 Gaining market shares Volume Operating profit All-time high operating profit for a first quarter 572,000 MT SEK 509 million* Earnings per share increased by 9 percent (up 11% y/y, up 6% y/y**) (up 4% y/y) Operating cash flow including changes in working capital was good Most of our geographic markets have seen good progress. US has come back after a Operating profit challenging period ROCE As expected, the lower yield in per kilo our CCF business continued with higher than normal production 15.4%*** SEK 0.87 costs Reported tax costs corresponded (up 5% y/y, up 3% y/y**) to an average tax rate of 25 percent (27) due to a lower corporate tax rate in Sweden combined with further * Excluding acquisition costs of SEK 9 million optimization of capital structure ** Fixed FX in the Group *** Rolling 12 months incl. IFRS 16 impact 3 23/04/2019 The Co-Development Company
Operating profit, excl acquisition costs, for Q1 2019 was well in line with our historic trend lines 600 526 516 509 500 475 471 460 454 435 431 431 409 400 388 381 376 368 343 331 328 326 321 303 292 300 287 281 273 265 251 246 244 242 231 220 211 204 196 200 178 164 100 0 Q1 Q2 Q3 Q4 2010–2018 2019 4 23/04/2019 The Co-Development Company
Highlights Q1 2019 AAK makes significant investments in China AAK issues bond for a total of SEK 500 million AAK AB has issued a senior unsecured bond for a total of SEK 500 Eighteen months after inaugurating our production facility in million with a tenor of five years Zhangjiagang, China, we have decided on significant add-on Floating interest rate of three months STIBOR plus 130 basis points investments to increase capacity and support volume growth for, in particular, our Special Nutrition and Bakery segments The proceeds from the bond issue will be used to finance AAK’s recent acquisitions in Europe and earlier communicated investments The processing plant for Special Nutrition will significantly strengthen the product and service offering for our end customers The issue is part of an MTN program with a framework amount of SEK 4,000 million AAK has established a solid presence in the Chinese market and with these new investments we are very well positioned to continue Total of SEK 1,600 million now issued (SEK 1,100 million + SEK 500 to grow organically and capture market share million) M&A During Q1, AAK made two acquisitions (further details on upcoming slides) 5 23/04/2019 The Co-Development Company
MaasRefinery acquired to accelerate growth, strengthen the European supply chain and to add operational capabilities MaasRefinery – a Dutch specialized vegetable oils refinery strategically Port of Rotterdam located in Port of Rotterdam Capacity is approximately 40,000 MT with further room for expansion MaasRefinery is strategically located next to a deep-sea terminal in Rotterdam Established in 2009 and designed according to the latest process technology in order to maximize energy efficiency and minimize oil losses FSSC 22000 certified and compliant with Skal, Kosher, RSPO and GMP+ Strategic rationale Increase capacity to enable accelerated growth of our business in Europe Support existing European production footprint to optimize supply chain and save costs Strengthen capabilities and flexibility for the production of organic oils and fats 6 23/04/2019 The Co-Development Company
BD Foods – a good strategic fit with our global Foodservice expansion BD Foods – a British Foodservice company Produces bespoke chilled restaurant quality meal accompaniments including sauces, salsas, chutneys, vinaigrettes, infused oils and dressings Portfolio of over 3,000 products Wide range of customers including pubs, restaurants, hotels, airlines and airline caterers, other travel caterers, hospitality companies, wholesalers, retailers and food manufacturers Located in St Leonards-on-Sea (near Hastings), East Sussex Established in 2001 Strategic rationale Broad product and packaging offering including dip pots and hot filled products Extensive know-how in new product development and packaging design Customer-focused innovation 7 23/04/2019 The Co-Development Company
FX exposure – translation impact positive in the quarter Average Average rate Movement rate 2018 Q1 2019 vs SEK USD 8.71 9.11 EUR 10.26 10.36 GBP 11.58 11.88 MXN 0.45 0.47 8 23/04/2019 The Co-Development Company
Working capital days Working capital days, rolling 12 months Development YTD Inventory Payables 75 70 -1 -2 65 60 55 50 Receivables Other WC 45 40 Flat +1 35 30 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Inventory Acc. Pay Acc. Rec Tot Net WC 9 23/04/2019 The Co-Development Company
Good cash flow for a first quarter Cash flow Q1 2019 Comments +12% Continued volume growth impacted cash flow 666 from working capital negatively by increased 67 595 receivables as well as higher inventory. This was partly offset by increased payables (-643) 178 CAPEX excluding acquisitions mainly related 50 AP to regular maintenance investments and (-129) capacity increases 63 Other 127 -28 Inventory 169 -152 AR (-526) 98 27 -296 -67 (-130) Working Capital (-219) EBITDA 2018 EBITDA Changes WC Paid interest CAPEX Other non- FCF and taxes cash items (LY) 10 23/04/2019 The Co-Development Company
Return on Capital Employed (ROCE) We target a gradual and continuous improvement % 16,5 ROCE end Q4 2018* 15.4% 16,0 Capital 15,5 EBIT LTM employed* SEK million SEK million 15,0 1,996 12,970 14,5 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Growth and operating leverage ROCE R12M Incl. IFRS 16 ROCE R12M Excl. IFRS 16 to drive increase in ROCE * ROCE: Return on Capital Employed calculated on rolling 12 months 11 23/04/2019 The Co-Development Company
Loan and duration profile SEK million Duration Mortgage 531 13 years MTN bond 500 5 years 63% Long term MTN bond 1,100 3 years Short term SEK million Duration 37% Bilateral 638 4 months Bank loans 628 6 months Total 3,397 12 23/04/2019 The Co-Development Company
Food Ingredients MSEK MSEK 350 1.500 Operating profit Operating Organic volume 308 per kilo profit growth 300 271 1.200 +13% +14% +1% 250 Operating profit 900 200 150 600 100 Business area development 300 50 Margin expansion 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19 Bakery in positive trend SEK Rolling 12 months Quarter SEK 0,90 0,90 US regaining momentum 0,81 Operating profit per kilo 0,80 0,80 Special Nutrition had lower volumes but improved 0,72 mix with more concentrates and less blends 0,70 0,70 0,60 0,60 0,50 0,50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19 Rolling 12 months Quarter 13 23/04/2019 The Co-Development Company
Chocolate & Confectionery Fats MSEK MSEK 220 900 206 Operating profit Operating Organic volume 200 190 per kilo growth profit 180 -4% 160 +13% +8% Operating profit 600 140 120 100 80 300 Business area development 60 40 20 0 0 Strong volume growth in the quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19 Rolling 12 months SEK SEK Margin expansion on high-end products Quarter 2,20 2,00 2,00 Effects of lower raw material yield remained in 1,86 1,79 1,80 Operating profit per kilo the quarter 1,50 1,60 1,40 Capacity expansion investments progress 1,20 1,00 according to plan 1,00 0,80 0,60 0,50 0,40 0,20 0,00 0,00 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19 Rolling 12 months Quarter 14 23/04/2019 The Co-Development Company
Technical Products & Feed MSEK MSEK 50 160 Operating profit Operating Organic volume 45 140 per kilo profit growth 40 36 36 120 -4% +0% +5% 35 Operating profit 100 30 25 80 20 60 15 Business area development 40 10 20 5 Volume growth in both our feed and fatty acids 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19 business SEK Rolling 12 months SEK Maintenance stop decreased production days Quarter 0,65 0,65 0,60 0,60 0,55 0,55 0,48 0,50 0,50 Operating profit per kilo 0,46 0,45 0,45 0,40 0,40 0,35 0,35 0,30 0,30 0,25 0,25 0,20 0,20 0,15 0,15 0,10 0,10 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 15 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19 Rolling 12 months Quarter 15 23/04/2019 The Co-Development Company
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