AAK

AAK Group

• Total volumes decreased by 4 percent to 548,000 MT (571,000), mainly due to declines in Food Ingredients and Technical Products & Feed.
• Operating profit increased by 47 percent, reaching SEK 1,141 million (778), including a negative currency translation effect of SEK 26 million. At fixed foreign exchange rates, operating profit, increased by 50 percent.
• Profit for the period totaled SEK 870 million (517).
• Earnings per share equaled SEK 3.34 (1.98).
• Cash flow from operating activities amounted to SEK 1,353 million (1,062).
• Return on Capital Employed (ROCE), R12M, was 19.1 percent (14.5 percent on December 31, 2022).
• The Board of Directors proposes that a dividend of SEK 3.70 (2.75) per share to be paid for the financial year 2023.

Business areas

• Food ingredients operating profit increased by 47 percent to SEK 685 million (465).
• Chocolate & Confectionery Fats Operating profit reached SEK 481 million (308), an increase of 56 percent compared to the corresponding quarter last year.
• Technical Products & Feed operating profit totaled SEK 59 million (100), a 41 percent decrease compared to last year.

CEO’s comments
I begin by extending my heartfelt appreciation to our employees for their tireless efforts and their dedication to AAK and to Making Better Happen™. Your hard work building an aligned organization on top of a decentralized structure forms the foundation of our achievements in 2023, and our success reflects your strong commitment.

The year 2023 brought substantial progress. Achieving a remarkable 43 percent growth in operating profit, on top of a 21 percent growth in 2022, we surpassed our target of an average EBIT growth of around 10 percent. This accomplishment underscores our position as a diverse Multi-oil Ingredient House. The results also speak to the power of alignment and internal optimization.

Business performance
In the fourth quarter, operating profit grew 47 percent compared to the corresponding quarter last year. The growth was driven by strong performance in Food Ingredients and Chocolate & Confectionery Fats, while Technical Products & Feed declined. At fixed foreign exchange rates, operating profit increased by 50 percent.

Volumes continued to improve sequentially for the second quarter in a row but declined by 4 percent compared to the same period last year. The year-on-year decline was mainly driven by the Bakery optimization program and weak demand in Feed.

Profitability showed significant strength, with operating profit per kilo reaching SEK 2.08 in the quarter. This marked an increase of 53 percent, or 57 percent at fixed currencies, compared to the fourth quarter of 2022.
This was partly driven by internal optimization projects, namely, productivity improvements in our processing plants and partly by better portfolio & price management, including continued higher sales of speciality solutions.

The operational cash flow was strong in the quarter, primarily attributable to the higher profit.

SBTi targets approved
In December, we received notification that our emission reduction targets had been approved by the Science Based Targets Initiative (SBTi). This approval signifies our dedication to meaningful contributions to global climate action initiatives. AAK proudly stands as an early adopter, being one of the first companies having secured approval for the Forest, Land, and Agriculture (FLAG) targets.

Concluding remarks
As we bring 2023 to a close, I am pleased to note that we have reached several important milestones and have progressed toward realizing our long-term aspiration. Our financial performance in 2023 exhibited strength, marked by an impressive 43 percent growth in operating profit, despite declining volumes. This performance was further underscored by a strong cash flow and return on capital employed.

We are gaining recognition for our positive contribution to the green transformation of the global food supply chain. Investors, media, and key opinion leaders are increasingly recognizing the potential of plant-based oils and fats.

We remain committed to delivering on our 2030 aspiration. As we look ahead, I am excited about the internal and external opportunities for AAK, and I believe we are well-positioned to continue growing and expanding our business. Thus, we remain prudently optimistic and fully committed to Making Better Happen™.

Johan Westman, President and CEO

Conference call
The Interim report for the fourth quarter and year-end report 2023 will be presented today, February 7, 2024 at 10 a.m. CET. For participation, please see instructions under the investor tab on the AAK website, www.aak.com.