AAK Annual Report 2018

6 President and CEO: A strong year with organic volume and profit growth My first year as President and CEO for AAK has been a very exciting and stimulating time. I have traveled quite extensively, and I have had many informative and interesting encounters with colleagues, customers, shareholders and other stakeholders. Aside from visiting our many production facilities, I have also spent some memorable and inspiring time with our sourcing operations in West Africa and Southeast Asia. Wherever I have come, I have been warmly welcomed by professional, highly motivated, and passionate colleagues with great dedication for our customers and our co-development approach. AAK is a very well-managed company with strong regional leadership and I am extremely proud and priv- ileged to be part of this team. There is no doubt that we have all the prerequisites to continue to be successful. Solid financial performance despite challenges 2018 has been another year of strong financial perfor- mance. We continue to grow faster than the market and there has been organic volume growth as well as profit growth for all three business areas. Operating profit for the year reached SEK 1,956 million, which, compared to 2017, was an improvement of 10 percent, in line with our ambition. Raw material yields have been lower than normal within business area Chocolate & Confectionery Fats and we have seen a greater demand for some of our high-end products compared to our capacity. To mitigate the situation, we have made significant investments to remove bottlenecks and to support current and future volume growth of high-end products. We have also strengthened our sourcing operations in West Africa. The capacity is expected to increase during the later part of 2019 as our investments are implemented. Key strategic achievements Our strategic company program The AAK Way, now in its final year, has seen some good progress and important results during 2018. To further expand our geographic footprint, we have invested in a customiza- tion plant in the Philippines. We have also signed an exclusive agent and distributor agreement in the GCC (Gulf Cooperation Council) region. In addition, we have opened new Customer Innovation Centers in Tokyo, Singapore and the UK which will further strengthen our co-development approach in these important regions. We have furthermore expanded our capacities and production capabilities. For example, through our joint venture AAK Kamani in India we have made important investments, and we have also completed significant upgrades of our production facilities in Louisville, USA. Other important milestones include our customer survey, reaching out to more than 2,000 customers globally. While confirming our unique customer co-de- velopment approach, the survey results also gave us valuable input to further improve our customer value proposition. To become a “truly customer-centric” company and to further develop the customer experi- ence, we have also continued to train and educate our dedicated sales and customer innovation organization. During 2019, we will not only conclude The AAK Way in the best possible way, we will also start to plan for our next strategic company program. Recognized sustainability work Sustainability is a fundamental and strategically important driver for our business and during the past year we have seen strong results within all of our CSR focus areas. Our efforts to continuously improve our sustainability work were recognized in early 2019 when Corporate Knights Inc., after analyzing some 7,500 companies, ranked AAK among the 100 Most Sustainable Corpo- rations in the world. For more information on our efforts within sustainability, please refer to our sustainability report. Expansion and continued growth The growth journey that AAK has experienced over the last years is no doubt impressive and going forward we will continue to build upon the solid foundation that we have created. We remain focused on profitable sustain- able growth, organically as well as through strategic mergers and acquisitions.