AAK Annual Report 2019

6 President and CEO: A strong year with continued profit growth Looking back at 2019, there is no doubt that it has been a strong year for AAK. In terms of financial develop- ment, we have seen year-over-year growth in volumes, operating profit, operating profit per kilo, and earnings per share. We have also made three strategic acquisi- tions, increased our ownership in our joint venture AAK Kamani in India, and brought some key products to market. Profit growth in line with our ambition Compared to 2018, we managed to grow our operating profit with 10 percent, in line with our ambition. Business area Food Ingredients was our main driver with a 13 percent increase in operating profit. Dairy, Bakery and Foodservice all contributed nicely as did our solutions to plant-based foods. The picture for Special Nutrition was more mixed. Volumes were impacted by lower birth rates in China and destocking by some global customers. However, we continued to strengthen our mix with a higher portion of customer co-developed solutions. Chocolate & Confectionery Fats also contributed to the profitability improvement. This despite facing some challenges throughout the year, especially due to low-yielding shea kernels. However, the last batches of these kernels have now been used. In addition, our investment projects to increase capacity and strengthen our supply chain have been completed according to plan and with good results. The long-term market trend for the industry looks promising and we continue to see a strong demand for our high-end solutions. Despite a small decline, Technical Products & Feed continued to operate on a significantly higher operating profit level during 2019 compared to historical perfor- mances. This is in large part due to our successful implementation of our customer co-development approach within the business area. Important product launches and strategic acquisitions During the year, we have brought a number of important products to market, among them our chocolate solution COBAO ™ Pure. This breakthrough innovation which delivers significantly improved bloom-retarding effects and extends shelf life, is expected to be beneficial mainly in the fast-growing premium chocolate segment. AkoPlanet ™ , our portfolio with tailor-made solutions for food manufacturers developing plant-based alternatives, has generated strong volume and profit growth since it was launched in June 2019. Our pipeline of customer co-development projects more than doubled between the second and the third quarter, and then again between the third and the fourth quarter. The three acquisitions we have made during the year have helped us increase our capacity in Europe, broaden our capabilities within our foodservice offerings, and expand our portfolio with lecithin, a key ingredient for many customers within our core segments. Continued progress within sustainability We continue to make substantial progress within our sustainability activities to contribute to the UN Sustainable Development Goals. Through our responsible sourcing activities, we see a positive impact on smallholders’ livelihoods, and through our co-development work, we continuously create new sustainable solutions. In West Africa, we have further strengthened our shea sourcing program Kolo Nafaso and our work with women’s groups. We are now directly working with more than 230,000 women. This is an important achieve- ment in securing our long-term growth for shea-based solutions and making a positive and sustainable impact in our supply chain. Fully aware of the impacts of global warming, we have committed to set a Science Based Target during 2020. Climate change impact assessments have been initiated at all production sites which will provide valuable input for our actions going forward. New strategic direction The closing of 2019 also marked the end of The AAK Way, a company program that has resulted in many important achievements. In parallel with concluding the program, we have reviewed our market and our capabilities to define AAK’s strategic direction going forward. Although we will continue to build on what has made us successful, we will also sharpen our focus and