Aak Ab · OMXSTO:AAK
Aak Ab — Investor Day (October 2006)
47 slides from Aak Ab's investor day presentation, Oct 3, 2006
Slide 1: Welcome to Capital Market day
Welcome to Capital Market day Jerker Hartwall, President and CEO
Slide 2: Capital Market Day agenda
Capital Market Day agenda 09.00 President’s introduction - This is AAK - Jerker Hartwall President and CEO 09.45 Business area presentations - Håkan Christensson President Business Area Food Ingredients Continental Europe. - Ian McIntosh President Business Area Food Ingredients UK and Nafta (USA, Me
Slide 3: Presenters: Jerker Hartwall, Jørgen Balle, Anders Byström
Jerker Hartwall Jørgen Balle President and C.E.O. Vice President AarhusKarlshamn AB, President Business Area Chocolate & Confectionery Fats and Business Area Lipids for Care, President AarhusKarlshamn Denmark A/S. Jerker Hartwall Anders Byström Håkan Christensson Vice President and CFO Vice Presiden
Slide 4: AarhusKarlshamn is the world-leading producer of vegetable speciality fats
AarhusKarlshamn is the world-leading producer of vegetable speciality fats 4 Capital Market Day, October 3, 2006
Slide 5: Our vegetable raw-material base
Our vegetable raw-material base • Rapeseed • Palm Rapeseed • Soya Sunflower Olive • Shea Soya Shea • Maize Palm • Sunflower • Olive 5 Capital Market Day, October 3, 2006
Slide 6: This is AarhusKarlshamn
This is AarhusKarlshamn • A merger between Aarhus United A/S and Karlshamns AB. • Total sales: SEK 10.5 billion. • 2,500 employees. • Production plants in seven countries. • New headquarters, Malmoe, Sweden • Listed on the Stockholm Stock Exchange from September 11th 2006. 6 Capital Market Day, Octo
Slide 7: From crop to consumer
From crop to consumer Where AAK is located in the primary value chain Producer of Food Farmers Retailers Consumers (Raw materials) Ingredients Producer (Oils & Fats) •United • AarhusKarlsha • Nestlé, Kraft, • Wal-Mart, Plantations mn Unilever, etc. Tesco, Berhad Metro, • Loders • Mars, Carrefour •IO
Slide 8: AAK around the world
AAK around the world Production plants Sales offices AAK Sweden AAK Norway AAK Poland AAK Czech Republic AAK Denmark AAK UK AAK Netherlands AAK Croatia AAK Russia AAK Canada AAK Ukraine AAK US AAK Hong Kong AAK Mexico AAK Latin America Sao Paolo, Brazil AAK Ivory Coast AAK Benin AAK Australia AAK La
Slide 9: Application segments
Application segments Chocolate & Technical Food Other Confectionery Products & Ingredients Business Fats Feed - Dairy Fat - Chocolate fats - Fatty acids - Skin care Alternatives (CBE, CBR, CBS) - Feed materials - Hair care - Bakery - Chocolate Fillings - Bio-lubricants - Foodservice - Chocolate spre
Slide 10: Business Areas - scope
Business Areas - scope Regional Global Food Regional Ingredients Chocolate & Confectionery Global Technical Fats Products & (Other - Speciality Feed Business) - Bulk - Mainly Cosmetic Speciality - Speciality - Bulk - Only Speciality Net sales Net sales Net sales 6,200 MSEK 3,100 MSEK 900 MSEK EBIT E
Slide 11: Why AAK? Merger Rationale
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Slide 12: Critical mass
Critical mass • A more attractive company for employees, customers and investors. • Stronger market position. • Faster and global deployment of innovations. • Better international development potential for our staff. • A wider base of know-how and expertise. • Stronger purchasing power. • Financial
Slide 13: Complementing each other
Complementing each other Aarhus United Karlshamns Chocolate fats Cosmetics Dairy-Fat alternatives Foodservice Geographically West/South North/East 13 Capital Market Day, October 3, 2006
Slide 14: Strategic merger reasons
Strategic merger reasons • Accelerated growth • Stronger cost position • Lower investment costs • A stronger cash flow 14 Capital Market Day, October 3, 2006
Slide 15: Our strategy
RAK AarhusKarlshamn Our strategy
Slide 16: Strategic direction – how to compete
Strategic direction – how to compete “More speciality”, “More global” Bulk oils Speciality solutions Speciality ADM Loders AAK Fuji Bunge AAK Others Cargill Accelerate development of speciality solutions 16 Capital Market Day, October 3, 2006
Slide 17: Towards a more global company
Towards a more global company Russia/Eastern Europe •Full commercial set- up in Russia and Ukraine •New projects ongoing North America •US palm oil investment •Full commercial set- up in US for Lipids for Care Asia South America •Full commercial set-up in Malaysia for Asia •Full commercial set- up i
Slide 18: More speciality solutions
More speciality solutions Cosmetic fats Branded Chocolate Long Life fats Frying oils Foodservice Bulk Dairy fat Sauces oils alternatives Marinades Raw materials Low saturated Baby foods and low trans Nutritional products lipids Bakery fats 18 Capital Market Day, October 3, 2006
Slide 19: Product types – an overview
Product types – an overview Bulk oils Speciality solutions Standard Value added True bulk oils specialities specialities Uses Margarine, DFA, bakery fats, Chocolate, cooking oils baby foods, Cosmetics foodservice R&D Low Medium-High Advanced Number of raw Low Medium High materials (1-5) (5-15) (10-2
Slide 20: Global industry driving forces
Global industry driving forces • Healthy products • Food safety (risk-free products) • Convenience products • Cost pressure 20 Capital Market Day, October 3, 2006
Slide 21: Growth
Growth Bulk oils Speciality Volumes AAK The market 1 10 30 >100 21 Capital Market Day, October 3, 2006
Slide 22: How to grow when markets don’t?
How to grow when markets don’t? New solutions replacing the old ones! Global market growth: 2.6% CAGR* Developed markets: Western Europe 1.7% and North America: 2.2% CAGR Market size Emerging markets: Eastern Europe, Latin America, Africa/Middle East: 4.1-5.7 % Double-digit growth niches Cocoa Butte
Slide 23: High-growth area: Cocoa Butter Equivalents
High-growth area: Cocoa Butter Equivalents Global confectionery market growth: 2.5% CAGR* Emerging markets: Eastern Europe/Russia, Latin America and Asia, Africa/Middle East: 3.3-5.0% CAGR Market Developed markets: size North America and Western Europe: 1.2-2.1% CAGR* Double-digit growth rate Cocoa
Slide 24: High-growth area: Trans free alternatives
High-growth area: Trans free alternatives Developed markets: Market size - Western Europe 1.7% CAGR* - North America: 2.2% CAGR Double-digit growth rate Trans-free alternatives Time *) Source: Euromonitor 2006, % constant value growth 2005-10. 24 Capital Market Day, October 3, 2006
Slide 25: High-growth area: Dairy fat alternatives
High-growth area: Dairy fat alternatives Global dairy market growth: 2.4% CAGR* Market Emerging markets: size Latin America and Eastern Europe: 3.6-4.1% CAGR Developed markets: Western Europe and North America: 1.4-2.1% CAGR Double-digit growth rate Dairy Fat Alternatives Time *) Source: Euromonitor
Slide 26: High-growth area: Non-mineral oil cosmetic alternatives
High-growth area: Non-mineral oil cosmetic alternatives Market size Global market growth: 5.0% CAGR* Double-digit growth rate Non-mineral oil cosmetic alternatives Time *) Source: Euromonitor 2005, % constant value growth 2004-09. 26 Capital Market Day, October 3, 2006
Slide 27: Roadmap to growth in 3-5 years
Roadmap to growth in 3-5 years E , CB Ebit t s fa FA e D t la , es o ts c iv o fa h at C ng n er lli lt e fi A ic e ic rv s t at ry Fa t et ec se pr e w ol ke sm ry oc od oj Ba N ai Co Ch Fo D Applications 27 Capital Market Day, October 3, 2006
Slide 28: Improving Margins by shifting product-mix
Improving Margins by shifting product-mix Improving the 50/50 split between bulk and speciality Gross contribution Speciality Speciality Bulk Bulk Time 28 Capital Market Day, October 3, 2006
Slide 29: Bulk and Speciality by business area
Bulk and Speciality by business area Unit margin* High 3.3 SEK/kg Group avg.: 1.9 SEK/kg 1.7 SEK/kg Lipids Chocolate for & Confec- Care tionery 0.7 SEK/kg Fats Food Ingredients Technical Products & Feed Bulk Speciality * Unit margin = Gross contribution / volume. Source: Annual report 2005. 29 Capit
Slide 30: The merger year
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Slide 31: The merger year
The merger year • Restructuring of all our activities and value chain • Sourcing • Production • Distribution • Sales and marketing • Administration • A year of big change! 31 Capital Market Day, October 3, 2006
Slide 32: Cost synergies
Cost synergies • First communication - 150 MSEK 2008 • New communication, Q2 - 175 MSEK 2008 • Second wave starts, amounts to be communicated at later stage • Cost related to the 175 MSEK in synergies amounts to approximately 250 Mkr. 32 Capital Market Day, October 3, 2006
Slide 33: Cost synergies 2006 -2008
Cost synergies 2006 -2008 175 MSEK 10 % 50 % 20 % Sourcing Operation Sales Trading - UK restructuring - Sales offices - NL restructuring - Agents, etc. - Freight costs - SE/DK - Marketing - Raw materials 20 % Administration 33 Capital Market Day, October 3, 2006
Slide 34: 2006 - The Merger year
2006 - The Merger year • Agent /distribution network reconstructed • Own sales organisation US, Russia, Ukraine • Production rationalisation UK • Production rationalisation SWE/DK/NL • Lots of smaller synergy projects 34 Capital Market Day, October 3, 2006
Slide 35: Strategic business activities
Strategic business activities + CBE – expansion (150 MSEK investment) + Expansion in the US + Acquisition “Wet Food” division from Lion Food Ltd - Divestment of BSP Pharma 35 Capital Market Day, October 3, 2006
Slide 36: Three-year plan
Three-year plan • 2006 Make the change • 2007 Make it work – improved profit • 2008 In place – good profit 36 Capital Market Day, October 3, 2006
Slide 37: Food Ingredients Continental Europe and UK/Nafta
Food Ingredients Continental Europe and UK/Nafta 37 Capital Market Day, October 3, 2006
Slide 38: Summary
RAK AarhusKarlshamn Summary
Slide 39: The merger year
RAK AarhusKarlshamn The merger year
Slide 40: Important activities during October - April
Important activities during October - April New logotype Reconstruction UK Company structure Acq. Lion Foods Operative organisation working CCF investment Strategy and budget 150 MSEK in New head office synergies identified established in Malmoe October November December January February March April
Slide 41: Important activities during May - December
Important activities during May - December BSP pharma divestment O-listing 175 MSEK in US-investment synergies identified decision Second wave of synergies Group Management Capital market day Merger/Synergy Projects May June July August September October November December 41 Capital Market Day, Octo
Slide 42: The Future
The Future 2006 The year 2006 will witness considerable restructuring within our entire value chain - higher operational costs - non recurring costs 2007 In 2007, we are anticipating significant improvements related to these change processes implemented during 2006. 2008 Our goal is to achieve fully
Slide 43: Three-year plan
Three-year plan 800 700 600 Reconstruction 530 500 Rationalisation MSEK 400 416 One offs 300 Shea limitation 200 No 100 subcontracting 0 2004 2005 2006 2007 2008 43 Capital Market Day, October 3, 2006
Slide 44: Three-year plan
Three-year plan 800 + Synergies 700 + US 600 Reconstruction 530 expansion + CBE 500 Rationalisation expansion MSEK 400 416 + Distributors One offs 300 CBE expansion Shea limitation Investment 200 + Foodservice No acquisition 100 subcontracting 0 2004 2005 2006 2007 2008 44 Capital Market Day, Octobe
Slide 45: Three-year plan
Three-year plan + Synergies 800 + Synergies + CBE investment 700 + US 600 Reconstruction + Production 530 expansion rationalisation SWE/DK/NL + CBE 500 Rationalisation expansion + Other business development MSEK 400 416 + Distributors projects One offs 300 CBE expansion Shea limitation Investment 20
Slide 46: Roadmap to growth in 3-5 years
Roadmap to growth in 3-5 years E CB Ebit t s, a FA f te D l a , es ts c o fa iv h o at ng C n lli er fi lt e A e ic at t ic rv Fa ry s ol et t se ec pr e w oc ke ry sm od oj Ch ai Ba N Co Fo D Applications 46 Capital Market Day, October 3, 2006
Slide 47: The first choice for value added vegetable oil
AAK vision: The first choice for value added vegetable oil solutions 47 Capital Market Day, October 3, 2006