AAK Annual Report 2020

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 finan- cial year January 1 – December 31, 2020. Performance and financial position 2020 was an unprecedented year. The Covid-19 pandemic impacted people, societies and business operations across the world. In spite of the pandemic and a material negative currency translation impact there has been year-over-year growth in terms of ope­ rating profit, operating profit per kilo, and earnings per share. In addition, the company acquired 75 percent of NPO Margaron LLC, Russia, as well as the remaining 31 percent of the shares in AAK Kamani, India, and announced the establishment of a Plant-based Foods Global Center of Excellence on the company’s prem- ises in the Netherlands. AAK’s new purpose, Making Better Happen™, has been launched according to plan and initiatives and activities are ongoing in all areas within AAK. • Net sales decreased by SEK 576 million to SEK 27,934 million (28,510). This was mainly related to a negative currency translation impact of SEK 1,370 million and lower sales due to the Covid-19 pan- demic, partly offset by the impact from higher raw material prices and improved product mix. • Operating profit reached SEK 2,167 million (2,142), an increase by 1 percent including items affecting comparability and acquisition costs. The currency translation impact was negative SEK 98 million. Operating profit at fixed foreign exchange rates, excluding items affecting comparability and acquisi- tion costs, improved by 6 percent. Food Ingredients reported a decrease of 6 percent while Chocolate & Confectionery Fats reported a strong improvement of 9 percent. Technical Products & Feed reported an increase of 5 percent. • Operating profit per kilo reached SEK 0.99 (0.94), an improvement by 5 percent. At fixed foreign exchange rates and excluding acquisition costs operating profit per kilo increased by 10 percent. • AAK reported two items affecting comparability during the second quarter, amounting to net SEK 6 million. There were costs of SEK 200 million linked to structural measures that will generate annual savings of about SEK 150 million with full run-rate from second half of 2021. AAK also reported an income of SEK 206 million, related to an optimiza- tion of the company’s capital structure. Acquisition costs during the year amounted to SEK 4 million (15). • The Group’s profit after financial items amounted to SEK 2,040 million (2,011). Net financial items amounted to negative SEK 127 million (negative 131), a decrease of SEK 4 million. • The equity/assets ratio was 44 percent as at December 31, 2020 (45 percent as at December 31, 2019). Consolidated net debt as at December 31, 2020 was SEK 2,738 million (3,117 as at December 31, 2019). On December 31, 2020, the Group had total committed credit facilities of approximately SEK 7,234 million (7,081 as of December 31, 2019). • Operating cash flow including changes in working capital amounted to SEK 2,023 million (1,558). Cash flow from working capital was SEK 44 million (negative 896). Accounts receivables have increased and impacted cash flow negatively due to increased sales of more speciality solutions to customers with longer payment terms. Inventory has increased due to increased raw material prices. The increased inventory has been more than fully offset by the increased accounts payables. Cash outflow from investing activities amounted to SEK 1,150 million (1,335), whereof SEK 412 million (535) was related to acquisitions. • Calculated on a rolling 12 months basis, Return on Capital Employed (ROCE) was 14.3 percent (14.9 at December 31, 2019). • Earnings per share were SEK 6.16 (5.86), an increase of 5 percent, due to increased operating profit, lower financial costs and lower tax costs. The income reported as items affecting comparability in the second quarter was not taxable. This has reduced the average tax rate in the period by 1 percentage point. The work to further optimize the capital structure in the Group has also supported the lower tax rate. • On October 21, 2020, the Board of Directors decided to propose to distribute a dividend of SEK 2.10 per share to the shareholders for financial year 2019. The proposed dividend for financial year 2020 amounts to SEK 2.30. For further information, please see page 47. AAK Annual Report 2020 43 For the financial year January 1 – December 31, 2020 Directors’ report