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AAK Annual Report 2016

37 Directors’ Report )RUWKH¿QDQFLDO\HDU-DQXDU\±'HFHPEHU 7KH%RDUGRI'LUHFWRUVDQGWKH&KLHI(HFXWLYH2I¿FHURI$$.$% (publ.), corporate identity number 556669-2850, with its registered RI¿FHLQ0DOP|KHUHE\SUHVHQWWKH)LQDQFLDO6WDWHPHQWVDQG &RQVROLGDWHG)LQDQFLDO6WDWHPHQWVIRUWKH¿QDQFLDO\HDU-DQXDU\ – December 31, 2016. 3HUIRUPDQFHDQG¿QDQFLDOSRVLWLRQ We are proud to report that our decisive, targeted, hard work, based on our clear strategy, has produced good results. 7KHRSHUDWLQJSUR¿WZDVDWDUHFRUGKLJKOHYHORQFHDJDLQ $OWKRXJKSDUWVRIWKHZRUOGPDUNHWDUHIDFLQJVLJQL¿FDQW challenges, the Group continued to report a double-digit LPSURYHPHQWLQSUR¿WFRPSDUHGWRWKHSUHYLRXV\HDU7KLV is a trend that has continued since 2010. Net sales increased by SEK 1,943 million to SEK 22,057 million (20,114). This increase was due primarily to a better product mix, higher raw material prices and acquisitions, but was mitigated in part by a negative currency translation effect of SEK 648 million. Volumes increased by 7 percent, primarily due to the acquisitions made. Organic growth amounted to 2 percent, despite lower volumes for commodity products in Food Ingredients, which showed exceptional growth in 2015. 2SHUDWLQJSUR¿WHFOXGLQJQRQUHFXUULQJLWHPVZDVDWD record high of SEK 1,615 million (1,411), an improvement of 14 percent. The currency translation effect was negative and DPRXQWHGWR6(.PLOOLRQ2SHUDWLQJSUR¿WWUDQVODWHG DW¿HGHFKDQJHUDWHVHFOXGLQJQRQUHFXUULQJLWHPVLP- proved by 17 percent. All business areas had a double-digit SHUFHQWDJHLPSURYHPHQWLQRSHUDWLQJSUR¿WLQFRPSDUHG to the previous year. 2SHUDWLQJSUR¿WLQFOXGLQJQRQUHFXUULQJLWHPVDPRXQWHGWR SEK 1,615 million (1,409), an improvement of 15 percent. Non-recurring items amounted to SEK 0 million (-2) and consist of acquisition-related expenses of SEK 15 million (15) and a positive net effect of SEK 15 million concerning the acquisition of California Oils Corporation. 2SHUDWLQJSUR¿WSHUNLORHFOXGLQJWKHDERYHQRQUHFXUULQJ items, amounted to SEK 0.82 (0.77). This was due to an improved product mix but was mitigated by a negative currency translation effect and expenses in connection with new investments. 7KH*URXS¶VSUR¿WDIWHU¿QDQFLDOLWHPVDPRXQWHGWR6(. PLOOLRQ1HW¿QDQFLDOLWHPVZHUH6(.PLOOLRQ (-114), an increase of SEK 56 million due to an increase in the Group’s loans in high-interest rate countries as a consequence of ongoing new investments and recent acquisitions, plus increased working capital on account of higher raw material prices. The equity/assets ratio was 44 percent as at December 31, 2016 (48 percent as at December 31, 2015). Consoli dated net debt as at December 31, 2016 was SEK 2,620 million (SEK 2,083 million as at December 31, 2015). On December 31, 2016, the Group had total credit facilities of around SEK 6,139 million. &DVKÀRZIURPRSHUDWLQJDFWLYLWLHVEHIRUHFKDQJHVLQZRUNLQJ capital, amounted to SEK 1,476 million (1,356). Working capital increased by SEK 263 million (reduction of SEK 380 million), primarily as a consequence of higher raw material prices combined with the working capital tied up in new investments. &DVKÀRZIURPRSHUDWLQJDFWLYLWLHVLQFOXGLQJFKDQJHVLQ working capital, amounted to SEK 1,213 million (1,736). After LQYHVWPHQWVLQFOXGLQJDFTXLVLWLRQVFDVKÀRZDPRXQWHG to SEK -208 million (720). The Group’s net investments in non-current assets and acquisitions totalled SEK 1,421 million (1,016), comprising ongoing maintenance and growth investments, and acquisitions in the USA and acquisitions of non-controlling interests in Mexico, plus strategic investments in Brazil and China. Return on Capital Employed, calculated on a rolling 12 months basis, amounted to 15.8 percent (15.7 percent on December 31, 2015). This was despite the negative impact of higher working capital as a consequence of higher raw material prices, new investments and acquisitions. Earnings per share before dilution were SEK 23.71 (22.17), an increase of 7 percent. The proposed dividend amounts to SEK 8.75 (7.75), an increase of SEK 1.00 or 13 percent. The Company’s largest business area, Food Ingredients, reported DUHFRUGRSHUDWLQJSUR¿WRI6(.PLOOLRQDQLQFUHDVHRI SHUFHQW7KHRSHUDWLQJSUR¿WSHUNLORLQFUHDVHGE\SHUFHQWWR SEK 0.75 (0.72). This was due to an improved product mix but was mitigated by a negative currency translation effect and expenses in connection with new investments. The Bakery segment had yet another challenging year, particularly in Western Europe. The Dairy segment reported strong organic volume growth. Butterfat prices have been at a very low level for a number of quarters but have risen dramatically since the summer. The Special Nutrition segment, which comprises Infant Nutrition, Senior Nutrition and Medical Nutrition, reported high volume growth, which is due to exceptional volume growth for the Akonino® product range in Infant Nutrition. Our other product range in Infant Nutrition is InFat®, ZKLFKLVVROGYLD$GYDQFHG/LSLGV$%DMRLQWYHQWXUHEHWZHHQ AAK and Enzymotec. This product segment reported good volume growth combined with an improved product mix. Foodservice reported organic volume growth that was particularly good in the UK and the USA. There was negative volume growth for commodity products, after exceptional growth in 2015. Chocolate & Confectionery Fats reported a strong improvement LQRSHUDWLQJSUR¿WRISHUFHQWWR6(.PLOOLRQSULPDULO\ as a consequence of strong volume growth. Volumes increased E\SHUFHQWDQGDIWHUWZR\HDUVRIVLJQL¿FDQWO\SRRUHUPDUNHW conditions in Ukraine and Russia, both countries showed strong growth. The volumes for both high and low value-adding products continued to grow organically, and the volume growth for low value-adding products was particularly good during the second half of the year. The strong product development of recent years


AAK Annual Report 2016
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