Slide 1: Financial performance
Fredrik Nilsson Chief Financial Officer Financial performance The Co-Development Company
Slide 2: Customer Co-Development and successful integration of acquisitions driving profit growth
Customer Co-Development and successful integration of acquisitions driving profit growth… SEK million 2,112 11% 1,956 1,786 1,615 1,411 2015 2016 2017 2018 2019* * September, rolling 12 months The Co-Development Company
Slide 3: Through volume growth and value-adding solutions
…through volume growth and value-adding solutions Volume (‘000 MT) Operating profit/kilo (SEK) 6% 5% 2,239 2,282 0,93 2,129 0,84 0,87 1,966 0,82 1,833 0,77 2015 2016 2017 2018 2019* 2015 2016 2017 2018 2019* * September, rolling 12 months The Co-Development Company
Slide 4: Working capital days – stable trend in percent of sales
Working capital days – stable trend in percent of sales Entering new markets/geographies put pressure on working capital days Strong push on payment terms from customers Potential to improve cash flow from working capital through focused efforts Working capital days % of sales 74 30 72 25 70 68 20 6
Slide 5: Strong track record of free cash flow
Strong track record of free cash flow Over SEK 2,000 million in free cash flow since 2015 (excluding acquisitions) SEK million 2,200 2,080 2,000 1,956 1,736 1,786 1,800 1,615 1,600 1,466 1,409 1,340 1,400 1,212 1,213 1,200 1,040 1,099 1,090 1,000 945 843 848 800 588 600 400 367 241 289 200 0 2015 20
Slide 6: The AAK Way coming to an end
The AAK Way coming to an end – solid progress and good results set a strong foundation for our next company strategy Go to Operational Innovation Special People Market Excellence Focus Areas Continuous training on Further progressing with Market-driven innovation Senior and Medical Leadership develo
Slide 7: The AAK Way – anatomy of growth in operating profit
The AAK Way – anatomy of growth in operating profit SEK million 2,200 2,112 10% 217 2,000 1,800 10 350 1,615 90 1,600 180 90 100 1,400 200 0 2016 Currency Acquisitions* Inflation Productivity Investments Price/ Volume 2019 R12m in mix * At acquisition date organization The Co-Development Company The
Slide 8: Low customer concentration decreases dependency and risk
Low customer concentration decreases dependency and risk # #11 5% ## 2-10 2-10 16% # 50- # 50- 59% 10% ##11-25 11-25 10% ##26-50 26-50 The Co-Development Company
Slide 9: Preparations to mitigate effects of Brexit in place
Preparations to mitigate effects of Brexit in place Approximately 90 percent of our business in the UK is for the UK market Main expected cost drivers identified as tariffs on goods sold and imported into and out of the UK Other effects include Build-up of safety stocks Additional staff to handle cu
Slide 10: Capital allocation principles
Capital allocation principles Solid balance sheet provides strong platform for growing long-term shareholder value Dividends Core business investments Acquisitions Consistent dividends Capacity expansion Bolt-on 30–50 percent of net profit Improve efficiency Strategic targets History of dividend gro
Slide 11: CAPEX – increasing investments to keep growth momentum
CAPEX – increasing investments to keep growth momentum SEK million 1,600 1,421 1,400 Investments done enhancing growth areas 1,269 1,200 449 Debottleneck CAPEX 1,117 123 1,000 Capacity expansions in India and China 1,000 488 Acquisitions in core business and adjacencies 810 Strengthened sourcing cap
Slide 12: Return on Capital Employed (ROCE)
Return on Capital Employed (ROCE) We target a gradual and continuous improvement – recent drop has been driven by strategic purchase of key raw materials and acquisitions % 16.0 ROCE end Q3 2019* 15.8 15.1% 15.6 Capital 15.4 EBIT LTM employed* SEK million 15.2 SEK million 2,097 15.0 13,872 14.8 Q3 Q
Slide 13: Solid balance sheet and well-balanced debt portfolio provide strong foundation for future growth
Solid balance sheet and well-balanced debt portfolio provide strong foundation for future growth Net debt Maturity profile SEK million 4,000 1.80 3,500 1.60 21% 3,000 1.40 1.20 2,500 1.00 2,000 79% 0.80 1,500 0.60 1,000 0.40 500 0.20 SEK 7,186 million in 0 0.00 committed credit facilities Q1 Q2 Q3 Q
Slide 14: Guidance 2019 tax rate 25%
Strong focus to improve and optimize capital structure results in lower tax rate % 30 Guidance 2019 29 tax rate 25% 28 Reported tax rate 27 Corresponding to SEK 50 26 million in lower tax payments 25 24 2015 2016 2017 2018 2019 The Co-Development Company
Slide 15: Consistent EPS growth drives consistent dividend
Consistent EPS growth drives consistent dividend Dividend policy to pay out 30–50 percent of net profit Earnings per share Dividend per share* 5.50 5.22 5.36 2.00 1.85 5.00 4.71 +10% 1.75 1.63 4.50 3.95 +11% 1.46 4.00 1.50 3.70 1.29 3.53 3.50 1.25 2.98 1.13 3.00 2.62 1.00 2.36 2.45 1.00 0.88 2.50 0.
Slide 16: Average 10% year-over-year EBIT improvement
Continue building on what makes us great, combined with different portfolio strategies, will enable our management ambition of 10% EBIT growth Average 10% year-over-year EBIT improvement & Supporting a good and consistent EPS improvement The Co-Development Company
Slide 17: Thank you!
Thank you! www.aak.com The Co-Development Company