AAK Annual Report 2018

51 2018 saw another record-high full-year result. How would you describe AAK’s financial performance? I would describe it as very strong. Particularly consid- ering the challenges we have had within Chocolate & Confectionery Fats where volatility in raw material yields has resulted in lower output and higher production costs. The continued double-digit improvement in operating profit is in line with our management ambition, and we have now had 32 straight quarters with record-high operating profit quarter-over-quarter as well as a record- high full-year result every year since 2010. The organic growth for our speciality and semi- speciality solutions continued during the year and with 5 percent organic growth we have no doubt gained market share. What is your comment on the cash flow? Despite growing at a fast pace and investing in more capacity to meet customer demand, we have had a positive cash flow after investment activities during both 2017 and 2018. We expect capital expenditure to be at a slightly higher level in 2019 compared to 2018. Cash flow from working capital was negative in 2018. Good working capital management has impacted cash flow favorably. This was offset by a modest increase in raw material prices during the second half of 2017, impacting 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 has also resulted in an outflow of cash flow from working capital. We continue our focus on working capital days and further improvements should be possible, particularly relating to payment terms with our suppliers and late payments from some customers. Linked to the company’s long-term performance, we strive to pay a stable dividend. For the seventh year in a row we increased the dividend paid, totaling SEK 412 million or 35 percent of the consolidated profit after tax. How is capital allocated? We always try to maximize our ability to invest in growth and create a higher shareholder return. To ensure continued growth, we want to have a strong balance sheet and be well capitalized with a net debt/EBITDA ratio lower than 3. Our current ratio is 1.06. At the end of 2018 we established an MTN program (Medium Term Note) with a framework amount of SEK 4,000 million. The program will diversify our existing sources of funding and give us a flexible alternative to current bank facilities. Our dividend policy is to have a payout ratio of net profit of 30–50 percent. Historically, the payout ratio has been around 35 percent. Over the last years we have invested significant amounts in organic growth, built new factories and expanded others to secure that we have enough capacity to meet the strong demand for our solutions. The company will continue to invest in organic growth, both in equipment and in our employees, to secure that we can continue to be the co-development partner to our customers. Fredrik Nilsson, CFO CFO: Strong financial performance and gained market share