Aak Ab · OMXSTO:AAK
Aak Ab — Shareholder Meeting (May 2009)
71 slides from Aak Ab's shareholder meeting presentation, May 19, 2009
Slide 1: Annual General Meeting 2009
Jerker Hartwall President and CEO Annual General Meeting 2009
Slide 2: Agenda for today
Agenda for today This is AAK AAK and the financial crisis Strategy Business Areas Result Cash flow The future Annual General Meeting 2009, CEO 2
Slide 3: AAK is the world's leading producer of vegetable speciality fats
AAK is the world’s leading producer of vegetable speciality fats Annual General Meeting 2009, CEO 3
Slide 4: This is AAK
This is AAK Total sales: approx SEK 17 billion (13) EBIT 2008, SEK 851 million (653) (exclusive of final settlement of insurance compensation) 2,500 employees 9 production plants in 7 countries Head office in Malmö, Sweden Annual General Meeting 2009, CEO 4
Slide 5: AAK around the world
AAK around the world Production plants AAK Sweden Sales offices AAK Denmark AAK UK AAK The Netherlands AAK US AAK Mexico AAK Latin America Annual General Meeting 2009, CEO 5
Slide 6: Sales per geographic areas 2008
Sales per geographic areas 2008 Övriga Rest of världen the world 6%8%(6%) Nord/Syd- North/South amerika America Europe Europa 18% 69(71%) 75% 69% % 25% (23%) Annual General Meeting 2009, CEO 6
Slide 7: Sales per Business Area
Sales per Business Area Technical Chocolate & Products & Feed Confectionery Fats 10% (10) 29% (31) 61% (59) Oils & Fats Food Ingredients represent 90% of the sales Annual General Meeting 2009, CEO 7
Slide 8: Our vegetable raw material base
Our vegetable raw material base Rapeseed Palm Rapeseed Soya Soya Olive Sunflower Shea Shea Sunflower Palm Olive Soya Annual General Meeting 2009, CEO 8
Slide 9: World production
World production Olive Peanuts Coconut Palm kernel Sunflower Rapeseed Soya Palm Million tonnes 0 10 20 30 40 Annual General Meeting 2009, CEO 9
Slide 10: Vegetable oils – character
Vegetable oils – character Rapeseed – 6% saturated – 94% unsaturated, thereof 11% Omega 3* Sunflower – 10% saturated – 90% unsaturated, 0% Omega 3 Olive oil – 15% saturated – 85% unsaturated, 0% Omega3 Palm oil – 50% saturated – 50% unsaturated, 0% Omega 3 Coconut oil – 91% saturated – 9% unsaturate
Slide 11: AAK's Business Areas
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Slide 12: AAK's Business Areas
AAK’s Business Areas Regional Global Food Chocolate & Regional Ingredients Confectionery Fats Technical Products & - Speciality Feed - Bulk - Speciality - Speciality - Bulk Total sales Total sales Total sales 10,400 MSEK 4,900 MSEK 1,600 MSEK EBIT 319 MSEK EBIT 547 MSEK EBIT 56 MSEK Annual General M
Slide 13: AAK and the financial crisis
AAK and the financial crisis - ~=—_ ——.
Slide 14: AAK and the financial crisis
AAK and the financial crisis Quotation from Year End report ”The effects on AAK of the financial crisis and weakened business climate are difficult to assess” ”However, due to the severity of the global downturn, the uncertainty is significantly larger than in previous periods of recession” ”Politic
Slide 15: Food Ingredients
Food Ingredients Annual General Meeting 2009, CEO 15
Slide 16: The financial crisis and Food Ingredients
The financial crisis and Food Ingredients What has happened in the Food Ingredients market? Limited volume effect globally Fast change towards cheaper products Continued fast development towards non-trans products with low content of saturated fat The retail business’ own brands (private label) are
Slide 17: The financial crisis and Food Ingredients
The financial crisis and Food Ingredients What has happened in the Business Area Food Ingredients? Limited volume effect Strong margin development Positive development in acquisitions – Lion Foods, Croda Food Services, Rapsona The strategy towards more speciality products continues according to plan
Slide 18: AAK – a world leader in vegetable speciality fats
AAK – a world leader in vegetable speciality fats - High content of technology Lowest price - Speciality producer Bulk producer Raw materials Raw materials Annual General Meeting 2009, CEO 18
Slide 19: Chocolate & Confectionery Fats
Chocolate & Confectionery Fats Annual General Meeting 2009, CEO 19
Slide 20: The financial crisis and Chocolate & Confectionery Fats
The financial crisis and Chocolate & Confectionery Fats Quotation from business Barry Callebaut: Public report of results for first six months of fiscal year 2008/09 “… negative growth in global chocolate consumption for the first time in more than a decade. In some key Western European and North Am
Slide 21: The financial crisis and Chocolate & Confectionery Fats
The financial crisis and Chocolate & Confectionery Fats Quotation from business Nestlé: First-quarter sales performance 2009: “In Eastern Europe, the combination of the economic downturn, the increase in the cocoa price and currency devaluations resulted in reduced demand.“ Mars: Nathalie Roos, pres
Slide 22: The financial crisis and Chocolate & Confectionery Fats
The financial crisis and Chocolate & Confectionery Fats What has happened in the Chocolate & Confectionery Fats market? Volume decrease in the Western world in the range of 5-10% Volume decrease in Eastern Europe more than 10% Asia is showing a stable development Development towards cheaper products
Slide 23: Destocking
The financial crisis and Chocolate & Confectionery Fats Destocking AAK Chocolate producers Retailers Annual General Meeting 2009, CEO 23
Slide 24: Destocking
The financial crisis and Chocolate & Confectionery Fats Destocking AAK Chocolate producers Retailers Annual General Meeting 2009, CEO 24
Slide 25: The financial crisis and Chocolate & Confectionery Fats
The financial crisis and Chocolate & Confectionery Fats What has happened in the Business Area Chocolate & Confectionery Fats? Comprehensive destocking at customers’ Great caution in Eastern Europe Volumes down by 20% EBIT SEK 74 million (139) Margin development +26%, 4.73 SEK/kg to 5.94 SEK/kg Annu
Slide 26: Technical Products & Feed
Technical Products & Feed Annual General Meeting 2009, CEO 26
Slide 27: The financial crisis and Technical Products & Feed
The financial crisis and Technical Products & Feed What has happened in the Technical Products & Feeds market? Recession in the car industry globally Recession in the paper and chemical/technical industries Over-capacity in the business Feed industry not yet effected Annual General Meeting 2009, CEO
Slide 28: The financial crisis and Technical Products & Feed
The financial crisis and Technical Products & Feed What has happened in the Business Area Technical Products & Feeds? Deliveries to the car industry heavily reduced Deliveries to the paper and chemical industries heavily reduced Deliveries to the feed industry not yet effected EBIT SEK 13 million (2
Slide 29: Our strategy
Our strategy Annual General Meeting 2009, CEO 29
Slide 30: From crop to consumer
From crop to consumer Where AAK is located in the primary value chain Producers of Farmers Food ingredients Retailers Consumers (Raw materials) Producers (Oils & Fats) •United • AAK • Nestlé, • Wal-Mart Plantations Kraft, • Loders Croklaan, • Tesco Berhad Unilever Fuji Oil • Metro •IOI, Kuok • Mars
Slide 31: Strategy: Global niche strategy
Strategy World market Speciality solutions Loders AAK Fuji AAK Others Global niche strategy Annual General Meeting 2009, CEO 31
Slide 32: Growth strategy
Growth strategy Bulk products Speciality solutions Volumes Profitability Market index 1 10 30 >100 Annual General Meeting 2009, CEO 32
Slide 33: From bulk to more speciality products
From bulk to more speciality products EBIT Speciality products for - Chocolate - Baby food Speciality - Bakery - Cosmetic - Acquisitions Bulk Bulk Time Annual General Meeting 2009, CEO 33
Slide 34: Growth strategy
Growth strategy Specialisation Selective acquisitions Product development - Bulk products - Strong customer base established over a long time Annual General Meeting 2009, CEO 34
Slide 35: Growth – strategy
Growth – strategy Specialisation Selective acquisitions Product development Lion Foods Croda Food Services Enzymotec - Bulk products Rapsona - Strong customer base established over a long time Annual General Meeting 2009, CEO 35 35
Slide 36: New speciality products for many applications
New speciality products for many applications Annual General Meeting 2009, CEO 36
Slide 37: InFat – The right fat for infants
InFat – The right fat for infants Quality similar to mother milk Gives significant increase of energy intake and calcium absorption Gives calm digestion and optimal skeleton development Annual General Meeting 2009, CEO 37
Slide 38: Example of our specialisation strategy
Example of our specialisation strategy 2008 New factory 2007 Advanced Lipids Joint Venture between AAK and Enzymotec High degree of Enzymotec speciality More speciality fats 2000 Simple oils Baby Food Annual General Meeting 2009, CEO 38
Slide 39: New speciality factory – for infant formula
New speciality factory – for infant formula Annual General Meeting 2009, CEO 39
Slide 40: Bakery
Bakery Annual General Meeting 2009, CEO 40
Slide 41: 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 Services Acquired bakery fat producer 2000 Simple oils Bakery fat Annual General Meeting 2009, CEO 41
Slide 42: Food Ingredients – Speciality products create global business
Food Ingredients – Speciality products create global business AAK Sweden AAK Denmark AAK UK AAK Netherlands AAK US AAK Mexico AAK Latin America Annual General Meeting 2009, CEO 42
Slide 43: Food Ingredients – Speciality products create global business
Food Ingredients – Speciality products create global business AAK Sweden - Speciality fats for bakery AAK Denmark - Infant formula AAK UK AAK Netherlands AAK US AAK Mexico AAK Latin America Annual General Meeting 2009, CEO 43
Slide 44: Food Ingredients – Speciality products create global business
Food Ingredients – Speciality products create global business AAK Sweden - Speciality fats for bakery AAK Denmark - Infant formula AAK UK AAK Netherlands AAK US AAK Mexico AAK Latin America Annual General Meeting 2009, CEO 44
Slide 45: Result 2008
Result 2008 Annual General Meeting 2009, CEO 45
Slide 46: 2008: Sales +32%, Operating profit +30%
2008 Sales +32 %, SEK 17.207 million (13.005) Operating profit +30%, SEK 851 million (653) (exclusive of final settlement of insurance compensation) Increased volumes and margins within Chocolate & Confectionery Fats and Food Ingredients Positive development in the acquisitions made in recent years
Slide 47: Important events 2008
Important events 2008 The most important events were the start-up of our new CBE factory and the re-start of the older factory in Aarhus, Denmark, which was damaged in the December 2007 incident A new factory in Karlshamn was commissioned in September, providing a significant capacity increase in th
Slide 48: First quarter 2009
First quarter 2009 Annual General Meeting 2009, CEO 48
Slide 49: First quarter 2009
First quarter 2009 Sales +15 %, SEK 4.223 million (3.683) Operating profit -24%, SEK 157 million (207) Improved cash flow and stronger balance sheet Annual General Meeting 2009, CEO 49
Slide 50: Insurance
Insurance Negotiations about the compensation are ongoing but have not yet been completed. AAK still expects additional significant positive effects from insurance compensation on operating profit partly related to 2008, partly related to 2009 and cash flow. Annual General Meeting 2009, CEO 50
Slide 51: Operating profit, first quarter 2009, per Business Area
Operating profit, first quarter 2009, per Business Area SEK million 140 120 100 80 2007 60 2008 2009 40 20 0 TPF FI CCF Annual General Meeting 2009, CEO 51
Slide 52: Operating profit, rolling 12 months
Operating profit, rolling 12 months Annual General Meeting 2009, CEO 52
Slide 53: Operating profit, rolling 12 months
Operating profit, rolling 12 months Excl final insurance compensation Annual General Meeting 2009, CEO 53
Slide 54: Cash flow
Cash flow
Slide 55: Raw material price development
Raw material price development Raps Palm Soya Annual General Meeting 2009, CEO 55
Slide 56: Cash flow from ongoing business, rolling 12 months
Cash flow from ongoing business (before investments), rolling 12 months SEK million 600 400 200 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 -200 -400 -600 -800 -1000 Annual General Meeting 2009, CEO 56
Slide 57: Rationalisation project continues
Rationalisation project continues
Slide 58: AAK's rationalisation project
AAK’s rationalisation project First wave of synergies SEK 200 million 2005 – 2007 Second wave of synergies SEK 100 million 2007 – 2010 Total SEK 300 million 2005 – 2010 Annual General Meeting 2009, CEO 58
Slide 59: Specialisation of the Swedish and Danish sites (second wave)
Specialisation of the Swedish and Danish sites (second wave) Cost synergies of approx. SEK 100 million Fully implemented during 2010 One-off costs of SEK 150 million, accounted for in 2007 - of which SEK 50 million did not have any cash flow effect • The project is developing as planned and will pro
Slide 60: The future
The future Annual General Meeting 2009, CEO 60
Slide 61: Roadmap to growth in the coming years
Roadmap to growth in the coming years t s, s, EBIT fa ve te ti l a na c o a er e o ul ic h lt C BE m A rv s r C ic t s Se fo Fa t et ry ec pr ew od t sm ke FA y n oj D ir fa N Fo Ba a Co In D Applications Annual General Meeting 2009, CEO 61
Slide 62: The future – Chocolate & Confectionery Fats
The future – Chocolate & Confectionery Fats Annual General Meeting 2009, CEO 62
Slide 63: Cocoa Butter Equivalents, future opportunities
Cocoa Butter Equivalents, future opportunities Cocoa Butter Equivalents Cocoa butter The same quality Cocoa butter Cheaper raw material Expensive raw material Exact quality Variation in quality ------------------------------------------------------------------- AA Cocoa Butter Equivalents K K = AA B
Slide 64: Chocolate consumption by geographic area – CBE potential
Chocolate consumption by geographic area – CBE potential New CBE potential Annual General Meeting 2009, CEO 64
Slide 65: The future – Chocolate & Confectionery Fats
The future – Chocolate & Contectionery Fats The use of CBE increases. CBE is cheaper and has the same functionality as cocoa butter AAK has created the world’s largest CBE centre in Aarhus, Denmark AAK has developed the best shea supply Annual General Meeting 2009, CEO 65
Slide 66: The future – Food Ingredients
The future – Food Ingredients Annual General Meeting 2009, CEO 66
Slide 67: The future – Food Ingredients
The future – Food Ingredients The driving force is health, e.g. non-trans products, low content of saturated fats Fast re-formulation to cheaper products Changes are positive for a speciality company as AAK Annual General Meeting 2009, CEO 67
Slide 68: Strategy – driving the product mix towards more speciality products
Strategy – driving the product mix towards increased share of speciality products Profit Bulk oils Speciality products Infant formula Bakery fats FoodService 2000 2008 Annual General Meeting 2009, CEO 68
Slide 69: The future for AAK
The future for AAK We develop the speciality strategy We make selective acquisitions We are under development to become a more balanced company We are well positioned – based on investments made, geographic platforms, and strong product development Annual General Meeting 2009, CEO 69
Slide 70: Vegetable healthy oils have an exciting future
Vegetable healthy oils have an exciting AAK is in a strong future position to benefit from these opportunities Annual General Meeting 2009, CEO 70
Slide 71: AAK has an interesting future
AAK has an interesting future Annual General Meeting 2009, CEO 71