President and CEO:
A strong year with continued profit growth
Looking back at 2019, there is no doubt that it has been
a strong year for AAK. In terms of financial development,
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we have seen year-over-year growth in volumes,
operating profit, operating profit per kilo, and earnings
per share. We have also made three strategic acquisitions,
increased our ownership in our joint venture AAK
Kamani in India, and brought some key products to
market.
Profit growth in line with our ambition
Compared to 2018, we managed to grow our operating
profit with 10 percent, in line with our ambition.
Business area Food Ingredients was our main driver
with a 13 percent increase in operating profit. Dairy,
Bakery and Foodservice all contributed nicely as did our
solutions to plant-based foods. The picture for Special
Nutrition was more mixed. Volumes were impacted
by lower birth rates in China and destocking by some
global customers. However, we continued to strengthen
our mix with a higher portion of customer co-developed
solutions.
Chocolate & Confectionery Fats also contributed
to the profitability improvement. This despite facing
some challenges throughout the year, especially due
to low-yielding shea kernels. However, the last batches
of these kernels have now been used. In addition, our
investment projects to increase capacity and strengthen
our supply chain have been completed according to
plan and with good results. The long-term market trend
for the industry looks promising and we continue to see
a strong demand for our high-end solutions.
Despite a small decline, Technical Products & Feed
continued to operate on a significantly higher operating
profit level during 2019 compared to historical performances.
This is in large part due to our successful
implementation of our customer co-development
approach within the business area.
Important product launches and strategic acquisitions
During the year, we have brought a number of important
products to market, among them our chocolate solution
COBAO™ Pure. This breakthrough innovation which
delivers significantly improved bloom-retarding effects
and extends shelf life, is expected to be beneficial
mainly in the fast-growing premium chocolate segment.
AkoPlanet™, our portfolio with tailor-made solutions for
food manufacturers developing plant-based alternatives,
has generated strong volume and profit growth since it
was launched in June 2019. Our pipeline of customer
co-development projects more than doubled between
the second and the third quarter, and then again
between the third and the fourth quarter.
The three acquisitions we have made during the
year have helped us increase our capacity in Europe,
broaden our capabilities within our foodservice offerings,
and expand our portfolio with lecithin, a key ingredient
for many customers within our core segments.
Continued progress within sustainability
We continue to make substantial progress within
our sustainability activities to contribute to the UN
Sustainable Development Goals. Through our
responsible sourcing activities, we see a positive
impact on smallholders’ livelihoods, and through our
co
development work, we continuously create new
sustainable solutions.
In West Africa, we have further strengthened our
shea sourcing program Kolo Nafaso and our work with
women’s groups. We are now directly working with more
than 230,000 women. This is an important achievement
in securing our long-term growth for shea-based
solutions and making a positive and sustainable impact
in our supply chain.
Fully aware of the impacts of global warming, we
have committed to set a Science Based Target during
2020. Climate change impact assessments have
been initiated at all production sites which will provide
valuable input for our actions going forward.
New strategic direction
The closing of 2019 also marked the end of The AAK
Way, a company program that has resulted in many
important achievements. In parallel with concluding
the program, we have reviewed our market and our
capabilities to define AAK’s strategic direction going
forward. Although we will continue to build on what has
made us successful, we will also sharpen our focus and