Johan Westman, CEO Fredrik Nilsson, CFO Interim Report Second quarter 2019 The Co-Development Company
Agenda Second quarter 2019 1 Key strategic activities 2 Business area information 3 Q&A 4 2 16/07/2019 The Co-Development Company
Highlights Q2 – strong profit growth and strategic launch of our portfolio for plant-based alternatives HIGHLIGHTS GROWTH & RETURNS Organic volume growth Q2 19 continued Volume Operating profit All-time high operating profit for a second quarter 565,000 MT SEK 518 million R12M operating profit above SEK 2 billion for the first (up 14% y/y, up 10% y/y*) (up 3% y/y) time Reported tax costs reduced to 25 percent (27) Earnings per share increased by 18 percent Operating profit Good operating cash flow ROCE per kilo Strong trend and improved mix in Food Ingredients 15.5%** SEK 0.92 As expected, the lower yield (up 11% y/y, up 6% y/y*) in our CCF business continued with higher than normal production costs * Fixed FX ** Rolling 12 months incl. IFRS 16 effect 3 16/07/2019 The Co-Development Company
Operating profit for Q2 2019 was well in line with our historic trend lines 600 526 518 516 509 500 475 471 460 454 435 431 431 409 400 388 381 376 368 343 331 328 326 321 303 292 300 287 281 273 265 251 246 244 242 231 220 211 204 196 200 178 164 100 0 Q1 Q2 Q3 Q4 2010–2018 2019 4 16/07/2019 The Co-Development Company
Key product launches Q2 AkoPlanet™ COBAO™ Pure During Q2, AAK launched AkoPlanet™, a new portfolio with tailor- Newly launched COBAO™ Pure is a unique, patented solution that made solutions for food manufacturers developing plant-based delivers significantly improved bloom-retarding effects, extending a alternatives within the meat, dairy and ice cream segments chocolate product’s shelf life with up to 400 percent, without impacting the product AkoPlanet™ will not only enable food manufacturers to meet a variety of industry opportunities, such as health, nutrition and The AAK solution delivers significantly improved bloom -retarding sustainability, but also the fast-growing demand for plant-based effects in all kinds of applications including milk and dark chocolate products among consumers tablets, coated and filled products, and dark chocolate with nuts Sustainable sourcing is a crucial aspect for the plant-based COBAO™ Pure is not subject to regulations that limit the use of movement and all raw materials used in the AkoPlanet™ portfolio vegetable fats in chocolate products are, as a minimum standard, traceable to the growing region 5 16/07/2019 The Co-Development Company
FX exposure – translation impact positive in the quarter Average Average rate Movement rate 2018 YTD 2019 vs SEK USD 8.71 9.25 EUR 10.26 10.47 GBP 11.58 11.96 MXN 0.45 0.48 6 16/07/2019 The Co-Development Company
Working capital days up two days since year-end Working capital days, rolling 12 months Development YTD Inventory Payables 75 70 -1 -3 65 60 55 50 Receivables Other WC 45 Flat Flat 40 35 30 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q1 2019 Inventory Acc. Rec Acc. Pay Tot Net WC 7 16/07/2019 The Co-Development Company
Q2 cash flow benefited from low raw material prices Cash flow Q2 2019 Comments +16% Good inventory management as well as 688 continued low raw material prices impacted cash flow from inventory and accounts 101 595 receivables positively. This was offset by lower accounts payables. (65) 125 CAPEX related to regular maintenance 148 Inventory (-164) investments and capacity increases 169 AR amounted to SEK 169 million. Acquisitions 54 related to the increased ownership in AAK Kamani amounted to SEK 111 million. -161 AP 111 (222) -280 -142 Other 54 128 (-174) -101 (-99) Working Capital EBITDA 2018 EBITDA Changes WC Paid interest CAPEX Other non- FCF and taxes cash items (LY) 8 16/07/2019 The Co-Development Company
Return on Capital Employed (ROCE) We target a gradual and continuous improvement % 16,2 ROCE end Q2 2019* 16,0 15.5% 15,8 Capital 15,6 EBIT LTM employed* SEK million 15,4 SEK million 2,060 15,2 13,315 15,0 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 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 9 16/07/2019 The Co-Development Company
Loan and duration profile – good duration in the loan portfolio SEK million Duration Mortgage 539 13 years Long term MTN bond 500 5 years MTN bond 1,100 3 years 79% Bilateral 550 3 years Club loan 250 2 years SEK million Duration Short term 21% Bilateral 155 4 months Bank loans 606 6 months Total loans 3,699 Cash 744 Net 2,955 10 16/07/2019 The Co-Development Company
Food Ingredients MSEK MSEK 346 350 1.500 Operating profit Operating Organic volume per kilo profit growth 1.200 300 292 +18% +18% +1% Operating profit 900 250 600 Business area development 200 300 Strong growth in the Bakery and Dairy segments 0 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Special Nutrition continued to have a favorable mix 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19 19 SEK Rolling 12 months Quarter SEK Higher sale of concentrated solutions compared 0,95 0,95 to blended ones 0,91 0,90 0,90 Operating profit per kilo 0,85 0,85 Foodservice improved profitability while volumes 0,80 0,80 0,77 were slightly negative 0,75 0,75 Strong volume growth in Asia combined with a very 0,70 0,70 favorable development of the product mix in North 0,65 0,65 Latin America, South Latin America and the US 0,05 0,05 0,00 0,00 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19 19 Rolling 12 months Quarter 11 16/07/2019 The Co-Development Company
Chocolate & Confectionery Fats MSEK MSEK 210 800 Operating profit Operating Organic volume 200 per kilo growth 190 profit 177 180 169 600 -9% +15% 170 +5% Operating profit 160 150 140 400 130 Business area development 120 110 200 100 There was good volume growth for high-end semi- 10 speciality products and strong volume growth for low- 0 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 end semi-speciality products 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19 19 Rolling 12 months Quarter The lower operating profit per kilo was due to higher SEK SEK 2,20 2,10 production costs and the proportionately stronger 2,00 2,00 volume growth for low-end semi-speciality products 1,80 1,90 Operating profit per kilo as mentioned above 1,60 1,80 1,74 1,40 1,70 1,58 1,20 Effects of lower raw material yields remained 1,60 1,00 1,50 0,80 1,40 Slightly positive price development on high-end 0,60 0,20 solutions in the quarter 0,40 0,10 0,20 0,00 0,00 Capacity expansion investments progress according Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19 19 Rolling 12 months Quarter to plan 12 16/07/2019 The Co-Development Company
Technical Products & Feed MSEK MSEK 50 180 Operating profit Operating Organic volume 45 160 per kilo profit growth 40 140 35 +14% +9% -4% 35 Operating profit 120 30 100 25 80 20 Business area development 60 15 40 10 The fatty acids business continued its volume 20 5 growth 0 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19 19 The feed business had a slightly negative SEK Rolling 12 months Quarter SEK 0,70 0,70 volume development but higher sales of high- 0,65 0,65 0,60 0,60 end solutions 0,55 0,55 Operating profit per kilo 0,49 0,50 0,50 0,43 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 Q2 Q3 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q3 Q4 Q1 Q2 Q4 Q1 Q2 15 15 15 16 16 16 16 17 17 17 17 18 18 18 18 19 19 Rolling 12 months Quarter 13 16/07/2019 The Co-Development Company
Progress and good results for The AAK Way – strong foundation for our next company program Operational Special Go To Market Excellence Focus Areas Further progressing with multi-oil sustainability Senior and Medical Nutrition business growing Continuous training on Creating Customer Value Global networks enabling best practice sharing on Launch of AkoPlanet™ – AAK portfolio with Follow up on global customer survey – We listen, key production capabilities solutions for plant-based foods We care, We act Continuous Improvement and Lean practices Cross-regional collaboration for strengthened Training on oils & fats and customers’ industries enabled by a strengthened toolbox INNOBO-Product offerings Innovation People Market-driven innovation process Leadership development Preparing the organization for the future 14 16/07/2019 The Co-Development Company
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