AAK Annual Report 2017

$FWLQJ &(2 $ \HDU RI VLJQL¿FDQW DFKLHYHPHQWV The past year has without a doubt been exceptional for AAK. :H KDYH VHHQ D QXPEHU RI VLJQL¿FDQW DFKLHYHPHQWV 6RPH of the highlights include a higher organic volume growth compared to the underlying market, another record-high RSHUDWLQJ SUR¿W WKH LQDXJXUDWLRQ RI RXU QHZ SURGXFWLRQ SODQW LQ &KLQD RXU ¿UVW VDOHV RI $NRYLWD ® , our product range IRU 6HQLRU 1XWULWLRQ DQG WKH VLJQLQJ RI RXU ¿UVW FRPPHUFLDO contract for TROPICAO ™ , our chocolate solution for hot climate markets. Alongside these important milestones, we were saddened when our CEO Arne Frank passed away last summer. During his time as CEO, Arne developed AAK from good to great, turning the company into a world-leading supplier of value- DGGLQJ YHJHWDEOH RLOV DQG IDWV ,Q WKLV GLI¿FXOW SHULRG RXU leaders, together with their teams, have very professionally continued to execute the company’s strategy, and for that I’m very proud and grateful. The positive trend from previous years continued and GHPRQVWUDWHG D VWURQJ ¿QDQFLDO SHUIRUPDQFH ZLWK DQ LPSURYHPHQW RI RSHUDWLQJ SUR¿W E\ SHUFHQW )RRG ,QJUH - dients, primarily driven by segments Special Nutrition and Dairy, was a main contributor to the increase. Chocolate & Confectionery Fats reported a double-digit year-over-year improvement despite some production and supply chain challenges during the second half of the year. Our smallest business area, Technical Products & Feed, had a challenging start to 2017 but was able to come back to expected levels during the second half of the year. The AAK Way and management ambition 2XU ¿UVW \HDU ZLWK 7KH $$. :D\ KDV GHYHORSHG DFFRUGLQJ to expectations and we are happy with the implementation of the program. Our key focus with The AAK Way, which will guide us through 2019, is to enable the company to deliver strong organic growth. This will be achieved by focusing on ¿YH SULRULW\ DUHDV *R WR 0DUNHW 2SHUDWLRQDO ([FHOOHQFH Special Focus Areas, Innovation, and People. :LWKLQ 6SHFLDO )RFXV $UHDV ZH GHOLYHUHG RXU ¿UVW YROXPHV of Akovita ® , our product range for Senior Nutrition. We also initiated a new Customer Innovation Center with special focus on plant-based dairy applications in Richmond, California, USA. The center is set to open in mid-2018. Within Operational Excellence we among other things, made important progress with our multi-oil sustainability as well as coordinating our shipping activities on a global level. For priority area People we conducted our second Employee Engagement Survey at the end of 2017. In order to strengthen our leadership competencies and company values, we also developed and carried out two leadership days globally. When we launched The AAK Way in the beginning of 2017 we established a new management ambition for the coming years, a 10 percent year-over-year improvement in operating SUR¿W ZKLFK ZLOO VXSSRUW D JRRG DQG FRQVLVWHQW LPSURYHPHQW in earnings per share. For 2017, we are proud to report an LPSURYHPHQW LQ RSHUDWLQJ SUR¿W WKDW LV VOLJKWO\ EHWWHU WKDQ WKDW ambition. Continued sustainable growth :H VDZ VRPH VLJQL¿FDQW DFKLHYHPHQWV ZLWKLQ RXU sustainability activities over the past year. Within palm oil sustainability traceability to mill remains high despite a number of new AAK factories which require time to imple- ment our palm oil policy and high standard of traceability. 'XULQJ WKH \HDU ZH DOVR HQJDJHG LQ D YHU\ VLJQL¿FDQW smallholder project in Borneo, Malaysia through Forever 6DEDK $$. LV WKH ¿UVW SDOP RLO VXSSO\ FKDLQ FRQWULEXWRU WR the project, which aims to prepare smallholders in the region IRU MXULVGLFWLRQDO 5632 FHUWL¿FDWLRQ E\ ZKLOH DW WKH same time assisting them in improving their livelihoods and reducing environmental impact. As for shea, an essential raw material for AAK, our successful program with women’s groups in West Africa continues to grow and show great progress, both in Burkina Faso, where the program was initiated in 2009, and in Ghana where it was established a couple of years ago. Our efforts to continuously improve our work within sustainability has been recognized by independent asses- sors. The Stockholm School of Economics reported that AAK KDV PDGH VLJQL¿FDQW LPSURYHPHQWV LQ FRPPXQLFDWLQJ LWV sustainability work. AAK was ranked near the top compared with Sweden’s largest listed companies. In addition, we recently received a gold rating for our sustainability work IURP (FR9DGLV ZKLFK RSHUDWHV WKH ¿UVW FROODERUDWLYH SODWIRUP providing sustainability ratings and performance improve- ment tools for global supply chains. If you want to learn more about our sustainability work, please refer to our annual sustainability report. 4