AAK Annual Report 2018

39 For the financial year January 1 – December 31, 2018 The Board of Directors and the Chief Executive Officer of AAK AB (publ.), corporate identity number 556669- 2850, with its registered office in Malmö, hereby present the Financial Statements and Consolidated Financial Statements for the financial year January 1 – December 31, 2018. Performance and financial position Net sales increased by SEK 1,156 million to SEK 27,592 million (26,436). There was an underlying growth in sales due to a positive product mix, organic volume growth, and a positive currency translation impact of SEK 149 million. Organic volume growth was 5 percent (5), primarily due to a strong demand for speciality and semi-speciality products. Operating profit was record-high and reached SEK 1,956 million (1,786), an improvement of 10 percent. The currency translation impact was SEK 22 million. Operating profit at fixed foreign exchange rates improved by 8 percent. Food Ingredients reported a strong improvement by 9 percent and Technical Products & Feed had a very strong year with an improvement by 85 percent. Chocolate & Confectionery Fats had a more challenging year and reported a 2 percent improvement compared to last year. Operating profit per kilo reached SEK 0.87 (0.84). At fixed foreign exchange rates operating profit per kilo increased by 3 percent. The Group’s profit after financial items amounted to SEK 1,829 million (1,666). Net financial items amounted to negative SEK 127 million (negative 120), an increase of SEK 7 million. The higher financial expenses are due to increased borrowings in high interest rate countries and increased interest rates in a few markets, mainly Turkey. The equity/assets ratio was 50 percent as at December 31, 2018 (46 percent as at December 31, 2017). Consolidated net debt as at December 31, 2018 was SEK 2,667 million (2,666 as at December 31, 2017). On December 31, 2018, the Group had total credit facilities of approximately SEK 6,339 million. Operating cash flow including changes in working capital amounted to SEK 1,090 million (1,099). Cash flow from working capital was negative, amounting to SEK 555 million (negative 388). A modest increase in raw material prices during the third quarter 2017 impacted cash flow from working capital negatively during the first part of 2018 while lower raw material prices had a favorable impact during the latter part of the year. Continued organic volume growth during the year has resulted in an outflow of cash flow from working capital. Cash outflow from investing activities amounted to SEK 723 million (810). Capital expenditures were mainly related to regular maintenance investments and capacity increases in several regions. Calculated on a rolling 12 months basis, Return on Capital Employed (ROCE) was 15.8 percent (15.6 at December 31, 2017). The increased operating profit was partly offset by higher working capital during the first part of 2018. At the balance sheet date, ROCE was 15.5 percent (15.9). Earnings per share were SEK 5.21 (4.71), an increase of 11 percent. The increase in operating profit was partly offset by higher financial costs and a one-off tax income in 2017 related to the US tax reform (TCJA). The proposed dividend amounts to SEK 1.85 (1.63), an increase of SEK 0.22 or 13 percent. The Company’s largest business area, Food Ingredients, reported a record-high operating profit of SEK 1,205 million (1,107), an increase of 9 percent. The operating profit per kilo increased by 4 percent to SEK 0.80 (0.77). The Bakery segment continued its positive trend. The product mix continued to improve with a greater proportion of customer co-developed solutions. The long-term growth trend within Dairy continued and the segment once again reported good organic volume growth. All regions showed good growth except Directors’ report