Johan Westman, CEO Fredrik Nilsson, CFO Interim Report Fourth quarter and Year-end report 2019 The Co-Development Company
Agenda Fourth quarter and year-end report 2019 1 Business area information and financial details 2 Updated strategic direction 3 4 Q&A 4 2 30/01/2020 The Co-Development Company
Highlights Q4 – Continued profit growth and new strategic direction HIGHLIGHTS GROWTH & RETURNS All-time high operating profit Q4 19 for a fourth quarter Adjusted Volume Reported tax costs reduced operating profit to 24 percent (26) 582,000 MT Earnings per share SEK 562 million increased by 12 percent (up 1% y/y) Strong cash flow from (up 9% y/y, up 7% y/y*) accounts receivables and accounts payables – offset by strategic purchases of Adjusted key raw materials to Chocolate & Confectionery operating profit ROCE Fats to build large safety stock per kilo 14.9%** Good year-over-year operating profit SEK 0.97 improvement in both Food (up 8% y/y, up 6% y/y*) Ingredients and Chocolate & Confectionery Fats * Fixed FX ** Rolling 12 months incl. IFRS 16 effect 3 30/01/2020 The Co-Development Company
Operating profit for Q4 2019 – the trend continued SEK million 600 569 562 526 518 516 509 500 475 471 460 454 435 431 431 409 400 388 381 376 368 343 331 328 326 321 303 292 300 287 281 273 265 251 246 244 242 231 220 211 204 196 200 178 164 100 0 Q1 Q2 Q3 Q4 2010–2018 2019 4 30/01/2020 The Co-Development Company
2019 summary HIGHLIGHTS AkoPlanet™ Our range of solutions for plant-based foods Strong growth Strong pipeline development COBAO™ Pure Application for the chocolate and confectionery industry Ramped up M&A activity Expanded portfolio offering in Foodservice Addition of lecithin to our portfolio, an adjacent ingredient to oils & fats Addition of capacity in Europe (Rotterdam, the Netherlands) 5 30/01/2020 The Co-Development Company
Summary 2019 – Continued double-digit profit growth HIGHLIGHTS GROWTH & RETURNS Sales amounted to SEK 2019 28,510 million (27,592), an Adjusted Volume increase by 3 percent operating profit Double-digit operating profit 2,290,000 MT growth continues SEK 2,157 million Operating cash flow (up 2% y/y) including changes in (up 10% y/y, up 6% y/y*) working capital amounted to SEK 1,558 million (1,090) Reported tax costs reduced Adjusted to 25 percent (27) Earnings per share operating profit ROCE increased by 12 percent per kilo The proposed dividend is 14.9%** SEK 2.10 (1.85), an SEK 0.94 increase by 14 percent Three strategic acquisitions (up 8% y/y, up 3% y/y*) to support future profit growth * Fixed FX ** Rolling 12 months incl. IFRS 16 effect 6 30/01/2020 The Co-Development Company
Consistent growth in EPS drives increase in dividend The proposed dividend is SEK 2.10 (1.85) per share, an increase by 14 percent compared to last year Earnings per share Dividend per share* +12% +14% SEK SEK 5,86 6,00 2,20 2,10 +11% +11% 5,50 2,00 5,21 1,85 5,00 4,71 1,80 1,63 4,50 1,60 1,46 3,95 4,00 3,70 1,40 3,53 1,29 3,50 1,13 1,20 2,98 3,00 1,00 2,62 1,00 2,45 0,88 2,36 2,50 0,79 0,75 0,80 0,71 2,00 0,60 1,50 0,40 1,00 0,20 0,50 0,00 0,00 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020** *Year paid out ** Proposed dividend 7 30/01/2020 The Co-Development Company
Food Ingredients MSEK MSEK 380 1.500 Operating profit Operating Organic volume 360 349 per kilo profit growth 340 1.200 321 +7% +9% +2% 320 Operating profit 300 900 280 260 600 240 Business area development 220 300 20 Strong profit growth driven by plant-based foods solutions as 0 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 well as Dairy and Bakery 15 16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 SEK Rolling 12 months Quarter SEK Special Nutrition had a mixed performance 1,10 1,10 Lower birth rates in China and destocking by some global 1,00 1,00 0,90 0,90 0,90 customers continued to negatively impact Infant Nutrition 0,84 Operating profit per kilo 0,80 0,80 while we saw a double-digit growth rate for volumes to local 0,70 0,70 customers in China 0,60 0,60 0,50 0,50 Solutions for plant-based foods generated a strong volume 0,40 0,40 and profit growth. Our pipeline of customer co-development 0,30 0,30 projects has doubled between the third and the fourth quarter, 0,20 0,20 just as it did between the second and the third quarter. 0,10 0,10 0,00 0,00 Foodservice improved profitability despite negative volume Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 15 16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 development Rolling 12 months Quarter 8 30/01/2020 The Co-Development Company
Chocolate & Confectionery Fats MSEK MSEK 230 1.000 Operating profit Operating Organic volume 220 205 per kilo profit growth 210 800 200 +13% +13% +0% 190 182 Operating profit 180 600 170 160 150 400 140 130 Business area development 120 200 Strong profit growth driven by favorable spot business 10 0 0 opportunities in the quarter as well as an improved product mix Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 15 16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 Volume growth for Chocolate & Confectionery Fats was flat SEK Rolling 12 months Quarter SEK Mixed picture with growth for our filling fats and spreads while 2,00 2,00 1,77 our low-end semi-speciality products declined 1,57 Operating profit per kilo Pressure from some customers to roll contracted volumes 1,50 1,50 forward remains Capacity expansion investments completed during the fourth 1,00 1,00 quarter with good results The extended maintenance stop at our production plant in Aarhus, 0,50 0,50 Denmark, planned for the first quarter 2020, is currently ongoing With new kernels at hand and additional capacity, we expect to 0,00 0,00 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 15 16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 reach normal cost levels within the business area by the middle of the first quarter 2020 Rolling 12 months Quarter 9 30/01/2020 The Co-Development Company
Technical Products & Feed MSEK MSEK 50 50 180 Operating profit 46 Operating Organic volume 45 160 per kilo profit growth 40 140 -9% -8% +1% 35 Operating profit 120 30 100 25 80 20 60 15 Business area development 40 10 20 5 Continued strong performance in our crushing operation 0 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 15 16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 Both our fatty acids business and our feed business declined SEK Rolling 12 months Quarter SEK compared to the very strong corresponding quarter 2018 0,70 0,70 0,64 Compared to historical performances, we continue to 0,65 0,65 0,58 0,60 0,60 operate on a significantly higher operating profit level due to 0,55 0,55 Operating profit per kilo the successful implementation of our customer co- 0,50 0,50 0,45 0,45 development approach within the business area 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 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 15 16 16 16 16 17 17 17 17 18 18 18 18 19 19 19 19 Rolling 12 months Quarter 10 30/01/2020 The Co-Development Company
Q4 cash flow impacted by sourcing of strategic raw materials Cash flow Q4 2019 Comments +13% Strategic purchases of key raw 741 materials to Chocolate & Confectionery Fats had a significant negative impact 654 on cash flow from inventory 21 Strong positive cash flow from -176 accounts payables as well as accounts 136 (60) receivables (-259) -157 (307) 288 AR (26) 300 AP 549 Other (-174) 279 186 218 -1.199 Inventory 47 -326 -176 EBITDA EBITDA Changes Paid interest CAPEX and Other non- FCF 2018 WC and taxes acquisitions cash items Acquisitions Tax (LY) 11 30/01/2020 The Co-Development Company
Raw material price development Sharp price increase on palm – rapeseed also in an upward trend Comments Palm prices have gone up significantly during the fourth quarter, which will have an impact on cash flow with a 6–9 month lag A 10 percent change in all raw material prices will affect working capital by +/- SEK 350 million 12 30/01/2020 The Co-Development Company
Return on Capital Employed (ROCE) We target a gradual and continuous improvement % 16,0 ROCE end Q4 2019* 15,8 14.9% 15,6 Capital 15,4 EBIT LTM employed* 15,2 SEK 2,142 SEK 14,417 15,0 million million 14,8 14,6 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Growth and operating leverage to drive increase in ROCE ROCE R12M incl. IFRS 16 ROCE R12M excl. IFRS 16 * ROCE: Return on Capital Employed calculated on rolling 12 months 13 30/01/2020 The Co-Development Company
Loan and duration profile SEK million Duration Mortgage 534 13 years Long term MTN bond 500 5 years MTN bond 500 5 years MTN bond 1,100 2 years 80% Bilateral 400 3 years Clubloan 150 2 years SEK million Duration Short term Bilateral 273 3 months 20% Bank loans 527 6 months Total loans 3,984 Cash -982 Net 3,002 14 30/01/2020 The Co-Development Company
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