Slide 1: Annual General Meeting 2007
Annual General Meeting 2007 Jerker Hartwall President and CEO “AAK – a global company” 1 Annual General Meeting 2007
Slide 2: AAK is the world-leading producer of vegetable speciality fats
AAK is the world-leading producer of vegetable speciality fats 2 Annual General Meeting 2007
Slide 3: This is AAK
This is AAK • A merger between Aarhus United and Karlshamns • Total sales: SEK 11 billion • 2,500 employees • Production plants in seven countries • New head office in Malmö • The AAK share is listed on the Stockholm Stock Exchange, Nordic list, Mid Cap, since October 2006 3 Annual General Meeting 2
Slide 4: AAK around the world
AAK around the world Production plants Sales offices AAK Sweden AAK Norway AAK Poland AAK Czech Republic AAK Denmark AAK Food AAK Netherlands AAK Croatia AAK UK AAK Russia AAK Canada AAK Ukraine AAK USA AAK Hong Kong AAK Mexico AAK Latin America Sao Paolo, Brazil AAK Ivory Coast AAK Benin AAK Austra
Slide 5: Our raw material base
Our raw material base • Rapeseed • Palm Rapeseed • Soya Olive Sunflower Soya • Shea Shea Palm • Sunflower • Olive Soya 5 Annual General Meeting 2007
Slide 6: AAKs business area
AAKs business area Regional Global Food Regional Chocolate & Ingredients Confectionery Fats Technical Products & - Speciality Lipids for Care Feed - Bulk - Speciality - Speciality - Bulk Total sales Total sales Total sales 6,200 MSEK 3,400 MSEK 1,100 MSEK - DFA - Cocoa Butter - Fatty acids - Bakery
Slide 7: Sales per geographic area
Sales per geographic area Other 5% 22% Americas 37% Nordic Nordic W.Europe CEE/Russia Americas Other 11% CEE/Russia Europe represent approx. 75 % of 25% sales West-Europe 7 Annual General Meeting 2007
Slide 8: Sales per business area
Sales per business area Technical Products & Feed 9% Chocolate & Confectionery Fats 31% CCF/LfC FI Oils & Fats TPF stands for 90 % of our total Food Ingredients sales 60% 8 Annual General Meeting 2007
Slide 9: AAKs Market positions
AAKs Market positions Nordic UK/West CEE / North MX/Latin Asia/ Europe Russia America America Africa Chocolate & Confectionery Fats Lipids for Care Food Ingredients Technical Products & Feed Strong positions Normal positions 9 Annual General Meeting 2007
Slide 10: Global industry driving forces
Global industry driving forces • Healthy products • Food safety (risk-free products) Changes are • Convenience products positive for AAK • Cost pressure • Bio fuel 10 Annual General Meeting 2007
Slide 11: Price development
Price development Palm Rapeseed - Soya 2002 2003 2004 2005 2006 2007 11 Annual General Meeting 2007
Slide 12: AAK is the world-leading producer of speciality fats
AAK is the world-leading producer of speciality fats Bulk oils for: Speciality fats for: - Margarine - Dairy Fat Alternatives - Deep frying - Cosmetic - Mayonnaise - Chocolate/fillings - High technology level To lowest price - Application know-how in corporation with customer 12 Annual General Meeti
Slide 13: Successful development of speciality fats for
Successful development of speciality fats for • Vegetable cheese fats • Lipids for cosmetics • Trans free solutions for food applications • Trans free solutions for chocolate • Cholesterol lowering ingredients • Baby food 13 Annual General Meeting 2007
Slide 14: Why AAK? Merger Rationale
Why AAK? Merger Rationale 14 Annual General Meeting 2007
Slide 15: Critical mass
Critical mass • Stronger market position • Faster and global deployment of innovations • A wider base of know-how and expertise • Financial strength for organic growth and acquisitions • A more attractive company for employees, customers and investors 15 Annual General Meeting 2007
Slide 16: Complementing each other
Complementing each other Aarhus United Karlshamns Chocolate fats Cosmetics Dairy Fat Alternatives FoodService Geographically West/South North/East 16 Annual General Meeting 2007
Slide 17: Strategic merger reasons
Strategic merger reasons • Faster growth • Lower cost level • Lower investment level 17 Annual General Meeting 2007
Slide 18: The merger year
The merger year 2006 18 Annual General Meeting 2007
Slide 19: 2006 - The merger year
2006 - The merger year • We are merged, • we have carried out large changes, • we have taken big strategic decisions, • we are back on Stockholm's Stock Exchange • and we have created the base for an exiting future! 19 Annual General Meeting 2007
Slide 20: Cost synergies
Cost synergies • First communication 2006 - 150 MSEK 2008 • New communication, Q2 2006 - 175 MSEK 2008 • Costs related to the 175 MSEK in synergies amounts to approximately 248 MSEK 20 Annual General Meeting 2007
Slide 21: Cost synergies 2006-2008
Cost synergies 2006 -2008 175 MSEK 10 % 50 % 20 % Sourcing Production Sales Trading Fa st Ti m Fa st e-c on 20 % s um ing Administration Fa st 21 Annual General Meeting 2007
Slide 22: Further rationalizations
Further rationalizations 22 Annual General Meeting 2007
Slide 23: Specialization of the Swedish and Danish sites
Specialization of the Swedish and Danish sites. • Savings of approximately SEK 100 Million. • Full effect late 2009. • Non-recurring cost of SEK 150 Million - thereof SEK 50 million without cash flow effects. 23 Annual General Meeting 2007
Slide 24: Total synergies and non-recurring costs
Total synergies and non-recurring costs First phase synergies 175 MSEK Second phase rationalization 100 MSEK ……………………………………………………………… Total rationalization 275 MSEK First phase costs 248 MSEK Second phase costs 150 MSEK ……………………………………………………………… Total non-recurring costs 398 MSEK 24 Annual General Me
Slide 25: Total synergies and non-recurring costs
Total synergies and non-recurring costs First phase synergies 175 MSEK Second phase rationalization 100 MSEK ……………………………………………………………… Total rationalization 275 MSEK First phase costs 248 MSEK Second phase costs 150 MSEK ……………………………………………………………… Total non-recurring costs 398 MSEK The total cost savin
Slide 26: Our strategy
Our strategy 26 Annual General Meeting 2007
Slide 27: 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 • AarhusKarlshamn • Nestlé, Kraft, • Wal-Mart Plantations • Loders Croklaan, Unilever • Tesco Berhad Fuji Oil • Mars • Metro •
Slide 28: Strategy: Global niche strategy
Strategy Bulk products Speciality solutions Speciality ADM Loders AAK Fuji Bunge AAK Others Cargill Global niche strategy 28 Annual General Meeting 2007
Slide 29: Growth – strategy
Growth – strategy Bulk oils Speciality Volumes AAK The market 1 1 10 30 >100 29 Annual General Meeting 2007
Slide 30: How to grow when markets don't?
How to growth when markets don't? New solutions replacing the old ones! Market size Double-digit growth niches Cocoa Butter Equivalents Trans-free solutions Dairy Fat Alternatives Tid 30 Annual General Meeting 2007
Slide 31: More speciality solutions 2001
More speciality solutions 2001 Cosmetic fats Bulk oils Raw materials Chocolate fats 31 Annual General Meeting 2007
Slide 32: More speciality solutions 2005
More speciality solutions 2005 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 32 Annual General Meeting 2007
Slide 33: More speciality solutions 2006
More speciality solutions 2006 150 MSEK investment Cosmetic Acqusition fats ”Wet foods” Branded Chocolate Division in Long Life fats Akocheese Lion Food Frying oils FoodService Bulk Dairy Fat Sauces oils Alternatives Marinades Raw materials Low saturated Baby foods and low trans Nutritional products
Slide 34: AAK´s business areas
AAK´s business areas 34 Annual General Meeting 2007
Slide 35: Chocolate & Confectionery Fats
Chocolate & Confectionery Fats • World leader within speciality fats for the chocolate and confectionery industry Total sales 3,400 MSEK • Driving forces: • Cost • Health • Success factors: • Global market coverage • Product development • Productivity 35 Annual General Meeting 2007
Slide 36: Global consumption and growth rates of chocolate confectionery products
Global consumption and growth rates of chocolate confectionery products 3000 2500 1000 metric tonnes 2000 1500 1000 500 0 EU25 E Europe N Am L Am Asia Af/ME 1.4% 3.6% 1.6% 3.2% 4.4% 6.0% 36 Annual General Meeting 2007
Slide 37: Chocolate & Confectionery Fats - customers
Chocolate & Confectionery Fats - customers • Customers in global market • 60 % represented by “the big 6” •Mars, Nestlé, Cadbury, Kraft, Ferrero, Hershey • 20 % represented by the regional leaders • Cloetta, Toms etc 37 Annual General Meeting 2007
Slide 38: Cocoa Butter Alternatives
Cocoa Butter Alternatives Chocolate Fillings Compounds 38 Annual General Meeting 2007
Slide 39: Chocolate & Confectionery Fats – product portfolio
Chocolate & Confectionery Fats – product portfolio Cocoa Price butter CBE CBR CBS a ts g f il lin F Functionality 39 Annual General Meeting 2007
Slide 40: The CBE-market is the main AAK growth driver
The CBE-market is the main AAK growth driver 300 CBE volume - index 250 200 Index 150 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: CBE market data is based on AAK intelligence, no official sources exist 40 Annual General Meeting 2007
Slide 41: Lipids for Care
Lipids for Care • Global leader within speciality fats for the cosmetic industry • Driving forces • Vegetable raw materials • Health aspects • Success factors • Global market coverage • Product development 41 Annual General Meeting 2007
Slide 42: Lipids for Cares customers
Lipids for Cares customers • Customers in global market • 50 % represented by “the big 10”: L’Oreal, P&G, Unilever, Estée Lauder … • 30 % represented by the regional leaders 42 Annual General Meeting 2007
Slide 43: New shea based cosmetic products
New shea based cosmetic products 3000 2555 2500 New products 2000 1861 Number of New Products 1500 1239 1000 948 842 500 434 222 0 2000 2001 2002 2003 2004 2005 2006 2000 2001 2002 2003 2004 2005 2006 43 Annual General Meeting 2007
Slide 44: Chocolate & Confectionery Fats and Lipids for Care synergies
Chocolate & Confectionery Fats and Lipids for Care synergies • Shea as raw material • Process technology • Global market coverage 44 Annual General Meeting 2007
Slide 45: Shea
Shea 45 Annual General Meeting 2007
Slide 46: Shea and Cocoa in West-Africa
Shea and Cocoa in West-Africa 46 Annual General Meeting 2007
Slide 47: Shea areas in West-Africa
Shea areas in West-Africa Mali Burkina Faso Benin Nigeria Ivory Coast Togo Ghana 47 Annual General Meeting 2007
Slide 48: Shea tree
Shea tree 48 Annual General Meeting 2007
Slide 49: Shea fruits
Shea fruits 49 Annual General Meeting 2007
Slide 50: Shea market
Shea market 50 Annual General Meeting 2007
Slide 51: Large shea potential in West-African wild crop
Large shea potential in West-African wild crop Approx. 1,800,000 mt crop (wild shea) Approx. 600,000 mt collected by the inhabitants Approx. 200,000 mt exported 51 Annual General Meeting 2007
Slide 52: AAKs logistic chain of shea from tree to factory
AAKs logistic chain of shea from tree to factory Shea tree The inhabitants Village work Market place AAK AAK 52 Annual General Meeting 2007
Slide 53: Food Ingredients
Food Ingredients • Wide range from bulk oils to advanced products with tailored properties • Total sales 6,200 MSEK • Driving forces: • Cost • Health aspects • Success factors: • Regional market coverage • Product development • Productivity 53 Annual General Meeting 2007
Slide 54: Food Ingredients – Product portfolio
Food Ingredients – Product portfolio Bulk products • Standard oils like cooking oils Speciality products • Dairy Fat Alternatives (DFA) • Cholesterol lowering • Nutritionals for Baby food 54 Annual General Meeting 2007
Slide 55: Strategy - driving product-mix towards speciality products
Strategy - driving product-mix towards speciality products Ebit Bulk oils Value-added solutions Dairy Fat Alternatives (DFA) Bakery fats FoodService 2000 2006 55 Annual General Meeting 2007
Slide 56: Food Ingredients – Dairy Fats Alternatives
Food Ingredients – Dairy Fats Alternatives Replace milk fat in dairy application: - Costs - Health - Functionality Still a low proportion veg oils in dairy applications, <10% Leading player 56 Annual General Meeting 2007
Slide 57: Technical Products & Feed
Technical Products & Feed • Leading supplier of technical products and feed of raw materials to North Europe • Total sales 1,100 MSEK • Driving forces • Cost • Success factors • Specialization • Process development 57 Annual General Meeting 2007
Slide 58: Technical Products & Feed
Technical Products & Feed Important contributor to Rapeseed site’s overall cost position Fatty Feed acids material Oils & Fats Binol 58 Annual General Meeting 2007
Slide 59: Feed material
Feed material Market position • Market leader in the Nordic countries Success factors • Guaranteed free from salmonella ExPro™ Process • Nutritional value 59 Annual General Meeting 2007
Slide 60: Financials 2006
Financials 2006 60 Annual General Meeting 2007
Slide 61: Financials 2006
Financials 2006 • Total sales +4 % 10,929 MSEK • Operating profit 455 (470) MSEK • Dividend 29 SEK per shares • Equity ratio 33 % 61 Annual General Meeting 2007
Slide 62: Financials First quarter 2007
Financials First quarter 2007 62 Annual General Meeting 2007
Slide 63: First quarter 2007
First quarter 2007 • Net sales +6.2 %, SEK 2.971 million • Operating profit +36 % , SEK 162 million. 63 Annual General Meeting 2007
Slide 64: Operating profit first quarter 2007 by business area
Operating profit first quarter 2007 by business area 90 97 80 72 70 60 55 50 45 2007 40 2006 30 17 20 12 10 0 CCF/LFC FI TPF 64 Annual General Meeting 2007
Slide 65: Business Areas – Gross Contribution per tonne
Business Areas – Gross Contribution per tonne +9,9 %, +5,3 % +2,7 % 3.73 to SEK 4.10/kg 1.51 to SEK 1.59/kg 0.75 to SEK 0.77/kg Chocolate & Food Ingredients Technical Products Confectionery Fats & Feed 65 Annual General Meeting 2007
Slide 66: First quarter 2007
First quarter 2007 Positive CBE-development AAK Synergy impact Food Ingredients stable – tough competition Technical Products & Feed can see effects of rationalisation program Additional rationalisation of approx. 100 MSEK. Full implementation late 2009 66 Annual General Meeting 2007
Slide 67: Future
Future 67 Annual General Meeting 2007
Slide 68: Roadmap to growth in the coming years
Roadmap to growth in the coming years E , CB Ebit t s fa FA e D t la , es c o iv h o at C n er lt e A ic od ic rv s t ry Fa t et fo Se ec pr e w ke sm ry y od oj Ba N ab ai Co Fo D B Applications 68 Annual General Meeting 2007
Slide 69: Outlook 2007
Outlook 2007 We expect a clear EBIT-improvement, primarily due to the cost synergies resulting from the merger 69 Annual General Meeting 2007
Slide 70: We leave the merger year behind us
We leave the merger year behind us We develop the speciality strategy We get more and more global 70 Annual General Meeting 2007
Slide 71: An exciting future
- An exciting future - 71 Annual General Meeting 2007