Page 39

AAK Annual Report 2015

Directors’ Report For the financial year January 1 – December 31, 2015 The Board of Directors and the Chief Executive Officer 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, 2015. Performance and financial position Net sales increased by SEK 2,300 million to SEK 20,114 million (17,814). This increase was due primarily to acquisitions, organic volume growth and a positive currency translation effect of SEK 1,417 million. Volumes increased by 8 percent, primarily due to the acquisitions made. Organic growth amounted to 3 percent despite lower volumes for the Bakery segment, primarily in Europe, and deteriorating market conditions in Russia and Ukraine. Most of the remaining activities have developed well or very well. Operating profit, excluding acquisition-related expenses and non-recurring items, was at a record high of SEK 1,411 million (1,242), an improvement of 14 percent. The currency translation effect was positive and amounted to SEK 125 million (48). The two largest business areas, Food Ingredients and Chocolate & Confectionery Fats, reported a better operating profit for 2015 than for the previous year. The smallest business area, Technical Products & Feed, reported an unchanged profit. Operating profit, including non-recurring items, amounted to SEK 1,409 million (1,262), an improvement of 12 percent. Nonrecurring items amounted to SEK -2 million (20) and consist of acquisition costs of SEK 15 million (16), SEK 45 million in net profit as a result of the sale of the company’s office building in M.P. Bruuns Gade, Aarhus, Denmark. An assessment of previously made non-recurring provisions has resulted in increased provisions of SEK 32 million. The operating profit per kilo, excluding the above non-recurring items, amounted to SEK 0.77 (0.73), despite the dilutive effect of the acquisitions in Belgium, Colombia and India. Return on Capital Employed (ROCE) was affected negatively by acquisitions and new investments in Brazil and China. Return on Capital Employed, calculated over rolling twelve-month periods, amounted to 15.7 percent (16.0 percent on December 31, 2014). Earnings per share before dilution were SEK 22.17 (21.15), an increase of 5 percent. The proposed dividend amounts to SEK 7.75 (6.75), an increase of SEK 1.00 or 15 percent. The Company’s largest business area, Food Ingredients, reported a record-high operating profit of SEK 903 million (803), an increase of 12 percent. The operating profit per kilo was unchanged, SEK 0.72. The operating profit per kilo was affected negatively by the dilutive effect of acquisitions in Belgium, Colombia and India. Excluding acquisitions, the operating profit per kilo continued to improve.   Chocolate & Confectionery Fats reported a strong improvement in operating profit of 20 percent to SEK 553 million (460), primarily as a consequence of continued improvement in the product mix and a positive currency translation effect. Operating profit per kilo increased from SEK 1.46 to SEK 1.77 as a consequence of this. Volumes fell by 1 percent. The deteriorating market conditions in Ukraine and Russia had a negative impact on the business area.   Adjusted for the disposal of Binol, operating profit for the Company’s smallest business area, Technical Products & Feed, was SEK 88 million (89), a decrease of 1 percent.   The Group’s profit after financial items amounted to SEK 1,295 million (1,154). Net financial items were SEK -114 million (-108), an increase of SEK 6 million due to an increase in the Group’s loans in high-interest countries as a consequence of ongoing new investments and recent acquisitions. The equity/assets ratio was 48 percent as at December 31, 2015 (46 percent as at December 31, 2014). Consolidated net debt as at December 31, 2015 was SEK 2,083 million (SEK 2,508 million as at December 31, 2014). On December 31, 2015, the Group had total credit facilities of around SEK 5,924 million.   Cash flow from operating activities, before changes in working capital, amounted to SEK 1,356 million (1,252). Working capital fell by SEK 380 million (increase of 560 million), primarily as a consequence of lower raw material prices. This was partly offset by the organic volume growth. Cash flow from operating activities, including changes in working capital, amounted to SEK 1,736 million (692). After investments, including acquisitions, cash flow amounted to SEK 720 million (-16).   The Group’s net investments in non-current assets and acquisitions totalled SEK 1,016 million (708), comprising ongoing maintenance investments, the acquisition in India, plus strategic investments in Brazil and China. The sale of the office building in Aarhus, Denmark, is included in the net investments for the year. 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, the USA and North Latin America, but will gradually strengthen its positions in other regions. Acquisitions were made in India and Belgium during the year.   Chocolate & Confectionery Fats and Personal Care have worldleading 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 geographical segments through its close links to the Karlshamn factory in Sweden, bringing significant synergy gains. AAK’s focus on growth and productivity The corporate programme ‘AAKtion’ for 2014–2016 is proceeding according to plan. AAKtion is intended to further enhance the focus on ‘Sales – Innovation – Execution. 35


AAK Annual Report 2015
To see the actual publication please follow the link above