AAK releases interim report for the first quarter 2021

AAK Group has released its figures for the first quarter of 2021, with the first quarter of the year being led by a strong customer demand for its speciality and semi-speciality solutions, particularly within chocolate and confectionery fats, special nutrition, and plant-based foods.

  • Total volumes for the quarter were on par with last year and amounted to 569,000 MT (569,000).
  • Operating profit, including a negative currency translation impact of SEK 57 million, increased by 2%, reaching SEK 551 million (542).
  • Profit for the period amounted to SEK 400 million (383), an increase by 4%.
  • Earnings per share increased by 4%, to SEK 1.56 (1.50).
  • Cash flow from operating activities amounted to SEK 58 million (71).
  • Return on Capital Employed (ROCE), R12M, was 14.4% (14.3 at December 31, 2020).

Business areas

  • Food Ingredients – operating profit decreased by 4% to SEK 313 million (325).
  • Chocolate & Confectionery Fats – operating profit reached SEK 233 million (222), an increase by 5%.
  • Technical Products & Feed – operating profit reached SEK 44 million (38), an increase by 16%.

Johan Westman CEO of AAK Group said: “Despite the ongoing pandemic and a material negative currency translation impact, we achieved a higher operating profit compared to last year. At fixed foreign exchange rates, we increased our operating profit by 12%.”

Business performance
Volumes for AAK Group were on par with last year with a sequential increase during the quarter. There was very strong volume growth for chocolate & confectionery fats and for its high value-adding solutions within food ingredients. This was offset by lower volumes in Foodservice, which continues to be significantly impacted by Covid-19.

Operating profit amounted to SEK 551 million (542). This was driven by cost reduction measures combined with a higher share of speciality solutions. Operating profit per kilo reached SEK 0.97 (0.95). At fixed foreign exchange rates, operating profit per kilo increased by 13%.

The business dynamics within food ingredients were mixed with growth for our high-end speciality solutions within special nutrition and plant-based foods, and our semi-speciality solutions within dairy. However, Foodservice, and to some extent bakery, continued to be negatively impacted by restrictions and lockdowns.

Chocolate & confectionery fats reported strong volume growth, driven by the customer co-developed solutions. Demand in South Latin America and Russia picked up strongly during the quarter. The volume growth combined with implemented supply chain improvements resulted in a strong operating profit for the business area.

It was also a very good quarter for Technical Products & Feed, mainly driven by the company’s feed business and high utilisation in its crushing operations.

Strategic investment
To further accelerate the development of ingredient solutions for alternatives to meat and dairy products, AAK have during the quarter partnered up with Big Idea Ventures (BIV). Their investment in BIV’s New Protein Fund, the company will create new collaboration opportunities with some of the most recognised players in the food industry.

Continued strong sustainability progress
Westman said: “We continue to see strong development within our sustainability activities and our contributions towards the UN Sustainable Development Goals.

“We have significantly increased the number of women involved in Kolo Nafaso, our direct shea sourcing program in West Africa. The program, which has a very positive impact on the women and their families, now involves more than 320,000 women. Another important achievement is that our verified deforestation-free palm increased by 92 percent during 2020 compared to the year before. This is an important step on our journey towards sustainable palm oil, where we aim for a supply chain that is 100% traceable to plantation and 100 percent verified deforestation-free by 2025.

“We also continue our dedicated work to reduce our environmental impact and have recently decreased energy consumption, water consumption and waste per processed unit raw material.

Furthermore, we have decided that ESG targets henceforth is included in the evaluation of the Executive Committee’s remuneration.”

Concluding remarks
“Uncertainty and volatility, due to the pandemic and current global logistics and sea freight disturbances, remain high. This makes it difficult to predict the short-term future. However, AAK has a robust foundation, a strong financial track record and a solid balance sheet, and the company have over the past year demonstrated the resilience of our business. The passion, drive and agility our organisation shows are strengths we build on going forward.

“We offer plant-based, healthy, high value-adding oils and fats solutions based on our customer co-development approach. We continuously strengthen our portfolio of solutions that are good for both people and planet. Despite the short- to mid-term uncertainty, we see no reason to adjust our view on the strong favourable underlying long-term trends in our markets. Thus, we continue to remain prudently optimistic about the future and we are fully committed to Making Better Happen.”



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Media contact
Kiran Grewal
Editor, International Confectionery

Tel: +44 (0) 1622 823 922
Email: editor@in-confectionery.com

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