The Company’s largest business area, Food Ingredients,
44
reported a record-high operating profit of SEK
1,366 million (1,205), an increase of 13 percent. The
operating profit per kilo increased by 11 percent to
SEK 0.89 (0.80). The increase in operating profit was
primarily driven by semi-speciality solutions in Dairy,
Bakery and Foodservice. The performance within the
Special Nutrition segment was mixed. Lower birth
rates in China and destocking by some customers had
a negative impact on Infant Nutrition while Medical
Nutrition continued to grow. Solutions for plant-based
foods generated strong volume and profit growth.
Chocolate & Confectionery Fats reported an improvement
in operating profit of 6 percent to SEK 794 million
(747). The use of low-yielding shea kernels with a higher
cost base when compared to using normal-yielding
shea kernels impacted operating profit negatively. The
profit growth was driven by an improved product mix
and some favorable spot business opportunities during
the second half of the year. Investment projects to
increase capacity and strengthen the supply chain have
been completed according to plan. The sourcing season
for new kernels has been good and with new kernels at
hand and additional production capacity, the cost level
is expected to normalize within the business area by
the middle of the first quarter 2020. Volumes increased
by 7 percent. Operating profit per kilo decreased from
SEK 1.74 to SEK 1.73 as a consequence of the yield
challenges.
Operating profit for AAK’s smallest business area,
Technical Products & Feed, decreased by 3 percent
from SEK 155 million to SEK 150 million. Compared to
the record-high operating profit in 2018, both the fatty
acids business and feed business declined. Compared
to historical performances, the business area is
operating
on a significantly higher operating profit level
due to a successful implementation of the company’s
co-development approach within the business area
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.
New strategic direction
During the year, the company has reviewed its market
and capabilities to define AAK’s strategic direction
going forward. Building on a very strong historical
performance, we will preserve the DNA of our company.
Passion, drive and entrepreneurship that can be found
in all corners of AAK, our unique co-development
approach and customer centricity, and our determined
focus on sustainability will remain key going forward.
The strategic direction will be focused on the opportunities
within the specific industries we serve as well
as sustainability, health and nutrition. We will step up
our focus and investments within Plant-based Foods
and develop a Health & Nutrition platform. For Special
Nutrition and Chocolate & Confectionery Fats we will
invest for continued growth while focusing on optimizing
our performance within Bakery and Dairy.
Acquisitions
During the first quarter, AAK acquired the Dutch
company MaasRefinery B.V. and British foodservice
company BD Foods Ltd. MaasRefinery had revenues of
SEK 50 million in 2018 and BD Foods’ revenues for the
same year amounted to SEK 120 million. Neither of the
transactions had a significant impact on AAK’s earnings.
Acquisition-related costs of SEK 9 million were charged
during the first quarter.
During the second quarter, AAK further strengthened
its position in the strategic and fast-growing Indian
market by acquiring an additional 13 percent of the
shares of AAK Kamani, and during the fourth quarter,
AAK acquired another 5 percent. AAK now owns 69
percent of AAK Kamani.
During the third quarter, AAK acquired 80 percent
of Soya International (Europe) Ltd. The UK-based
company focuses on sourcing, processing and distribution
of non-GMO semi-speciality and speciality lecithins.
Soya International has a third-party processing facility in
the Netherlands and holds well-established relationships
with customers and distributors in 40 markets globally.