AAK Annual Report 2019

43 For the financial year January 1 – December 31, 2019 The Board of Directors and the President and Chief Executive Officer (CEO) 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, 2019. Performance and financial position 2019 has been a strong year for AAK. There has been year-over-year growth in terms of volumes, operating profit, operating profit per kilo, and earnings per share. In addition, the company has made three strategic acquisitions, increased its ownership in the joint venture AAK Kamani in India, and brought some key products to market, including AkoPlanet ™ and COBAO ™ Pure. The closing of 2019 also marks the end of The AAK Way, a company program that has resulted in many important achievements. Net sales increased by SEK 918 million to SEK 28,510 million (27,592). There was an underlying growth in sales due to organic volume growth, a greater portion of speciality solutions, and a positive currency translation impact of SEK 968 million. This was partly offset by lower raw material prices. Operating profit was record-high and reached SEK 2,142 million (1,956), an improvement of 10 percent including acquisition costs of SEK 15 million. The currency translation impact was SEK 75 million. Operating profit at fixed foreign exchange rates and excluding acquisition costs improved by 6 percent. Food Ingredients reported a strong improvement by 13 percent and Chocolate & Confectionery Fats improved by 6 percent. Technical Products & Feed reported a decline of 2 percent but is compared to historical performances operating on a significantly higher operating profit level. Operating profit per kilo reached SEK 0.94 (0.87), an improvement by 8 percent. At fixed foreign exchange rates and excluding acquisition costs operating profit per kilo increased by 5 percent. The Group’s profit after financial items amounted to SEK 2,011 million (1,829). Net financial items amounted to negative SEK 131 million (negative 127), an increase of SEK 4 million. Interest expenses for bank financing decreased but the new accounting standard for leases, IFRS 16, has resulted in addi- tional interest expenses of SEK 35 million compared to the corresponding period last year. The equity/assets ratio was 46 percent as at December 31, 2019 (50 percent as at December 31, 2018). Consolidated net debt as at December 31, 2019 was SEK 3,117 million (2,667 as at December 31, 2018). On December 31, 2019, the Group had total credit facilities of approximately SEK 7,081 million. Operating cash flow including changes in working capital amounted to SEK 1,558 million (1,090). Cash flow from working capital was negative, amounting to SEK 896 million (negative 555). Strategic purchases of key raw materials to Chocolate & Confectionery Fats impacted cash flow from inventory negatively. Accounts payables have during the latter part of 2019 showed positive cash flow and have, combined with lower raw material prices, to a small degree offset the increased inventory. Cash outflow from investing activities amounted to SEK 1,335 million (723), whereof SEK 535 million (0) was related to acquisitions. Calculated on a rolling 12 months basis, Return on Capital Employed (ROCE) was 14.9 percent (15.8 at December 31, 2018). ROCE was negatively impacted by 0.5 percent due to the new accounting standard for leases, IFRS 16. The additional purchase of strategic raw materials has also impacted ROCE negatively. Earnings per share were SEK 5.86 (5.21), an increase of 12 percent, due to increased operating profit combined with lower tax costs. A lower tax rate in Sweden and India combined with further optimiza- tion of capital structure in the Group have reduced the average tax rate. On March 30, 2020, the Board of Directors proposed to postpone the decision on the dividend for 2019. For further information, please see page 47. Directors’ report