AAK Annual Report 2017

39 Directors’ Report )RU WKH ¿QDQFLDO \HDU -DQXDU\ ± 'HFHPEHU 7KH %RDUG RI 'LUHFWRUV DQG WKH &KLHI ([HFXWLYH 2I¿FHU RI $$. $% (publ.), corporate identity number 556669-2850, with its registered RI¿FH LQ 0DOP| KHUHE\ SUHVHQW WKH )LQDQFLDO 6WDWHPHQWV DQG &RQVROLGDWHG )LQDQFLDO 6WDWHPHQWV IRU WKH ¿QDQFLDO \HDU -DQXDU\ – December 31, 2017. 3HUIRUPDQFH DQG ¿QDQFLDO SRVLWLRQ Net sales increased by SEK 4,379 million to SEK 26,436 million (22,057). The increase was mainly due to a better product mix, acquisitions and higher raw material prices, but was partly offset by a negative currency translation impact of SEK 327 million. Volumes increased by 8 percent and organic growth was 5 percent, primarily due to a strong demand for speciality and semi-speciality products, which continued to be strong. 2SHUDWLQJ SUR¿W ZDV UHFRUG KLJK DQG UHDFKHG 6(. PLOOLRQ (1,615), an improvement of 11 percent. The currency translation impact was negative and amounted to SEK 19 million. Opera- WLQJ SUR¿W DW ¿[HG IRUHLJQ H[FKDQJH UDWHV H[FOXGLQJ QRQ recurring items, improved by 12 percent Two business areas, Food Ingredients and Chocolate & Confectionery Fats, reported D GRXEOH GLJLW SHUFHQWDJH LPSURYHPHQW LQ RSHUDWLQJ SUR¿W IRU 2017 compared to the previous year. 2SHUDWLQJ SUR¿W SHU NLOR ZDV 6(. 7KLV ZDV GXH to an improved product mix but was offset by a negative currency translation impact and expenses in connection with new investments. 7KH *URXS¶V SUR¿W DIWHU ¿QDQFLDO LWHPV DPRXQWHG WR 6(. PLOOLRQ 1HW ¿QDQFLDO LWHPV DPRXQWHG WR 6(. PLOOLRQ D GHFUHDVH RI 6(. PLOOLRQ 7KH ORZHU ¿QDQFLDO H[SHQVHV DUH GXH WR WKH FRPSDQ\¶V RSWLPL]HG ¿QDQFLQJ LQ D IHZ KLJK LQWHUHVW UDWH FRXQWULHV 7KH FRPSDQ\ DOVR EHQH¿WHG from the structure in the interest market. The equity/assets ratio was 46 percent as at December 31, 2017 (44 percent as at December 31, 2016). Consolidated net debt as at December 31, 2017 was SEK 2,666 million (2,620 as at December 31, 2016). On December 31, 2017, the Group had total credit facilities of approximately SEK 6,213 million. &DVK ÀRZ IURP RSHUDWLQJ DFWLYLWLHV H[FOXGLQJ FKDQJHV LQ working capital, amounted to SEK 1,487 million (1,476). Working capital increased by SEK 388 million (263). Good working cap- LWDO PDQDJHPHQW KDG D SRVLWLYH LPSDFW RQ FDVK ÀRZ +RZHYHU this was offset by continued organic volume growth and higher raw material prices, combined with working capital being tied up IRU RXU QHZ IDFWRULHV LQ %UD]LO DQG &KLQD &DVK ÀRZ IURP RSHUDW - ing activities, including changes in working capital, amounted to SEK 1,099 million (1,213). After investments, including acquisi- WLRQV FDVK ÀRZ DPRXQWHG WR 6(. PLOOLRQ The Group’s net investments in non-current assets amounted to SEK 810 million (1,421 incl. acquisitions), mainly related to maintenance and growth investments. Return on Capital Employed, calculated on a rolling 12 months basis, amounted to 15.6 percent (15.8 percent on December 31, 2016). Return on Capital Employed declined due to higher working capital (higher raw material prices had a negative LPSDFW LQ WKH ¿UVW KDOI RI LQYHVWPHQWV LQ %UD]LO DQG &KLQD and acquisitions in 2016. Earnings per share were SEK 28.24 (23.71), an increase of 19 percent. The US tax reform, the Tax Cuts & Jobs Act (TCJA), had an impact on AAK in the fourth quarter as US corporate tax was reduced from 35 to 21 percent. As a consequence of this tax cut, AAK recognized positive non-recurring tax revenue of SEK 35 million due to revaluation of future tax liabilities that AAK USA has in its balance sheet. The proposed dividend amounts to SEK 9.75 (8.75), an increase of SEK 1.00 or 11 percent The Company’s largest business area, Food Ingredients, reported D UHFRUG KLJK RSHUDWLQJ SUR¿W RI 6(. PLOOLRQ DQ LQFUHDVH RI SHUFHQW 7KH RSHUDWLQJ SUR¿W SHU NLOR LQFUHDVHG E\ 3 percent to SEK 0.77 (0.75). This was due to an improved product mix but was offset by a negative currency translation impact and expenses in connection with new investments. The Bakery segment had another challenging year, particularly in Europe and North Latin America. The Dairy segment reported high, double- digit organic volume growth. Special Nutrition comprised of Infant, Senior and Medical Nutrition, reported high volume growth, which is due to exceptional volume growth for the Akonino ® product range in Infant Nutrition. Our other product range in Infant Nutrition, InFat ® , sold through Advanced Lipids AB, a joint venture of AAK and Enzymotec, also showed good volume growth combined with an improved product mix. Foodservice reported declining volumes, primarily due to challenging market conditions in northern Europe. Chocolate & Confectionery Fats reported an improvement in RSHUDWLQJ SUR¿W RI SHUFHQW WR 6(. PLOOLRQ 7KH RSHUD WLQJ SUR¿W ZDV GXULQJ WKH VHFRQG KDOI RI WKH \HDU DIIHFWHG QHJDWLYH - ly by some production challenges in Aarhus, Denmark, which led to increased production and supply costs. This occurred in combina- tion with a higher demand than expected. Volumes increased by 10 percent. Recent years’ strong customer co-development, new innovative solutions, and further expansion of our geographical IRRWSULQW FRQWLQXH WR \LHOG SRVLWLYH UHVXOWV 2SHUDWLQJ SUR¿W SHU NLOR increased from SEK 1.81 to SEK 1.82 as a consequence of this. At WKH HQG RI WKH FRPSDQ\ VLJQHG LWV ¿UVW FRPPHUFLDO FRQWUDFW for TROPICAO, our chocolate solution for hot climate markets. 2SHUDWLQJ SUR¿W IRU $$.¶V VPDOOHVW EXVLQHVV DUHD 7HFKQLFDO Products & Feed, was SEK 84 million (100), a decrease of 16 percent It was primarily the higher raw material prices for fatty DFLGV LQ WKH ¿UVW KDOI RI WKH \HDU WKDW KDG D QHJDWLYH LPSDFW RQ RSHUDWLQJ SUR¿W ,Q WKH VHFRQG KDOI RI WKH \HDU WKH EXVLQHVV DUHD UHSRUWHG LPSURYHG SUR¿WDELOLW\ FRPSDUHG ZLWK WKH SUHYLRXV \HDU

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