AAK Annual Report 2020

The Company’s largest business area, Food Ingredients, reported an operating profit excluding items affecting comparability of SEK 1,286 million (1,366), a decrease of 6 percent. The operating profit per kilo increased by 1 percent to SEK 0.90 (0.89). The decrease was primarily due to lower volumes for Foodservice, that was nega- tively impacted by restrictions and lockdowns, and led to a situation of under-absorption of costs. Solutions for Special Nutrition and Plant-based Foods generated strong profit growth. Chocolate & Confectionery Fats reported an improve- ment in operating profit excluding items affecting comparability of 9 percent to SEK 865 million (794). The growth in operating profit was driven by lower costs achieved by the implemented supply chain improvements, increased production capacity in Aarhus, Denmark, and the better-yielding shea kernels from the harvest 2019/2020. Operating profit per kilo increased to SEK 1.93 from SEK 1.73 driven by the above-mentioned factors. Operating profit excluding items affecting comparabi­ lity for AAK’s smallest business area, Technical Prod- ucts & Feed, increased by 5 percent from SEK 150 million to SEK 157 million. The increase was mainly driven by strong performances in our feed business and crushing operations. Our fatty acids business also showed growth due to a favorable product mix. Operations and significant events Business areas The company’s business areas are Food Ingredients, Chocolate & Confectionery Fats and Technical Products & Feed. Group-wide functions are included in the Group Functions segment. Food Ingredients maintains its strong regional positions, primarily in Europe, USA and North Latin America, but is gradually strengthening its positions in other regions. Chocolate & Confectionery Fats and Personal Care have world-leading positions, and these will gradually be expanded in an increasingly global arena. Technical Products & Feed has a strong local position in Northern Europe and will continue to focus its growth efforts in these geographic areas through its close links to the Karlshamn factory in Sweden, bringing significant synergy effects. Acquisitions During the first quarter, an agreement was signed to acquire 75 percent of NPO Margaron LLC, a producer of margarines, spreads, and bakery and confectionery fats, based in St. Petersburg, Russia. Margaron has been a trusted toll manufacturer to AAK for more than a decade and had in 2019 revenues of approximately SEK 280 million. During the third quarter, AAK further strengthened its position in the strategic and fast-growing Indian market by acquiring the remaining 31 percent of the shares of AAK Kamani. Company management Tim Stephenson was appointed President Global Sourcing & Trading in January 2020. Sten Estrup was appointed President Asia April, 2020. Fredrik Nilsson, Chief Financial Officer, left the company in January 2021 to pursue new opportunities outside of AAK. Tomas Bergendahl has been appointed new Chief Financial Officer and assumes his position as of May 1, 2021. Financial goals AAK’s financial goals are to grow faster than the underlying market and to generate strong cash flows. We also intend to continually improve the return on capital employed. Planned dividend policy The objective of the Board of Directors, taking into account the development of Group earnings, its finan- cial position and future development opportunities, is to propose annual dividends equivalent to at least 30–50 percent of the profit for the year, after tax, for the Group. Concluding remarks by the CEO We offer plant-based, healthy, high value-adding oils and fats solutions based on our customer co-devel- opment approach. In spite of the short- to mid-term uncertainty from the Covid-19 pandemic, we see no reason to adjust our view on the strong favorable underlying long-term trends in our markets. Thus, we continue to remain prudently optimistic about the future and we are fully committed to Making Better Happen™. AAK Annual Report 2020 44