Aak Ab · OMXSTO:AAK
Aak Ab — Q2 2024 Earnings Presentation
43 slides from Aak Ab's earnings presentation, Jul 18, 2024
Slide 1: Corporate Presentation Second quarter, 2024
Latest financials Equity story The business Financials Appendix Corporate Presentation Second quarter, 2024
Slide 2: Table of contents
Latest financials Equity story The business Financials Appendix Table of contents 1. Latest financials 2. Equity story 3. The business 4. Financials 5. Appendix 2
Slide 3: Latest financials
Latest financials Equity story The business Financials Appendix Latest financials Second quarter, 2024
Slide 4: Forward-looking statements
Forward-looking statements This presentation includes forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. This presentation contains several Given these uncertainties, reade
Slide 5: Solid performance driven by volume growth and improved profitability
Solid performance driven by volume growth and improved profitability Highlights Q2 2024 Key financials Q2 2024 • Volumes increased by 4 percent, driven by Chocolate & Confectionery Fats and Food Ingredients. Technical Products & Feed declined. Volume Operating profit • Operating profit per kilo incr
Slide 6: Selected events
Selected events Annual General Meeting Bio-boilers approaching full capacity • The Annual General Meeting was successfully held on May 8 in Malmö, • Our new bio-boilers at the Aarhus site in Denmark, completed in 2023, Sweden. are approaching full capacity. • The event saw a good turnout with shareh
Slide 7: Food Ingredients
Food Ingredients Operating profit SEK million SEK million 800 3,000 Net sales Operating profit per Operating profit 2,500 Volume SEK million kilo SEK SEK million 600 2,000 +4% -3% +15% +19% 400 1,500 334 346 7.504 7.270 2.18 756 1,000 1.90 636 200 500 0 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 8: Chocolate & Confectionery Fats
Chocolate & Confectionery Fats Operating profit SEK million SEK million 600 2,000 Net sales Operating profit per Operating profit Volume SEK million kilo SEK SEK million 1,500 400 +14% +3% +38% +58% 1,000 122 3,170 3,275 3.55 433 200 107 500 2.57 275 0 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 9: Technical Products & Feed
Technical Products & Feed Operating profit SEK million SEK million 150 400 Net sales Operating profit per Operating profit Volume SEK million kilo SEK SEK million 300 100 -11% -12% -78% -80% 200 64 555 0.69 44 57 50 488 100 0 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 20 20 20 21 21 21 21
Slide 10: Strong progress on deforestation-related targets
Strong progress on deforestation-related targets The Co-Development Company
Slide 11: Several actions to meet EUDR compliance
Several actions to meet EUDR compliance • Active collaboration with our suppliers to take necessary Better measures for EUDR compliance sourcing • Change of supply chain where EUDR compliance will not be possible • Align our make or buy strategy for components Better • Prepare our production setup f
Slide 12: Cash flow in the second quarter driven by earnings
Cash flow in the second quarter driven by earnings offset by impact from changes in inventory composition Cash flow Q2 2024 Comments • Cash flow from inventory was negative driven by 1.336 raw material mix. Inventory levels remain stable. • Cash flow from receivables was stable. 271 • Cash flow from
Slide 13: Return on Capital Employed (ROCE) increase following strong operating profit development
Return on Capital Employed (ROCE) increase following the strong operating profit development % 22 21.5 ROCE end Q1 2024* 21 21.5% 20 19 18 EBIT LTM Capital 17 employed* 16 SEK 4,656 SEK 21,645 15 million million 14 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 21 21 21 22 22 22 22 23 23 23 23 24 24 ROCE
Slide 14: Net debt/EBITDA marginally higher following dividend payout in Q2
Net debt/EBITDA marginally higher following dividend payout in Q2 Net debt/EBITDA 2.50 2.00 1.50 1.00 0.50 0.41 0.00 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Net debt /EBITDA The Co-Development Company 14
Slide 15: Solid performance in Q2
Solid performance in Q2 • Following a strong first quarter, we are pleased to continue progressing toward our 2030 aspiration in the second quarter. • Delivered a 4 percent year-over-year volume growth, accelerating from 3 percent in the first quarter and despite a headwind in Technical Products & F
Slide 16: Becoming the first choice for plant-based oil ingredients
Latest financials Equity story The business Financials Appendix Becoming the first choice for plant-based oil ingredients
Slide 17: Strong historical performance and well-positioned for future growth
Strong historical performance and well-positioned for future growth Strong Targeting underlying above GROWTH MARKET DRIVERS growth Average Strong BALANCE 10% year-over-year SHEET supporting EBIT further growth improvement
Slide 18: A strong track record
A strong track record of consistently increasing long-term performance and shareholder returns Operating profit* Operating profit/kilo* SEK SEK million million SEK SEK 5,000 1.94 4,116 2.00 4,000 2,888 1.50 1.28 3,000 2,157 2,165 2,393 CAGR 0.94 0.99 1.04 Continuous 2,000 1,615 1,786 1,956 1.00 0.77
Slide 19: Becoming recognized for our increasingly positive impact
Making Better Happen from plant to brand Becoming Throughout AAK's value chain recognized for CLIMATE BIODIVERSITY PEOPLE our increasingly positive impact • Reduce Scope 1 and 2 emissions • 100% verified deforestation- • Empowering smallholders and by 50% by 2030 free and conversion-free women to im
Slide 20: Structural drivers behind our profitability improvement
Structural drivers behind our profitability improvement Program Progress Impact Profitability High. Cost savings, capacity liberation Production process optimization and enhanced quality High. Capacity optimization, higher sales Portfolio & price management of speciality solutions and pricing Low. I
Slide 21: Capitalizing on internal optimization efforts following volume-driven growth
Capitalizing on internal optimization efforts following a period of volume-driven growth A journey from volume-driven to value-driven Volume and EBIT development over the past decade EBIT growth (%) Volume growth EBIT/kilo growth Adjusted EBIT Volume 44 37 SEK million (´000MT) 40 4.500 3.000 36 4.00
Slide 22: The business
Latest financials Equity story The business Financials Appendix The business
Slide 23: Everything we do is about Making Better Happen
Our purpose: Everything we do is about Making Better Happen About AAK AAK is The Multi-oil Ingredient House, specializing in plant-based oils and fats, the value-adding 20Production plants ingredients in many products people love to consume. We make these products better tasting, healthier, and more
Slide 24: The market growth is expected to accelerate
The market growth is expected to accelerate driven by specialty segments and solutions Indicative oils and fats market consumption (‘000 MT) Total market, oils and fats Growth driven by GDP per capita and 250 000 population growth ~3% ~1% Speciality markets, oils and fats 200 000 ~3% Slightly higher
Slide 25: A multi-oil ingredients house
A multi-oil ingredients house with a diversified portfolio oils Rapeseed/ Palm oil Palm kernel Shea kernels Canola oil Asia, Central oil Western Africa Northern and and South Asia and South central Europe, America America Canada, United States, Australia and China 12% 10% 4% 52% Coconut oil Soybean
Slide 26: A Scandinavian company with a global footprint
A Scandinavian company - with a global footprint Europe 43% 41% Americas 1% Other countries 15% AMEA Share of group volumes, 2023 The Multi-oil Ingredient House
Slide 27: A diverse portfolio of solutions
A diverse portfolio of solutions - today mainly serving various food applications Food Ingredients Chocolate & Confectionery Fats Technical Products & Feed • A global key supplier of • Market leader within • Sustainable business using plant-based oils functional cocoa butter by-products from special
Slide 28: Multi-oil Ingredient House
Multi-oil Raw materials from farmers and plantations Mills, crushers* and refineries* Ingredient House FMCG Producers Retailers Consumers *Crushing and refining performed by AAK for select raw materials.
Slide 29: The diversification of our portfolio reduces risk and cyclicality
The diversification of our portfolio - reduces risk and cyclicality Customers share of revenue (2023) Volumes (2023) MT (‘000) #1 ~5% 13% # 2-10 ~18% 463 148 (22%) 22% Volumes 413 030 (19%) 64% 276 551 Food Ingredients 254 462 (13%) Chocolate & Confectionery Fats 241 217 ~9% # 11-25 (12%) (11%) 218
Slide 30: Attractive employer
Attractive employer Investing in our 4,100 people’s growth and development We offer the chance to make a real difference by being part of a team that is passionate about Making Better Happen . • We take responsibility for health and safety, and for creating a workplace where equality, diversity and
Slide 31: AAK's Grievance Management Procedure (FY2023)
AAK’s Grievance Management Procedure (FY2023) • We have opened 127 cases since 2015, of which 38 are still active. • In 2023, 17 cases were opened, of which 14 are still active 80 150 Cases unresolved Number of cases active: 38 Cases resolved Number of cases resolved since 2015: 89 120 60 90 40 60 2
Slide 32: Spotlight: Replacing palm oil with coconut oil
Spotlight: Replacing palm oil with coconut oil 300 million additional hectares needed, equivalent to the size of Argentina and Belarus combined. The global By volume, about Palm oil crops ∼ 65 % of the Oil yield by crop type demand for food ∼35% of global account for less total agricultural Global o
Slide 33: Financials
Latest financials Equity story The business Financials Appendix Financials
Slide 34: Capital allocation to drive shareholder value creation
Capital allocation to drive shareholder value creation - via sustainable and profitable long-term growth 1 Investing for growth 2 Acquisitions 3 Return to shareholders Geographic Capacity expansion expansion M&A ✓ Innovation ✓ 30-50 percent of net profit Technology & Adjacent ✓ Capacity capabilities
Slide 35: Investing for growth
1 Investing for growth Historical CAPEX overview Future CAPEX priorities SEK million NIDB/EBITDA • Innovation 1,500 1,421 2.0 1,335 • Capacity expansions 1,233 1,203 1,200 1,150 • Efficiency gains 1.5 1,016 • Capacity to temporarily go to 3x NIBD/EBITDA for transformational 900 810 acquisitions or i
Slide 36: M&A, greenfield, and strategic investments
2 M&A, greenfield, and strategic investments - A continued enabler for AAK’s EBIT growth MaasRefinery Green-on (VC) CSM Benelux Advanced Lipids TLC / Belovo Region: Netherlands Region: Sweden Region: Benelux (JV) Region: Belgium Segment: Fats & Oils Segment: Oils from Co2; Segment: Fats & Joint vent
Slide 37: We continue to be disciplined, resulting in attractive return
3 We continue to be disciplined, resulting in attractive return A long-term ROCE improvment Historic dividend growth of above 10 percent ROCE (%) SEK million Div./share (SEK) Payout ratio (%) 20 25 000 4 50 ✓ Historic dividend growth 3.70 19,1% 15,7% 15,6% 15,8% 15,6% of above 10 percent 15,0% 20 00
Slide 38: Appendix
Latest financials Equity story The business Financials Appendix Appendix
Slide 39: Strong performance and solid profit growth in all business areas
Strong performance and solid profit growth in all business areas • Food Ingredients • Chocolate & Confectionery Fats • Technical Products & Feed -3% +1% -1% 1 531 1 476 519 521 320 317 Volume (MT) 1 426 1 433 1 364 459 473 300 305 285 449 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 2019 2020 2
Slide 40: Raw material price development
Raw material price development USD/ton Rapeseed oil and palm oil Rapeseed oil Palm oil The Multi-oil Ingredient House Capital Capital Market Market Day Day 2022 2021
Slide 41: Loan and duration profile
Loan and duration profile Short- and long-term credit facilities as per December 2023 Long-term facilities Long-term facilities SEK million SEK million Mortgage 469 66% MTN Bond 1,000 Club loan 4,447 Bilateral 556 Bilateral bond loan 500 Total long-term facilities 6,972 Short-term facilities SEK mil
Slide 42: Meet the IR Team
Meet the IR Team Carl Ahlgren Amelie Worrall Head IR, Corporate Communications & Branding IR & Corporate Communications Coordinator carl.ahlgren@aak.com amelie.worrall@aak.com +46 706 81 07 34 +46 704 48 64 70 The Multi-oil Ingredient House
Slide 43: Everything we do is about Making Better Happen
Everything we do is about Making Better Happen