Aak Ab · OMXSTO:AAK
Aak Ab — Investor Day (November 2009)
72 slides from Aak Ab's investor day presentation, Nov 11, 2009
Slide 1: Capital Market Day 2009
Jerker Hartwall Anders Byström Capital Market Day 2009
Slide 2: AAK is the world leading producer of vegetable speciality fats
AAK is the world leading producer of vegetable speciality fats Capital Market day 2009 2
Slide 3: AAK around the world
AAK around the world Production plants AAK Sweden AAK Norway AAK Poland Offices AAK Czech Republic AAK Denmark AAK UK AAK Croatia AAK Netherlands AAK Russia AAK Canada AAK Ukraine AAK US AAK Hong Kong AAK Mexico AAK Brazil AAK Ivory Coast AAK Benin AAK Australia AAK Latin America AAK Asia-Pacific AA
Slide 4: Our vegetable raw material base
Our vegetable raw material base Rapeseed Palm Rapeseed Soya Soya Olive Sunflower Shea Shea Sunflower Palm Olive Soya Capital Market day 2009 4
Slide 5: World production
World production Milliontonnes Million tonnes Capital Market day 2009 5
Slide 6: 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 7: Financial summary
Financial summary Focus the analysis on: Operating profit rolling 12 months 900 • Gross Margin per kilo or tonne 800 851 817 801 777 • Improvement in EBIT 700 698 717 750 600 653 • EBIT per kilo or tonne SEK Million 583 500 549 498 455 • Return on Net Operating Assets 400 300 • Net Debt / EBITDA 200
Slide 8: Do not look at:
Do not look at: Top line growth or EBIT margin Capital Market day 2009 8
Slide 9: CEO Summary – Q3 2009
CEO Summary – Q3 2009 Record high cash flow in the third quarter materialised as expected and has further strengthened the balance sheet. Food Ingredients continued to improve operating profit by 19 percent. Chocolate & Confectionery Fats continued to be negatively affected by the lower chocolate co
Slide 10: Highlight Q3 2009
Highlight Q3 2009 Net sales down at SEK 3,828 million (4,693) due to lower raw material prices. The operating result was SEK 235 million (261). Cash flow from operating activities before investments amounted to SEK 858 million (-48) an improvement by SEK 906 million. All financial information on thi
Slide 11: Highlight first nine months 2009
Highlight first nine months 2009 Net sales down at SEK 12,096 million (12,443) due to lower raw material prices. The operating result was SEK 538 million (639). Strong cash flow from operating activities before investments amounted to SEK 1,515 million (-362), an improvement by SEK 1,877 million. Al
Slide 12: Analysing AarhusKarlshamn Group
Analysing AarhusKarlshamn Group Focus the analysis on: • Gross Margin per kilo or tonne • Improvement in EBIT • EBIT per kilo or tonne • Return on Net Assets • Net Debt / EBITDA Due to the sales growth respectively EBIT in percent are affected by significant changes in raw material prices. Do not lo
Slide 13: Impact of significant changes in raw material price
Impact of significant changes in raw material price SEK million 2008 Sales 17 200 Raw materials 13 560 Gross Margin 3 640 Operating profit 851 Sales growth, % 28% Operating profit in % of Sales 5% Capital Market day 2009 13
Slide 14: Impact of significant changes in raw material price
Impact of significant changes in raw material price Raw material SEK million 2008 price -25% Sales 17 200 12 900 Raw materials 13 560 9 260 Gross Margin 3 640 3 640 Operating profit 851 851 Sales growth, % 28% -25% Operating profit in % of Sales 5% 7% Capital Market day 2009 14
Slide 15: Operating profit rolling 12 months
Operating profit rolling 12 months 900 800 851 817 801 777 700 750 698 717 600 653 Million 583 SEKmillion 500 549 498 400 455 SEK 300 200 100 0 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 All financial information on this page is exclusive non recurring items and IAS 39 C
Slide 16: Operating profit rolling 12 months
Operating profit rolling 12 months Excl final 900 insurance 800 851 compensation 817 801 777 700 750 698 717 600 653 Million 583 SEKmillion 500 549 498 400 455 SEK 300 200 100 0 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 All financial information on this page is exclusiv
Slide 17: Insurance
Insurance To date, AAK has received payments for business interruption in the amount of approximately SEK 421 million. Our ambition is to have the final insurance settlement before year-end 2009. Capital Market day 2009 17
Slide 18: AAK’s business areas – Rolling 12 months
AAK’s business areas – Rolling 12 months Regional Global Regional Food Chocolate & Ingredients Confectionery Fats Technical Products & - Speciality Lipids for Care Feed - Bulk - Speciality - Speciality - Bulk Total sales Total sales Total sales 10,350 MSEK 4,860 MSEK 1,320 MSEK EBIT 370 MSEK EBIT 38
Slide 19: Business Areas – Gross Contribution per kilo
Business Areas – Gross Contribution per kilo Chocolate & Food Ingredients Technical Products Confectionery Fats & Feed All three business areas have improved gross contribution per kilo. The improvement in Chocolate and Confectionery Fats and Food Ingredients was largely due to positive currency imp
Slide 20: Chocolate & Confectionery Fats
Chocolate & Confectionery Fats Operating profit Q3 July - September 180 160 Operating profit declined 140 by SEK 46 million to SEK 120 118 million. SEK Million 100 80 60 Continued to be negatively 40 affected by lower 20 chocolate consumption 0 following the recession. Q107 Q207 Q307 Q407 Q108 Q208
Slide 21: Chocolate & Confectionery Fats - EBIT per tonne
Chocolate & Confectionery Fats - EBIT per tonne, SEK, rolling 12 months Excl final 2 000 1 811 insurance 1 742 1 800 1 693 compensation 1 600 1 600 1 488 1 514 1 363 1 400 1 236 1 200 980 1 000 800 800 660 600 400 200 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007 2007 2007 2007 2008 2008 2008 2008 2009 20
Slide 22: Food Ingredients
Food Ingredients Operating profit Q3 July - September 120 100 The operating profit continued to improve in this quarter by 80 19 percent to SEK 113 million. SEK Million 60 Improved margins following 40 the larger proportion of high- 20 value products and positive currency impact. 0 Q107 Q207 Q307 Q4
Slide 23: Food Ingredients EBIT per tonne
Food Ingredients EBIT per tonne, SEK, rolling 12 months 450 405 378 400 362 335 339 350 308 312 317 311 312 314 300 250 200 150 100 50 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009 Capital Market day 2009 23
Slide 24: Technical Products & Feed
Technical Products & Feed Operating profit Q3 July - September 25 Operating profit improved by 20 SEK 4 million or 25 percent. SEK Million 15 The Feed business developed 10 strongly. 5 0 Q107 Q207 Q307 Q407 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Capital Market day 2009 24
Slide 25: Condensed balance sheet
Condensed balance sheet SEK million 30 Sep 09 31 Dec 08 Difference Sept 09 vs Dec 08 Total fixed assets 3 870 4 235 -365 Inventories 2 255 3 098 -843 Current receivables 2 329 3 640 -1 311 Cash and cash equiv. 193 105 +88 Total current assets 4 777 6 843 -2 066 TOTAL ASSETS 8 647 11 078 -2 431 Equit
Slide 26: Summary Cash flow statement for the Group
Summary Cash flow statement for the Group SEK Million Q3 YTD Q3 YTD 2009 2009 2008 2008 Cash flow from operating activities before changes in WC 269 717 235 648 Change in working capital 589 798 -283 -1 010 Cash flow from operating activities 858 1 515 -48 -362 Cash flow from investing activities -5
Slide 27: Raw material price development
Raw material price development Raw material prices - palm-, rapeseed- and soyabean oil 12000 Rapeseed oil Palm oil Soyabean oil 10000 8000 SEK/ton 6000 4000 2000 0 2002 2003 2004 2005 2006 2007 2008 2009 Capital Market day 2009 27
Slide 28: Net debt
Net debt KSEK NET DEBT 6 000 5 198 5 112 5 231 4 879 4 807 5 000 4 634 4 279 4 000 Dividend 3 804 3 791 1,200 MSEK 3 559 3 036 3 136 3 000 2 000 1 842 1 814 1 000 0 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Capital Market day 2009 28
Slide 29: Financial position
Financial position The Group’s net borrowings as at 30 September 2009 amounted to SEK 3,791 million (SEK 4,807 million on 30 June 2009). Compared to June 30 has net borrowings declined by SEK 1,017 million. The Group has total credit facilities of SEK 6,155 million, of which SEK 5,790 million are co
Slide 30: Cash flow from ongoing business, rolling 12 months
Cash flow from ongoing business (before investments), rolling 12 months 2000 1750 1500 1250 1000 SEK Million 750 500 250 0 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 -250 -500 -750 -1000 Record high positive cash flow in the third quarter materialised as expected and has
Slide 31: Investments and depreciation per year
Investments and depreciation per year 800 Examples of strategic investments the last 700 118 years: 600 595 CBE factory in Denmark 500 • 37 485 Baby food fat factory in 400 464 375 Sweden 336 300 307 306 299 396 Acquisition of Croda 200 Food Service in UK 201 100 0 2005 2006 2007 2008 2009 9 months
Slide 32: Major rationalisation program in the Nordic region
Major rationalisation program in the Nordic region Aarhus, Denmark Karlshamn, Sweden Capital Market day 2009 32
Slide 33: Rationalisation project
Rationalisation project Volumes Aarhus Karlshamn CBE Multi-oil focus Volumes factory Volumes Zaandijk Volumes Niche Capital Market day 2009 33
Slide 34: AAK’s rationalisation project
AAK’s rationalisation project First wave of synergies + Second wave + Third wave SEK 200 million 2005 – 2007 Without any expected additional non-recurring cost SEK 100 million 2007 – 2010 Additional SEK 200 million 2010 – 2011 = Total savings SEK 500 million, 2005 – 2011 Capital Market day 2009 34
Slide 35: Chocolate & Confectionery Fats
Chocolate & Confectionery Fats Capital Market day 2009 35
Slide 36: Chocolate market trends
Chocolate market trends 6-7 global players with 60% market share • Mars, Nestlé, Cadbury, Kraft, Ferrero, Hershey Outsourcing to contract manufacturing from the brand- owners. Private label retailing growing and squeezing branded supermarkets. Sustainable raw materials. Cost savings in focus. Capita
Slide 37: The CBE market growth
The CBE market growth High Medium Low Source: CBE market data is based on AAK’s internal analysis as there are no official data available. Capital Market day 2009 37
Slide 38: Chocolate consumption by geography
Chocolate consumption by geography New CBE potential Capital Market day 2009 38
Slide 39: CBE vs Cocoa butter
CBE vs Cocoa butter Cocoa Butter Equivalents Cocoa butter Cheaper More expensive Consistent quality Variation in quality ------------------------------------------------------------------------------------ Cocoa Butter Equivalents = Better and cheaper raw material Capital Market day 2009 39
Slide 40: Strong CBE-drivers
Strong CBE-drivers Has production of cocoa reached its peak?: …Côte d'Ivoire, Ghana and Indonesia (70 % of world production), farmers have been diversifying into other crops – with much better income …. less susceptible to disease SOURCE: EUROMONITOR 18 SEP 2009 The financial crisis Capital Market d
Slide 41: CBE Margin Elements
CBE Margin Elements Cocoa Butter price Raw material costs and crop CBE Margin Capacity utilization in the industry Capital Market day 2009 41
Slide 42: CBE Global Coverage
CBE Global Coverage Production plant AAK Sweden Office AAK Denmark AAK Russia AAK US AAK Mexico AAK West Africa AAK Latin America AAK Malaysia Capital Market day 2009 42
Slide 43: We are not only CBE
We are not only CBE Confectionery filling fat DELIAIR™ NH nominated for an FI Award 2009 DELIAIR™ unique product for aerated, non-hydrogenated smooth fillings. Capital Market day 2009 43
Slide 44: The filling fat - DELIAIR - reduces total fat content in fillings
The filling fat - DELIAIR - reduces total fat content in fillings Gives 60 percent more volumes than a filling based on standard fats. Reduced total fat content with maintained density. Whipped Creamy melting properties. standard filling fat Whipped DELIAIR™ NH Capital Market day 2009 44
Slide 45: High end filling fats market growth
High end filling fats market growth 2005 2006 2007 2008 2009 Capital Market day 2009 45
Slide 46: AAK - Shea and CSR
AAK - Shea and CSR In collaboration with United Nations Development Programme (UNDP), we are working to improve women's living situation. Through multi-platform facilitates everyday work. Through Micro credit provider's ability to develop the villages. More direct contacts with the villages, fewer i
Slide 47: Food Ingredients
Food Ingredients Capital Market day 2009 47
Slide 48: Trends in Food Ingredients market
Trends in Food Ingredients market Lowest costs Regional business Health • Non-trans • Low sat Sustainable raw materials. Capital Market day 2009 48
Slide 49: Food Ingredients – Regional business
Food Ingredients – Regional business AAK Sweden AAK Denmark AAK UK AAK Netherlands AAK US AAK Mexico AAK Latin America Capital Market day 2009 49
Slide 50: AAK Niche strategy – Baby Food
AAK Niche strategy – Baby Food Bulk products Speciality solutions Volumes Year 2007 Year 2000 Year 2005 Advanced Lipids Simple oils More speciality fats JV Profitability index 1 >100 Margin Index Capital Market day Day 2009 2009 50
Slide 51: InFat – The right fat for baby food
InFat – The right fat for baby food Quality similar to mother milk Gives significant increase of energy intake and calcium absorption Gives calm digestion and optimal skeleton development Capital Market day Day 2009 2009 51
Slide 52: New speciality factory – for baby food ingredients
New speciality factory – for baby food ingredients Capital Market Day 2009 52
Slide 53: Infat demand 2007 - 2010
Infat demand 2007 - 2010 High Medium Low 2006 2007 2008 2009 2010 New factory Capital Market Day 2009 53
Slide 54: AAK Niche strategy – Bakery
AAK Niche strategy – Bakery Bulk products Speciality solutions Volumes Year 2007 Croda Food Service Year 2003 Year 2000 Acquired bakery Simple oils fat producer AAK Profitability index 1 >100 Margin Index Capital Market Day 2009 54
Slide 55: Growth –
Growth – Bulk products Speciality solutions Volumes Croda Food Service Rapsona Advanced Lipids Lion Food 1 >100 Margin Index Capital Market day 2009 55
Slide 56: Food Ingredients – Speciality products create global business
Food Ingredients – Speciality products create global business AAK Sweden AAK Denmark AAK UK AAK Netherlands - Speciality fats for bakery - Baby food fat AAK US AAK Mexico AAK Latin America Capital Market day 2009 56
Slide 57: Food Ingredients – Speciality products create global business
Food Ingredients – Speciality products create global business AAK Sweden AAK Denmark AAK UK AAK Netherlands - Speciality fats for bakery - Baby food fat AAK US AAK Mexico AAK Latin America Capital Market day 2009 57
Slide 58: AAK - Palm and CSR
AAK - Palm and CSR AAK is a founding member of the Roundtable on Sustainable Palm Oil (RSPO) in collaboration with WWF. Member of their board of directors since its inception. AAK introduced certification trade: Book & claim - www.greenpalm.org AAK was the first in the world to take home the first c
Slide 59: www.greenpalm.com
www.greenpalm.com The key figures now are ~200,000 certificates. US$ 2 m raised for the plantations. US$ ~200,000 donation generated for the RSPO ($1 per certificate). Sales are progressing strongly. Greenpalm will be in the official publication for the Copenhagen Climate Change Summit. Greenpalm wi
Slide 60: Roadmap to growth
Roadmap to growth Chocolate & Confectionery Fats Food Ingredients Capital Market day 2009 60
Slide 61: From commodity to more speciality products
From commodity to more speciality products Speciality products for - Chocolate - Baby food - Bakery Speciality FROM Commodity - Cosmetic - Acquisitions Capital Market Day 2009 61
Slide 62: From commodity to more speciality products
From commodity to more speciality products Speciality products for - Chocolate - Baby food - Bakery Speciality TO Commodity - Cosmetic - Acquisitions Capital Market day 2009 62
Slide 63: AAK Growth
AAK Growth New products New products CBE New margins products CBE CBE margins CBE Volumes CBE margins CBE margins Volumes CBE CBE Volumes Volumes FI Speciality FI FI Speciality Speciality FI Speciality Synergies Synergies Synergies Synergies FI FI FI FI Commodity Commodity Commodity Commodity Q3 200
Slide 64: The future for AAK
The future for AAK We enhance the speciality strategy. We have strong product development. We are prepared for more acquisitions. We are a more balanced company. Capital Market Day 2009 64
Slide 65: AAK The first choice for value-added vegetable oil solutions
AAK The first choice for value-added vegetable oil solutions Capital Market day 2009 65
Slide 66: Back up
Back up
Slide 67: Accumulated IAS 39 effect since the merger
Accumulated IAS 39 effect since the merger 400 300 200 100 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 SEK Million -100 2006 2007 2008 2009 -200 SEK +486 -300 million in 2009 -400 -500 -600 Capital Market day 2009 67
Slide 68: 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. The difference between the internal market price valuation and IAS 39 market price valuation is the “IAS 39 effect” reported. The IAS 39 effect
Slide 69: Back to back hedging
Back to back hedging Paper Physical contracts purchase Net position Customer Inventory contracts AAK hedges the customer contracts by physical purchase, inventory and paper contracts (financial derivatives). Full market valuation of all ”legs” in the business areas operating result. Capital CapitalM
Slide 70: Hedging – practical example
Hedging – practical example 4. Paper trades of -500 3. Physical purchase of -700 Paper Physical contracts purchase Net unrealised 2. Inventory of -800 1. Sales of 2 000 Zero balance Customer means Inventory contracts full hedge of sales margins in absolute values Capital Market day 2009 70
Slide 71: IAS 39 effect – accounting impact
IAS 39 effect – accounting impact 4. Paper trades of -500 3. Physical purchase of -700 Paper Physical contracts purchase Only market valuation of financial derivatives are allowed in accordance with IAS 39 Net unrealised 1. Sales of 2 000 2. Inventory of -800 Customer Inventory contracts Capital Mar
Slide 72: IAS 39 - conclusion
IAS 39 - conclusion Full market valuation of all ”legs” in the business areas operating result. IAS 39 allows market price valuation of the hedge contracts only, while physical purchase contracts and sales contracts are not allowed to be valued. The difference between the internal market price valua