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AAK Annual Report 2015

Global operations involve a number of other risks, including: Trade barriers Inflation Changes in national or regional legislation, e.g. the introduction of protective tariffs and taxes, which prevent AAK from operating in a free market Environmental and health-related legislation Changes in the competitive environment The sector in which AAK operates is undergoing structural change. As a sector that has existed for just over a century and has a fundamental dependence on natural products, there is great pressure for more intensive development. This includes demands for sustainable, ethical production, where producers accept responsibility for social issues and the environmental impact of their operations. AAK operates on the basis of an organic growth and selective acquisition strategy. A strong balance sheet has laid the financial foundations for future acquisitions.   There is tough competition in the industry. Several global competitors deliver large volumes of bulk products with limited margins. Our response is to focus more on products with better margins and higher-added value. These include confectionery products and cosmetics, as well as valueadding ingredients for the bakery, dairy and infant nutrition industries. The health trend There is an ongoing debate on healthy alternative foods. The trans fat debate, for example, has been quite heated on occasion, resulting in a greater use of raw materials such as palm oil. Palm oil is a significant raw material for us at AAK and has a broad application area – from chocolate to foods and cosmetics. A great alternative to hardened fat, it is semisolid at room temperature, making it an attractive choice in the production of many foods. By using palm oil, trans fats can be eliminated from many food products.   We have the ability to adapt our product range quickly to the latest trends in the health debate. This is largely due to the fact that we work with all types of vegetable oils and can reformulate our products fairly easily to meet customer needs. We focus strongly on product co-development with our customers. This limits the risks involved in commercializing new products.   Regulatory measures also pose a risk. Active involvement in Corporate Social Responsibility related issues is, therefore, becoming increasingly important to forestall legislation on issues that are a natural development of human requirements. Highly skilled employees Business operations are affected by raw material prices, transport costs, energy prices, interest rates and exchange rates. Our employees are experienced in reacting quickly to changes in external factors and adapting operations, products and services to customer needs. 23


AAK Annual Report 2015
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