Slide 1: Interim Report Q4 and Year End Report 2008
Jerker Hartwall CEO Anders Byström CFO Interim Report Q4 and Year End Report 2008
Slide 2: Fourth quarter, 2008
Fourth quarter, 2008 The Group result for 2008 ended at SEK 851 million (653). Increased volumes and margins for Chocolate and Confectionery Fats and Food Ingredients. Positive developments in the most recent acquisitions within Food Ingredients are the main contributors to this improvement Interim
Slide 3: Insurance
Insurance The claims handling process with the insurance companies is currently progressing but not finalised. The finalisation of the insurance claims is expected to have additional significant positive effects on the profitability and cash flow for the company in respect of coverage of property re
Slide 4: Important Events 2008
Important Events 2008 The most important event was the start-up of our new CBE plant and the re-start of the older plant in Aarhus, Denmark, that was damaged in the December 2007 incident. The new plant has performed very well since the start-up in the first quarter. The recommissioned and more effi
Slide 5: Important Events 2008
Important Events 2008 A leading Swedish food service company, Rapsona, was acquired in the third quarter. The integration process followed the plan, and the operating results are developing positively. Through our strong presence in West Africa we now have a secured flow of incoming shea – the key r
Slide 6: Highlight Q4
Highlight Q4 Net sales +28%, SEK 4,764 million (3,709) The operating result increased +19 % or 34 MSEK, SEK 212 million (178). – including insurance compensation of SEK 41 million All financial information on this page is exclusive non recurring items and IAS 39 Interim Report Q4 and Year End Report
Slide 7: Highlight full year
Highlight full year Net sales +32%, SEK 17,207 million (13,005). The operating result increased +35% or 164 MSEK, SEK 851 million (653). – including insurance compensation of SEK 304 million Proposed dividend of SEK 4.00 per share (unchanged) All financial information on this page is exclusive non r
Slide 8: Insurance
Insurance Insurance compensation of SEK 304 million has been included in the SEK 851 million related to the December 2007 incident in Aarhus, Denmark. Included in the SEK 851 million above, SEK 47 million was recognised as income during the first quarter in relation to the December 2007 insurance cl
Slide 9: Operating profit rolling months
Operating profit rolling 12 months Additional 900 insurance 851 compensation 864 800 700 745 764 600 653 SEK million 583 500 549 498 470 400 455 300 200 100 0 2005 2006 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007 2007 2007 2007 2008 2008 2008 2008 All financial information on this page is exclusive non recurring i
Slide 10: Key figures
Key figures All financial information on this page is exclusive non recurring items and IAS 39 Interim Report Q4 and Year End Report 2008 10
Slide 11: Operating profit full year Business Area
Operating profit full year Business Area -9”/-14% +41”/+15% +191”/+54% Interim Report Q4 and Year End Report 2008 11
Slide 12: Business Areas – Gross Contribution per kilo
Business Areas – Gross Contribution per kilo Chocolate & Food Ingredients Technical Products Confectionery Fats & Feed The progress of the specialisation strategy can be tracked by the development of the gross contribution per kilo. For the full year we show improvements in the two major business ar
Slide 13: Chocolate & Confectionery Fats
Chocolate & Confectionery Fats Full Full Q4 Q4 Year Year SEK million 2008 2007 Change 2008 2007 Change Operating profit 139 106 +31% 547 356 +54% excl. non recurring items Volumes (thousand tonnes) 80 72 +11% 302 288 +5% Q4 October - December Operating profit improved by SEK 33 million or 31 % compa
Slide 14: Chocolate & Confectionery Fats - EBIT per tonne
Chocolate & Confectionery Fats - EBIT per tonne, SEK, rolling 12 months 2 000 1 811 1 742 1 800 1 600 1 488 1 363 1 400 1 236 1 200 980 1 000 800 800 660 600 400 200 0 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Interim Report Q4 and Year End Report 2008 14
Slide 15: Cacoa Butter Equivalent (CBE) and Shea
Cacoa Butter Equivalent (CBE) and Shea The new CBE plant has performed very well since the start-up in the first quarter 2008. Old plant in Aarhus restarted November 2008. World largest CBE capacity 2009. AAK is world leader in the CBE area and therefore the raw material, shea, is an especially impo
Slide 16: Food Ingredients
Food Ingredients Full Full Q4 Q4 Year Year SEK million 2008 2007 Change 2008 2007 Change Operating profit 90 81 +11% 319 279 +14% excl. non recurring items Volumes (thousand tonnes) 245 230 +7% 940 898 +5% Q4 October - December • The business area Food Ingredients showed continued stability in a ver
Slide 17: Food Ingredients - EBIT per tonne
Food Ingredients - EBIT per tonne, SEK, rolling 12 months 335 339 350 308 312 317 311 312 314 300 250 200 150 100 50 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007 2007 2007 2007 2008 2008 2008 2008 Interim Report Q4 and Year End Report 2008 17
Slide 18: Technical Products & Feed
Technical Products & Feed 3 months 3 months Full Full Q4 Q4 Year Year SEK million 2008 2007 Change 2008 2007 Change Operating profit 2 12 -83% 56 65 -14% excl. non recurring items Volumes (thousand tonnes) 75 76 -1% 301 295 +2% Q4 October - December The operating profit was slightly lower than last
Slide 19: Condensed balance sheet
Condensed balance sheet +647 +1,235 +296 +1,147 Interim Report Q4 and Year End Report 2008 19
Slide 20: Financial position
Financial position The Group’s net borrowings as at 31 December 2008 amounted to SEK 5,112 million (SEK 4,279 million on 31 December 2007). The Group has total credit facilities of SEK 6,300 million of which SEK 5,900 million is committed for 3 years or more. Interim Report Q4 and Year End Report 20
Slide 21: Summary cash flow statement for the Group
Summary cash flow statement for the Group * * Improved cash flow from operating activities compared to last year. Interim Report Q4 and Year End Report 2008 21
Slide 22: Cash flow – operational improvement Q4
Cash flow – operational improvement Q4 2008 Operational Operational Q4 2008 IAS 39 Q4 2008 Q4 2007 IAS 39 Q4 2007 Cash flow from operating activities before change in working capital -185 357 172 304 -63 241 Changes in working capital 564 -357 207 -570 63 -507 Cash flow from operating activities 379
Slide 23: Cash flow
Cash flow Towards the end of the second quarter, vegetable oils started to show a declining price trend. This decline accelerated during the third and fourth quarters. The significantly lower raw material prices will result in reduced working capital and improved cash flow over time during 2009. Int
Slide 24: Roadmap to growth
Roadmap to growth s, r ce t , EBIT es a a f pl iv te re at a ol n t er c fa o lt h ilk ce C BE A ic sm t i C Fa rv et r Se sm FA y he ts ry D ir od ec pr ew ot ke a Co D oj M Fo Ba N Applications Interim Report Q4 and Year End Report 2008 24
Slide 25: Growth - strategy
Growth - strategy Specialisation Selective acquisition Product Development Croda Food Service Enzymotec Rapsona Bulk products Strong customer base Interim Report Q4 and Year End Report 2008 25
Slide 26: Example of our specialisation strategy Advanced Lipids
Example of our specialisation strategy Advanced Lipids Joint Venture of AAK and Enzymotec Year High degree of 2007 speciality + Enzymotec (Infant formula) More speciality fats 2000 Simple oils Baby Food Interim Report Q4 and Year End Report 2008 26
Slide 27: Example of our specialisation strategy
Example of our specialisation strategy AAK The Bakery Fat specialist Year No 1 Bakery process aid 2007 + in Bakery fats Croda Food Service Acquired Bakery fat production 2000 Simple oils Bakery fat Interim Report Q4 and Year End Report 2008 27
Slide 28: Building blocks
Building blocks CBE margins CBE CBE margins Volumes CBE margins CBE CBE Volumes margins CBE CBE Volumes FI volumes Speciality FI Speciality FI FI Speciality Speciality Synergies Synergies Synergies 1st wave Synergies FI FI FI FI Commodity Commodity Commodity Commodity 2007 Q4 2008 2008 2009 2010 653
Slide 29: The merger plan
The merger plan 2006 Make the change 2007 Make it work – increased EBIT 2008 Well positioned – increased EBIT Interim Report Q4 and Year End Report 2008 29
Slide 30: The merger’s first three years
The merger’s first three years MSEK 2006 2008 Sales 10 900 17 200 EBIT 455 851 Interim Report Q4 and Year End Report 2008 30
Slide 31: Future prospects
Future prospects The effects on AAK of the financial crisis and weakened business climate are difficult to assess. Historically, the food and chocolate businesses, which represent more than 90 percent of the Group’s turnover, have shown relative stability in changing business climates. However, due
Slide 32: Future prospects
Future prospects The fatty acid business and the metalworking fluids both within Technical Products will be more severely affected because of the decline in the customer base in the paper and automotive industries. Cash flow, which has been negatively affected by the strong increase in raw material
Slide 33: APPENDIX
APPENDIX
Slide 34: ICCO’s forecasts of world cocoa production and consumption
ICCO’s forecasts of world cocoa production and consumption Source: http://www.icco.org/Attachment.aspx?Id=iid50178 Interim Report Q4 and Year End Report 2008 34
Slide 35: Cocoa butter price development in SEK/tonne
Cocoa butter price development in SEK/tonne Cocoa butter 60000 50000 40000 SEK/ton 30000 c 20000 10000 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Interim Report Q4 and Year End Report 2008 35
Slide 36: Palm USD/tonne
Palm USD/tonne Interim Report Q4 and Year End Report 2008 36
Slide 37: IAS 39
IAS 39 IAS 39 allows market price valuation of the hedge contracts only while physical purchase contracts and sales contracts are not allowed to be valued in the same way. The difference between the internal market price valuation and IAS 39 market price valuation is the “IAS 39 effect” reported. Th
Slide 38: Back to back hedging
Back to back hedging Paper Physical contracts purchase Net position Customer Inventory contracts Full market valuation of all ”legs” in the business areas operating result. Interim Report Q4 and Year End Report 2008 38
Slide 39: Theoretical accounting effect - IAS 39
Theoretical accounting effect - IAS 39 Paper Physical contracts purchase Net position Customer Inventory contracts Only market valuation of financial derivatives are allowed in accordance with IAS 39 No cash flow impact and no impact on underlying profitability. Interim Report Q4 and Year End Report