Arne Frank CEO Anders Byström CFO Fredrik Nilsson Head of IR Fourth Quarter and Full-year 20
Today`s agenda Fourth Quarter and Full-year 20 Business Area information Major Events and full-year 20 AAK Acceleration Other items Q & A Fourth Quarter and Full-year 20 2
Fourth quarter 20 Net sales amounted to SEK 3,930 million (3,788). The fourth quarter showed volume growth for the two main business areas Food Ingredients and Chocolate & Confectionery Fats. The earlier reported market conditions have continued. Negative currency translation impact of SEK 149 million. Operating profit reached SEK 251 million (289). As earlier commented the fourth quarter 20 included several non repeatable exceptional items. Hence this is a satisfactory result, in line with our long term improvement plans. For comparable units, adjusted for divestments and fixed exchange rates, the operating profit amounted to SEK 258 million (287). Fourth Quarter and Full-year 20 3
Fourth quarter Business Area summary Food Ingredients -4 % Operating profit reached SEK 137 million (143) a decline entirely due to negative translation impacts. The fourth quarter 20 showed volume growth of 1 percent. The positive development continued in all speciality product areas such as Infant Nutrition (Baby Food), Bakery and Bakery Services, Dairy Industry and Food Service. Chocolate & Confectionery Fats -28 % Reported an operating profit of SEK 6 million (147). The general market conditions for the first nine months of 20 have continued during the fourth quarter. Volumes increased by 1 percent. Technical Products & Feed +0 % Operating profit at SEK 31 million (31). Fourth Quarter and Full-year 20 4
Highlights full year 20 Operating profit reached SEK 824 million (827). Adjusted for divestments and at fixed exchange rate operating profit was up 6 percent to SEK 855 million (8). Earnings per share has improved by SEK 4.01, up 40 percent from SEK.14 to SEK 14.15. Proposed dividend of SEK 4.50 (4.25), an increase by SEK 0.25, or 6 percent. Fourth Quarter and Full-year 20 5
Financial summary Focus the analysis on: Volume Gross Margin per kilo Operating profit per kilo Improvement in Operating profit Quarter, '000 MT 450 400 350 300 250 200 150 0 AAK Group - Volume 1 800 1 600 1 400 1 200 1 000 800 600 400 Rolling 12 months, '000 MT Return on Net Operating Assets Net Debt / EBITDA 50 0 200 0 Quarter Rolling 12 months 3,00 AAK Group - Gross Margin per kilo 3,00 0,90 AAK Group - Operating profit per kilo 0,90 Quarter, SEK/Kg 2,50 2,00 1,50 1,00 0,50 0,00 2,50 2,00 1,50 1,00 0,50 0,00 Rolling 12 months, SEK/Kg Quarter, SEK/Kg 0,80 0,70 0,60 0,50 0,40 0,30 0,20 0, 0,00 0,80 0,70 0,60 0,50 0,40 0,30 0,20 0, 0,00 Rolling 12 months, SEK/Kg Quarter Rolling 12 months Quarter Rolling 12 months Fourth Quarter and Full-year 20 6
Financial summary Focus the analysis on: Volume Gross Margin per kilo Operating profit per kilo Improvement in Operating profit Return on Net Operating Assets Net Debt / EBITDA 0 0 Quarter, SEK million 350 300 250 200 150 0 50 AAK Group - Operating profit 00 900 800 700 600 500 400 300 200 0 Rolling 12 months, SEK million Quarter Rolling 12 months Return on Net Operating Assets - Rolling 12 months 15,0% 14,0% NET DEBT/EBITDA 13,0% 12,0% 5,00 4,50 4,00 11,0%,0% 9,0% 3,50 3,00 2,50 2,00 8,0% 7,0% 1,50 1,00 0,50 6,0% 0,00 Fourth Quarter and Full-year 20 7
Translation impact of a stronger SEK The result for full-year 20 includes negative translation effects of SEK 31 million. EUR/SEK USD/SEK 12,00,00 11,50 11,00 Average 20 9.55 9,50 9,00 Average 20 7.19,50 8,50,00 8,00 9,50 7,50 9,00 7,00 8,50 6,50 8,00 6,00 14,00 GBP/SEK 13,50 13,00 12,50 Average 20 11. 12,00 11,50 11,00,50,00 Fourth Quarter and Full-year 20 8
Food Ingredients 160 Food Ingredients - Operating profit 600 Quarter, SEK million 140 120 0 80 60 40 20 500 400 300 200 0 Rolling 12 months, SEK million 0 0 Fourth quarter 20 Quarter Rolling 12 months In the largest business area, Food Ingredients, operating profit reached SEK 137 million (143) a decline entirely due to negative translation impacts. The positive development continued in all speciality product areas such as Infant Nutrition (Baby Food), Bakery and Bakery Services, Dairy Industry and Food Service. Actions to reduce costs and improve the competitive positions are currently being executed and the business area continued to benefit from the on-going rationalisation programme. Realised cost savings have partly been matched by increased investments in organic growth outside Scandinavia. Fourth Quarter and Full-year 20 9
Food Ingredients EBIT per kg, SEK, rolling 12 months 0,80 0,70 Food Ingredients - Operating profit per kg 0,80 0,70 Quarter, SEK/kg 0,60 0,50 0,40 0,30 0,20 0,60 0,50 0,40 0,30 0,20 Rolling 12 months, SEK/kg 0, 0, 0,00 0,00 Quarter Rolling 12 months Fourth Quarter and Full-year 20
Chocolate & Confectionery Fats Quarter, SEK million 180 160 140 120 0 80 60 40 20 0 Chocolate & Confectionery Fats - Operating profit 600 500 400 300 200 0 0 Rolling 12 months, SEK million Fourth quarter 20 Quarter Rolling 12 months The operating result of SEK 6 million (147) was below last year mainly due to lower prices. Prices have been stable during 20. The general market conditions for the first nine months of 20 have continued during the fourth quarter. Volumes increased by 1 percent compared to last year. Fourth Quarter and Full-year 20 11
Chocolate & Confectionery Fats - EBIT per kg, SEK, rolling 12 months Chocolate & Confectionery Fats - Operating profit per kg Quarter, SEK/kg 2,40 2,20 2,00 1,80 1,60 1,40 1,20 1,00 0,80 0,60 0,40 0,20 0,00 2,40 2,20 2,00 1,80 1,60 1,40 1,20 1,00 0,80 0,60 0,40 0,20 0,00 Rolling 12 months, SEK/kg Quarter Rolling 12 months Fourth Quarter and Full-year 20 12
Technical Products & Feed 35 Technical Products & Feed - Operating profit 120 Quarter, SEK million 30 25 20 15 5 0 80 60 40 20 Rolling 12 months, SEK million 0 0 Fourth quarter 20 Quarter Rolling 12 months Operating profit at SEK 31 million (31) was in line with the fourth quarter 20 despite an exceptional 20. Volumes in the fourth quarter 20 were basically in line with the corresponding quarter 20. Technical products, particularly environmental friendly bio lubricants, continued to experience signs of market recovery. Fourth Quarter and Full-year 20 13
Ongoing rationalization programmes The rationalisation programmes are progressing and are at least in line with plan in all business areas as previously communicated. SEK 0 million (annualised) in cost savings was realised in late 20, and an additional SEK 200 million (annualised) will be realised in the latter part of 2011. First wave of synergies SEK 200 million 2005 20 + Second wave SEK 0 million 20 20 Third wave Additional SEK 200 million 20 2011 = Total savings SEK 500 million, 2005 2011 + Without any expected additional non-recurring cost Aarhus CBE focus Volumes Volumes Zaandijk Niche Volumes Volumes Karlshamn Multi-oil factory Fourth Quarter and Full-year 20 14
Balance sheet SEK million 31 Dec 20 31 Dec 20 Total Assets 9,252 8,513 Equity 3,188 2,949 Net interest bearing debt 2,634 3,186 The equity/assets ratio amounted to 34 percent (35 percent as at 31 December 20). Fourth Quarter and Full-year 20 15
Cash flow SEK million Q 4 20 Q 4 20 YTD 20 YTD 20 Cash flow from operating activities 347 327 1,155 1,3 Paid tax -58-49 -281-78 Change in working capital 243 472-117 1,270 Cash flow from operating activities incl change in working capital 532 750 757 2,265 Cash flow from investments -87-1 -331-313 Free cash flow 445 640 426 1,952 Cash flow from operating activities reaching SEK 757 million (2,265). The ongoing internal working capital improvement project continued to impact positively. The majority of the strong cash flow 20 was due to a significant decline in raw material prices which led to reduced working capital. Fourth Quarter and Full-year 20 16
Cash flow bridge year to date 1 000 2 265 130 83 450 1 135 11 757 Full-year 20 Raw material prices 20 Deferred tax payments "Normalized" cash flow 20 Operating activities Raw material prices 20 Other Full-year 20 Fourth Quarter and Full-year 20 17
Raw material prices 100 000 Raw material prices palm and rapeseed, January 1, 20 - Rapeseed Palm 9000 8000 SEK/ton 7000 6000 5000 4000 3000 20-01-01 20-02-01 20-03-01 20-04-01 20-05-01 20-06-01 20--01 20--01 20--01 20--01 20-11-01 20-12-01 20-01-01 20-02-01 20-03-01 20-04-01 20-05-01 20-06-01 20--01 20--01 20--01 20--01 20-11-01 20-12-01 20-01-01 20-02-01 20-03-01 20-04-01 20-05-01 20-06-01 20--01 20--01 20--01 20--01 20-11-01 20-12-01 2011-01-01 2011-02-01 +45 % A percent change in all raw material prices will effect working capital by +/- SEK 250 million. As a consequence of the policy of back-to-back hedging of raw materials there is a time lag between movement in the spot price and the cash flow impact. Fourth Quarter and Full-year 20 18
AAK s refinancing completed The Group s net borrowings as at 31 December 20 amounted to SEK 2,634 million. AAK has signed two new fully committed credit facilities. The new loan terms also includes significantly enhanced flexibility. The Group now has committed credit facilities aggregating SEK 6,000 million with a maturity of five years or more. Fourth Quarter and Full-year 20 19
Investment Grade Pricing - Interest margin 300 250 200 ~80-90 bps 150 0 bps 50 0 2Q01 4Q01 2Q02 4Q02 2Q03 4Q03 2Q04 4Q04 2Q05 4Q05 2Q06 4Q06 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q Fourth Quarter and Full-year 20 20
Elimination of IAS39 effects AAK has implemented procedures permitting to eliminate the IAS39 from October 1, 20. included a positive IAS 39 effect of SEK 140 million. Commencing the first quarter 2011 there will be no IAS 39 effect. Fourth Quarter and Full-year 20 21
AAK Acceleration 3 Priority Areas Growth Efficiency People Fourth Quarter and Full-year 20 22
AAK Acceleration - Growth Bakery Dairy Chocolate & Confectionery Fats Infant Nutrition Food Service Merger & Acquisitions Fast-growing Economies Growth Fourth Quarter and Full-year 20 23
AAK Acceleration Efficiency Purchasing Productivity Efficiency Fourth Quarter and Full-year 20 24
AAK Acceleration People Sales Management & Sales Processes Mobilize Ourselves Internal Communication People Fourth Quarter and Full-year 20 25
AAK Executive Committee Octavio Díaz de León David Smith Torben Friis Lange Anne Mette Olesen Renald Mackintosh Anders Byström Arne Frank Karsten Nielsen Bo Svensson Edmond Borit Jean-Marc Rotsaert Fourth Quarter and Full-year 20 26
Major events 20, Summary Record high, like for like, operating profit with Food Ingredients reported record high annual operating profit. Stabilized margins in Chocolate & Confectionery Fats. Strong recovery in Technical Products & Feed. Execution of the ongoing Scandinavian rationalisation programme in line with plan. Rolled out company program AAK Acceleration Based upon our speciality strategy. Actionable execution oriented. Mid and long term growth and profit evolution. Growth-Efficiency-People. New global organization with strengthened and more international Executive Committee. Fourth Quarter and Full-year 20 27
Major events 20 Investment by executives and key managers in a stock option program at market price. Commencing first quarter 2011 there will be no IAS 39 effect to report. Finalized long term refinancing of SEK 4,200 million, with much better flexibility, making up a part of a total committed facilities of SEK 6,000 million for five years or more. Fourth Quarter and Full-year 20 28
Concluding remarks from CEO Operating profit for 20 was in line with our expectations. We now have a very strong foundation for our mid- and longterm, the AAK Acceleration programme. Focus areas are Growth, Efficiency and People. The prioritized growth areas are; Bakery & Bakery Service, Dairy Industry, Chocolate & Confectionery Fats, Infant Nutrition (Baby Food), Food Service, Fast-growing economies (e.g. China and Brazil) and Merger & Acquisitions. For 2011 we have a cash flow challenge because of significant raw material price increases that occurred in 20 but with a time lag affecting 2011. We are pleased that we have been able to finalize the refinancing, with improved financial flexibility and we have now total committed facilities of SEK 6,000 million for five years or more Fourth Quarter and Full-year 20 29
Questions & Answers Fourth Quarter and Full-year 20 30
The first choice for value-added vegetable oil solutions Fourth Quarter and Full-year 20 31
Investor Relations Contacts Arne Frank Chief Executive Officer and President Phone: +46 40 627 83 Anders Byström Chief Financial Officer Phone: +46 40 627 83 32 Fredrik Nilsson Head of Investor Relations and Group Financial Manager Phone: +46 40 627 83 34 Mobile: +46 7 95 22 21 E-mail: fredrik.nilsson@aak.com Further Investor Relations information is available from the company homepage at http://www.aak.com/en/investor/ Fourth Quarter and Full-year 20 32
Appendix
Financial calendar Year Date Event 2011 May 4 2011 Interim report 2011 May 17 Annual General Meeting, Malmoe 2011 July 20 2011 Interim report 2011 November 4 2011 Interim report 2011 November 15 Capital Market Day Stockholm Fourth Quarter and Full-year 20 34
Cocoa Butter Fourth Quarter and Full-year 20 35
Raw material price development Fourth Quarter and Full-year 20 36
Operating EBIT vs Legal EBIT including the IAS 39 effect 20 20 70 578 1 475 827 Operational EBIT 20 IAS 39 Insurance compensation Legal EBIT 20 Fourth Quarter and Full-year 20 37