Aak Ab · OMXSTO:AAK
Aak Ab — Investor Day (October 2006)
46 slides from Aak Ab's investor day presentation, Oct 3, 2006
Slide 1: Financials
Financials Anders Byström CFO
Slide 2: Content
Content • Comments on the first 6 months 2006 • Review of trends, seasonal patterns etc based on historic information. 2 Capital Market Day, October 3, 2006
Slide 3: Content
Content • Comments on the first 6 months 2006 • Review of trends, seasonal patterns etc based on historic information. 3 Capital Market Day, October 3, 2006
Slide 4: Financial Highlights 1st six months 2006
Financial Highlights 1st six months 2006 • Sales totalled SEK 5 396 (5 252) • Operating Profit excl IAS 39 and non recurring items of 107 amounted to 220 (236) MSEK • During 2005 subcontracting in CCF of SEK 60 million full year and SEK 30 million first six months • Operating Profit incl IAS 39 and
Slide 5: Specification of non recurring items 2006
Specification of non recurring items 2006 6 months 2006 Total Termination of distributors 72 Extra admin costs 12 Personnel reduction & integration costs 23 Total 6 months non recurring 107 Q 2 2006 Total Termination of distributors 72 Extra admin costs 7 Personnel reduction & integration costs 23 2
Slide 6: Underlying operating profitability
"Underlying operating profitability " First six months 2006 2005 Operating profit per bullit point 220 236 (excl IAS 39 and non recur.) Adjust for 2005 subcontracting in CCF discontinued at end of 2005 -30 "Underlying operating profitability" 220 206 Second quarter 2006 2005 Operating profit per bul
Slide 7: 2006 – Remember "Make the change"
2006 – Remember ”Make the change” • Lot’s of hazzles • Non recurring costs • Restructuring of • Plants • Distributor channels • Production optimization • Lack of shea nuts 7 Capital Market Day, October 3, 2006
Slide 8: Content
Content • Comments on the first 6 months 2006 • Review of trends, seasonal patterns etc based on historic information 8 Capital Market Day, October 3, 2006
Slide 9: Historic Financial Trends are based on "Pro forma" external financial statements
Historic Financial Trends are based on ”Pro forma” external financial statements • Simply adding • Karlshamn • Aarhus United Disregarding for example depreciation of Purchase Price Allocation ( 20 MSEK annually) 9 Capital Market Day, October 3, 2006
Slide 10: Content
Content • Gross contribution/ton • Commodity/specialty • Revenue/cost structure • Seasonality • CAPEX/ depreciation • Dividend policy 10 Capital Market Day, October 3, 2006
Slide 11: Source Annual Report 2005
Source Annual Report 2005 11 Capital Market Day, October 3, 2006
Slide 12: Impact of changing raw material prices
Impact of changing raw material prices • An illustration of the impact on • Sales growth • EBIT % 12 Capital Market Day, October 3, 2006
Slide 13: Illustration of the impact of significant changes in raw material prices - the base 2005
Illustration of the impact of significant changes in rawmaterial prices - the base 2005 pro forma Actual 2005 MSEK Sales 10 573 Raw material 7 672 Gross Contríbution 2 901 EBIT 530 Sales Growth 9% EBIT % sales 5% Source Financial reports 13 Capital Market Day, October 3, 2006
Slide 14: Impact of raw material price increase by 19%
Illustration of the impact of significant changes in rawmaterial prices - 2005 if raw material price increase by 19 % Change in raw Actual 2005 material cost MSEK 19% Sales 10 573 12 031 Raw material 7 672 9 130 Gross Contríbution 2 901 2 901 EBIT 530 530 Sales Growth 9% 24% EBIT % sales 5% 4% Sourc
Slide 15: Impact of raw material price decrease by 19%
Illustration of the impact of significant changes in rawmaterial prices - 2005 if raw material price decrease by 19 % Change in raw Change in raw Actual 2005 material cost material cost MSEK 19% -19% Sales 10 573 12 031 9 115 Raw material 7 672 9 130 6 214 Gross Contríbution 2 901 2 901 2 901 EBIT 5
Slide 16: Conclusion
Conclusion • For AAK focus analysis of •Contribution margin per ton •Absolute improvement in EBIT Since the trends for sales growth and EBIT % is ”distorted” by significant changes in rawmaterial prices. 16 Capital Market Day, October 3, 2006
Slide 17: Bulk and Speciality by business area
Bulk and Speciality by business area Unit margin* High SEK/kg 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 Value added * Unit 17 margin = Gross contribution / volume. Capital Market
Slide 18: Content
Content • Gross contribution/ton • Commodity/specialty • Revenue/cost structure • Seasonality • CAPEX/ depreciation • Dividend policy 18 Capital Market Day, October 3, 2006
Slide 19: Growth
Growth Bulk oils Speciality Volumes AAK The market Margin 1 10 30 >100 index 19 Capital Market Day, October 3, 2006
Slide 20: Actual gross contribution per ton, AAK 2000–2005
Actual gross contribution per ton AAK 2000 – 2005 GrossPro forma Contribution per tonne 2500 2000 1500 SEK/tonne 1000 500 0 2000 2001 2002 2003 2004 2005 Karlshamn Aarhus Total Source Financial reports 20 Capital Market Day, October 3, 2006
Slide 21: Two major forces affecting gross contribution per ton
Two major forces affecting gross contribution per ton Gross Contribution 2000-2005 Cost improvements and increased share of specialties SEK/tonne Price pressure on bulk oils 2000 2004 2005 Actual Source Financial reports 21 Capital Market Day, October 3, 2006
Slide 22: Two major forces affecting gross contribution per ton
Two major forces affecting gross contribution per ton Gross Contribution 2000-2005 Forces for increasing margins: • Continued improved share of specialities • Continued cost reduction programs Cost improvements and increased share of specialties SEK/tonne Price pressure on bulk oils Forces for decre
Slide 23: 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 23 Capital Market Day, October 3, 2006
Slide 24: Improvements in gross contribution per ton come in steps
• This does not mean that we will be able to show improvements in gross contribution per ton every consecutive quarters because specialties grow by steps and plateaus 24 Capital Market Day, October 3, 2006
Slide 25: 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 % High-growth niches Cocoa Butter Equiva
Slide 26: Content
Content • Gross contribution/ton • Commodity/specialty • Revenue/cost structure • Seasonality • CAPEX/ depreciation • Dividend policy 26 Capital Market Day, October 3, 2006
Slide 27: Sales by region
Sales by region Sweden; 10% Other countries; 14% Denmark; 4% The rest of the Nordic ; 6% America; 21% Western Europé; 32% Central and Eastern Europé; 13% 27 Capital Market Day, October 3, 2006
Slide 28: Our vegetable raw-material base
Our vegetable raw-material base More than 90 % is traded over a commodity exchange • Rapeseed • Palm • Soya Rapeseed • Shea Sunflower Olive • Maize • Sunflower Soya Shea • Olive Palm 28 Capital Market Day, October 3, 2006
Slide 29: AAK's cost structure
AAK’s cost structure 1% 0% 3% 10% Raw material and consumables 11% Other external costs ( i.e. energy etc) Salaries & wages Depreciation Other costs Financial net 76% 29 Capital Market Day, October 3, 2006
Slide 30: AAK's cost structure
AAK’s cost structure 1% 0% 3% Commodity trading 10% Process and yield mix improvements Raw material and consumables 11% Other external costs ( i.e. energy etc) Salaries & wages Depreciation Other costs Financial net 76% Synergies, 175 MSEK is 8 % of the ”base” of 2,0 billion SEK; cost improvements 3
Slide 31: AAK hedges
AAK hedges • All sales contracts (currencies and rawmaterial) • All Raw material prices that can be hedge on the commodity market (currency and raw material) 31 Capital Market Day, October 3, 2006
Slide 32: Sensitivity Analysis
Sensitivity Analysis 32 Capital Market Day, October 3, 2006
Slide 33: Content
Content • Gross contribution/ton • Commodity/specialty • Revenue/cost structure • Seasonality • CAPEX/ depreciation • Dividend policy • Financial goals 33 Capital Market Day, October 3, 2006
Slide 34: EBIT average by quarter 2000-2005
EBIT average by quarter 2000-2005 140 120 100 80 MSEK 60 40 20 0 Q1 Q2 Q3 Q4 Karlshamns Aarhus Totalt Source Financial reports 34 Capital Market Day, October 3, 2006
Slide 35: Normally a strong third quarter but remember lack of sheanuts
Normally a strong third quarter but remember lack of sheanuts EBIT average by quarter 2000-2005 140 120 100 80 MSEK 60 40 20 0 Q1 Q2 Q3 Q4 Karlshamns Aarhus Totalt Source Financial reports 35 Capital Market Day, October 3, 2006
Slide 36: Average Cash Flow per quarter 2003-2005
Average Cash Flow per quarter 2003-2005 350 300 250 200 150 MSEK 100 50 0 Q1 Q2 Q3 Q4 -50 -100 -150 Cash flow Karlshamns Cash flow Åarhus Cashflow total Source Financial reports 36 Capital Market Day, October 3, 2006
Slide 37: Average Cash Flow per quarter 2003-2005
Included some one offs Average Cash Flow per quarter 2003-2005 in AU Q 4 2004 350 300 Clear seasonal pattern 250 -low cash flow Q 1 200 -high cash flow Q 4 150 MSEK 100 50 0 Q1 Q2 Q3 Q4 -50 -100 -150 Cash flow Karlshamns Cash flow Åarhus Cashflow total Source Financial reports 37 Capital Market Day,
Slide 38: Content
Content • Gross contribution/ton • Commodity/specialty • Revenue/cost structure • Seasonality • CAPEX/ depreciation • Dividend policy 38 Capital Market Day, October 3, 2006
Slide 39: Investments and depreciations
Investments and depreciations 600 500 400 MSEK 300 200 100 0 2000 2001 2002 2003 2004 2005 Investments Depreciations Source Financial reports 39 Capital Market Day, October 3, 2006
Slide 40: Investments and depreciations
Investments and depreciations 600 600 Strategic investments for example 500 Strategic investment in bakery In extraction and packaging line in 500 in the UK and US in 2002 DK, energy technology in SE 400 400 MSEK MSEK 300 300 200 200 100 100 0 0 2000 2001 2002 2003 2004 2005 Investments Depreciation
Slide 41: Content
Content • Gross contribution/ton • Commodity/specialty • Revenue/cost structure • Seasonality • CAPEX/ depreciation • Dividend policy 41 Capital Market Day, October 3, 2006
Slide 42: Dividend Policy
Dividend Policy • Payout ratio of 30 – 50 % of the consolidated profit for the year after tax. • Considerations to earnings trend, financial position and future development 42 Capital Market Day, October 3, 2006
Slide 43: Condensed Balance Sheet
Condensed Balance Sheet 2006 2005 2006 2005 June 30 December 31 June 30 December 31 Non-current assets 3 487 3 463 Equity 3 407 3 504 Inventory 1 406 1 429 Minority 30 50 Receivables 1 708 1 732 Long-term debt 1 601 1 401 Cash 211 211 Current liabilities 1 774 1 880 Total Assets 6 812 6 835 Total Li
Slide 44: Capital Structure as of June 30, 2006
Capital Structure as of June 30, 2006 • Shareholders equity 3 407 MSEK • Net liability 1 842 MSEK • Equity/ Assets ratio 50 % 44 Capital Market Day, October 3, 2006
Slide 45: Dividend at the extraordinary shareholders meeting in November 10, 2006
Dividend at the extraordinary shareholders meeting in November 10, 2006 • Ordinary dividend 4 SEK per share • Extraordinary dividend 25 SEK per share • Company ”overcapitalized”,totally 1,2 billion SEK paid back to the shareholders • After the dividend Equity/total assets > 30 %. 45 Capital Market D
Slide 46: CFO Summary
CFO Summary • Strong balance sheet • 2006 a year with non-recurring items and restructuring, lack of nuts and ”hazzels” • Contribution margin per ton should improve in the future • Commodity price errosion has flattened out • Specialities started to grow a couple of years ago and will continue • Fur