Quarterly Report • Feb 3, 2017
Quarterly Report
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Fourth quarter and Year-end report, 2016
We are happy and proud to see that our determined, targeted and hard work based upon the clear strategy is yielding good results. For both the quarter and the full year AAK achieved again a record-high operating profit. The double-digit year-on-year improvement for the Group continued, a trend since 2010. This is despite parts of the world markets experiencing material challenges.
Operating profit, excluding non-recurring items, reached SEK 435 million (388), an improvement of 12 percent compared to the corresponding quarter in 2015. The currency translation impact was negative SEK 8 million, mainly related to Food Ingredients. Operating profit, at fixed foreign exchange rates and including non-recurring items, improved by 23 percent.
Food Ingredients reported a strong quarter with high single-digit profit growth due to a continued improved product mix, including a higher portion of customer co-developed solutions. Ramp-up costs in Brazil have, according to plan, been absorbed in the reported profit.
Chocolate & Confectionery Fats reported an impressive quarter with strong double-digit organic volume growth and profit growth.
Technical Products & Feed was in line with the previous two quarters but had a more challenging development compared to the exceptionally strong corresponding quarter in 2015.
Total volumes continued to grow nicely and were up 7 percent (6). Organic volume growth was 2 percent (1), despite continued declining commodity volumes in Food Ingredients where the growth in 2015 was exceptional. However, the demand for speciality and semi-speciality products continued to be strong, generating organic volume growth of 5 percent (0).
Business Area operating profit:
• Technical Products & Feed reached SEK 24 million (32).
Operating profit per kilo, excluding non-recurring items, reached SEK 0.83 (0.79), an improvement of 5 percent. The currency translation impact was negative SEK 0.02.
Operating profit per kilo for Food Ingredients increased to SEK 0.79 (0.77). This was due to an improved product mix, offset by a negative currency translation impact and ramp-up costs related to greenfield investments. At fixed foreign exchange rates, operating profit per kilo improved by 5 percent.
Operating profit per kilo for Chocolate & Confectionery Fats improved strongly and reached SEK 1.69 (1.57), an improvement of 8 percent. There was continued organic volume growth for both speciality and semi-speciality products in the quarter with the latter being particularly strong. Ramp-up costs related to greenfield investments have had a negative impact on operating profit per kilo.
Operating profit per kilo for Technical Products & Feed decreased, reaching SEK 0.34 (0.45).
Earnings per share increased by 18 percent, to SEK 6.69 (5.65). This is despite increased financial costs due to extended borrowings in high-interest rate countries (Brazil, China and India) and increased earnings in countries with high tax rates.
Sales amounted to SEK 6,326 million (5,266). The increase was mainly due to the positive product mix, increased raw material prices and acquisitions, partly offset by a negative translation impact of SEK 96 million.
The demand for speciality and semi-speciality products was stable, generating organic volume growth of 1 percent (1). The picture between the segments was mixed though.
The Bakery segment had another challenging quarter, particularly in Western Europe. In other regions, however, we are starting to see some improvements.
The Dairy segment continued the trend from previous quarters and reported solid organic
volume growth. Several regions and markets showed strong growth. Milk fat prices have been at a very low level for several quarters but have increased since the summer.
Special Nutrition, comprised of Infant, Senior and Medical Nutrition, reported double-digit volume growth. This was driven by an extraordinary volume growth for our Infant Nutrition product range Akonino®. Our other Infant Nutrition product range InFat®, sold through Advanced Lipids AB, a joint venture of AAK and Enzymotec, had a more challenging quarter after relatively strong volume growth last year. However, the product mix was significantly better.
Foodservice reported organic volume growth with good development particularly in the UK and the US.
Commodity products showed negative volume development after exceptional growth in 2015.
Total volumes increased by 16 percent (2). Organic volume growth in the quarter was 16 percent (negative 2).
There was continued organic volume growth for both high-end and low-end products in the quarter with the latter showing particularly strong growth for the second consecutive quarter.
After two years of severely deteriorating market conditions in Russia and Ukraine, the strong growth during the first three quarters continued, but still from low levels.
Operating cash flow including changes in working capital amounted to SEK 843 million (661). Cash flow from working capital was positive, amounting to SEK 426 million (292). The strong cash flow was due to increased accounts payables and reduced accounts receivables, this despite organic volume growth. Increased raw material prices and working capital tied up for the greenfield investments continued to have a negative impact on the cash flow.
Calculated on a rolling 12 months basis, Return on Capital Employed (ROCE) was 15.8 percent (15.7 at December 31, 2015). This is despite the negative effect of higher working
capital due to increased raw material prices, greenfield investments and acquisitions.
Our greenfield project in Brazil is progressing according to plan and volumes are increasing quarter by quarter.
Our China greenfield project also continues according to plan. The first limited volumes will be delivered during the first quarter 2017.
To be able to deliver the whole product range from the factories, the gradual ramp-ups will continue during 2017.
Our company program for 2014–2016, "AAKtion", has been completed during the quarter. The overall implementation of the program has progressed well over its three years.
Our new company program, The AAK Way, will guide us up through 2019. Our key focus with the program is to enable the company to continue to deliver strong organic growth. This will be achieved by focusing on five priority areas: Go to Market, Operational Excellence, Special Focus Areas, Innovation, and People.
In parallel to our new company program we have established a new management ambition for the coming years. We expect, on average, a 10 percent year-on-year improvement in operating profit which will support a good and consistent improvement in earnings per share. The ambition will be achieved through organic growth, innovation, a continued improved product mix, and improved efficiency.
Based on AAK's customer value propositions for health and reduced costs, and our customer product co-development and solutions approach, we continue to remain prudently optimistic about the future.
The main drivers are the continued positive underlying development in Food Ingredients and the continued improvement in Chocolate & Confectionery Fats.
Arne Frank Chief Executive Office
| Q4 | Q4 | Full year | Full year | |||
|---|---|---|---|---|---|---|
| SEK million (unless otherwise stated) | 2016 | 2015 | % | 2016 | 2015 | % |
| Income statement | ||||||
| Volumes ('000 MT) | 524 | 491 | +7 | 1,966 | 1,833 | +7 |
| Operating profit excluding non-recurring items | 4351) | 3882) | +12 | 1,6153) | 1,4114) | +14 |
| Operating profit including non-recurring items | 4501) | 3732) | +21 | 1,6153) | 1,4094) | +15 |
| Net profit | 287 | 245 | +17 | 1,040 | 945 | +10 |
| Financial position | ||||||
| Total assets | 17,184 | 13,896 | - | 17,184 | 13,896 | - |
| Equity | 7,576 | 6,650 | - | 7,576 | 6,650 | - |
| Net working capital | 3,604 | 3,087 | - | 3,604 | 3,087 | - |
| Net interest-bearing debt | 2,620 | 2,083 | - | 2,620 | 2,083 | - |
| Cash flow | ||||||
| EBITDA | 574 | 490 | +17 | 2,079 | 1,840 | +13 |
| Cash flow from operating activities | 843 | 661 | - | 1,213 | 1,736 | - |
| Cash flow from investing activities | -327 | -549 | - | -1,421 | -1,016 | - |
| Free cash flow | 516 | 112 | - | -208 | 720 | - |
| Earnings per share | ||||||
| Earnings per share before dilution, SEK | 6.69 | 5.65 | +18 | 23.71 | 22.17 | +7 |
| Earnings per share after dilution, SEK | 6.69 | 5.64 | +19 | 23.71 | 22.12 | +7 |
| Key figures | ||||||
| Volume growth, % | +7 | +6 | - | +7 | +8 | - |
| Operating profit per kilo (excl. non-recurring items), SEK |
0.83 | 0.79 | +5 | 0.82 | 0.77 | +6 |
| Return on Capital Employed (R12 months) | 15.8 | 15.7 | +1 | 15.8 | 15.7 | +1 |
| Net debt / EBITDA, multiple | 1.26 | 1.13 | +12 | 1.26 | 1.13 | +12 |
1) Non-recurring items for the fourth quarter 2016 amounted to SEK 15 million and consist of a reassessment of the preliminary negative goodwill relating to the acquisition of California Oils Corporation.
2) Non-recurring items for the fourth quarter 2015 consist of acquisition costs of SEK 15 million related to Kamani Oil Industries Pvt. and TLC. 3) Non-recurring items for the full year 2016 amounted to SEK 0 million and consist of acquisition costs of SEK 15 million and a net positive impact of SEK 15 million related to the acquisition of California Oils Corporation.
4) Non-recurring items for the full year 2015 amounted to negative SEK 2 million and consist of acquisition costs of SEK 15 million and 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.
Volumes increased by 7 percent (6) compared to the fourth quarter 2015. Organic volume growth was 2 percent (1) despite continued declining commodity volumes in Food Ingredients where the growth in 2015 was exceptional. However, the demand for speciality and semi-speciality products was strong, generating organic volume growth of 5 percent (0).
Sales amounted to SEK 6,326 million (5,266). The increase was mainly due to the positive product mix, increased raw material prices and acquisitions, partly offset by a negative translation impact of SEK 96 million.
Operating profit, excluding non-recurring items, reached SEK 435 million (388), an improvement of 12 percent compared to the corresponding quarter in 2015. The currency translation impact was negative SEK 8 million, mainly related to Food Ingredients. Operating profit at fixed foreign exchange rates and including non-recurring items, improved by 23 percent. Operating profit, including non-recurring items, amounted to SEK 450 million (373).
Operating profit per kilo, excluding non-recurring items, reached SEK 0.83 (0.79). The currency translation impact was negative SEK 0.02.
Net financial cost increased, reaching SEK 46 million (29). The Group's borrowings in highinterest rate countries (Brazil, China and India) have increased due to ongoing greenfield
projects, recently made acquisitions, and increased working capital due to higher raw material prices.
Operating cash flow including changes in working capital amounted to SEK 843 million (661). Cash flow from working capital was positive, amounting to SEK 426 million (292). The strong cash flow was due to increased accounts payables and reduced accounts receivables, this despite organic volume growth. Increased raw material prices and working capital tied up for the greenfield investments continued to have a negative impact on the cash flow.
Cash outflow from investing activities amounted to SEK 327 million (549). The lower investments are mainly due to the completion of our greenfield project in Brazil.
The equity/assets ratio amounted to 44 percent (48 percent at December 31, 2015). Net debt at December 31, 2016 amounted to SEK 2,620 million (SEK 2,083 million on December 31, 2015). At December 31, 2016 the Group had total committed credit facilities of approximately SEK 6,139 million (5,924 as of December 31, 2015), with approximately SEK 3,388 million of unused committed credit facilities.
The average number of employees at December 31, 2016 was 2,971 (2,815 at December 31, 2015).
Full year
| Operating profit | 2016 | 2015 | % | 2016 | 2015 | % | |
|---|---|---|---|---|---|---|---|
| Volumes ('000 MT) | 354 | 335 | +6 | 1,325 | 1,258 | +5 | |
| +8 % |
Net sales, SEK million | 4,146 | 3,542 | +17 | 14,707 | 13,556 | +8 |
| Operating profit per kilo | Operating profit, SEK million | 278 | 257 | +8 | 996 | 903 | +10 |
| +3 % |
Operating profit per kilo, SEK | 0.79 | 0.77 | +3 | 0.75 | 0.72 | +4 |
Full year
Q4
The demand for speciality and semi-speciality products was stable, generating organic volume growth of 1 percent (1). The picture between the segments was mixed though.
The Bakery segment had another challenging quarter, particularly in Western Europe. In other regions, however, we are starting to see some improvements.
The Dairy segment continued the trend from previous quarters and reported solid organic volume growth. Several regions and markets showed strong growth. Milk fat prices have been at a very low level for several quarters but have increased since the summer.
Special Nutrition, comprised of Infant, Senior and Medical Nutrition, reported double-digit volume growth. This was driven by an extraordinary volume growth for our Infant Nutrition product range Akonino®. Our other Infant Nutrition product range InFat®, sold through Advanced Lipids AB, a joint venture of AAK and Enzymotec, had a more challenging quarter after relatively strong volume growth last year. However, the product mix was significantly better.
Foodservice reported organic volume growth with good development particularly in the UK and the US.
Commodity products showed negative volume development after exceptional growth in 2015.
Q4
Sales amounted to SEK 4,146 million (3,542). The increase was mainly due to acquisitions, increased raw material prices, and an improved product mix, partly offset by lower commodity volumes, and a negative currency translation impact of SEK 111 million.
Operating profit improved by 8 percent to SEK 278 (257), due to a continued improved product mix, including a higher portion of customer codeveloped solutions. Ramp-up costs in Brazil have, according to plan, been absorbed in the reported profit growth. The currency translation impact was negative SEK 8 million.
Operating profit per kilo for Food Ingredients increased to SEK 0.79 (0.77). This was due to an improved product mix, offset by a negative currency translation impact and ramp-up costs related to greenfield investments. At fixed foreign exchange rates, operating profit per kilo improved by 5 percent.
We expect a continued positive underlying development for this business area.
| Q4 | Q4 | Full year | Full year | ||||
|---|---|---|---|---|---|---|---|
| Operating profit | 2016 | 2015 | % | 2016 | 2015 | % | |
| Volumes ('000 MT) | 100 | 86 | +16 | 367 | 312 | +18 | |
| +25 % |
Net sales, SEK million | 1,858 | 1,414 | +31 | 6,117 | 5,315 | +15 |
| Operating profit per kilo | Operating profit, SEK million | 169 | 135 | +25 | 664 | 553 | +20 |
| +8 % |
Operating profit per kilo, SEK | 1.69 | 1.57 | +8 | 1.81 | 1.77 | +2 |
Total volumes for the business area increased by 16 percent (2). Organic volume growth continued to be impressive, increasing by 16 percent in the quarter (negative 2).
There was continued organic volume growth for both high-end and low-end products in the quarter with the latter showing particularly strong growth for the second consecutive quarter.
After two years of severely deteriorating market conditions in Russia and Ukraine, the strong growth during the first three quarters continued, but still from low levels.
Net sales increased by SEK 444 million as a consequence of volume growth, increased raw material prices, acquisitions, and a positive currency translation impact of SEK 14 million.
Recent years' strong customer co-development, new innovative solutions, and further expansion of our geographical footprint are continuing to yield positive results.
As expected, operating profit improved further, by 25 percent, and reached SEK 169 million (135). There was no currency translation impact in the quarter.
Operating profit per kilo for Chocolate & Confectionery Fats improved strongly and reached SEK 1.69 (1.57), an improvement of 8 percent. There was continued organic volume growth for both speciality and semi-speciality products in the quarter with the latter being particularly strong. Ramp-up costs related to greenfield investments have had a negative impact on operating profit per kilo.
We are expecting continued improvement in Chocolate & Confectionery Fats.
| Q4 | Q4 | Full year | Full year | ||||
|---|---|---|---|---|---|---|---|
| Operating profit | 2016 | 2015 | % | 2016 | 2015 | % | |
| Volumes ('000 MT) | 70 | 70 | +0 | 274 | 263 | +4 | |
| -25 % Net sales, SEK million |
322 | 310 | +4 | 1,233 | 1,243 | -1 | |
| Operating profit per kilo | Operating profit, SEK million | 24 | 32 | -25 | 100 | 88 | +14 |
| -24 % |
Operating profit per kilo, SEK | 0.34 | 0.45 | -24 | 0.36 | 0.33 | +9 |
Volumes were stable compared to the corresponding quarter in 2015.
Net sales for the business area increased by SEK 12 million as a result of higher raw material prices.
Operating profit reached SEK 24 million (32). Last year's corresponding quarter was exceptionally strong for the fatty acids business. Pressure from higher raw material prices had an unfavourable impact on operating profit.
Operating profit per kilo decreased, reaching SEK 0.34 (0.45).
The operating profit is expected to be stable or to improve slightly compared to the prior year.
Total volumes were up 7 percent (8) and organic volume growth was up 2 percent (3).
Sales amounted to SEK 22,057 million (20,114). The increase was mainly due to the positive product mix, increased raw material prices, and acquisitions, partly offset by a negative currency translation impact of SEK 648 million.
Operating profit, excluding non-recurring items, reached SEK 1,615 million (1,411), an improvement of 14 percent. Operating profit at fixed foreign exchange rates, and excluding nonrecurring items, improved by 17 percent.
Including non-recurring items, operating profit reached SEK 1,615 million (1,409), an improvement of 15 percent. Non-recurring items amounted to net SEK 0 million (negative net 2). The currency translation impact was negative SEK 37 million.
Operating profit per kilo, excluding non-recurring items, reached SEK 0.82 (0.77). The currency translation impact was negative SEK 0.02.
Net financial cost increased, reaching SEK 170 million (114). The Group's borrowings in highinterest rate countries (Brazil, China and India) have increased due to ongoing greenfield projects, recently made acquisitions, and increased working capital due to higher raw material prices.
Reported tax costs correspond to an average tax rate of 28 percent (27). The reported tax rate is 1 percent higher than last year due to increased earnings in countries with higher tax rates.
Operating cash flow including changes in working capital amounted to SEK 1,213 million (1,736). Cash flow from working capital was negative, amounting to SEK 263 million (positive 380). This was due to the impact from substantially increased raw material prices during the last quarters, combined with working capital tied up for the two greenfield investments.
Cash outflow from investing activities amounted to SEK 1,421 million (1,016). The increased
outflow is mainly related to acquisitions and the greenfield projects in Brazil and China.
AAK announced on July 15, 2016 its entry into an agreement to acquire California Oils Corporation. The transaction was completed on August 31. Acquisition costs of SEK 15 million were reported in the third quarter.
The acquisition will not start contributing to AAK's operating profit until the third quarter 2017. A material turnaround of the business is planned. This will be supported by the implementation of our customer co-development concept with focus on tailor-made speciality and semi-speciality solutions.
Due to the complexity of calculating a fair value of the assets and liabilities in California Oils Corporation, AAK made a very preliminary assessment of the fair value in the third quarter which resulted in a negative goodwill, equal to planned integration costs.
In the fourth quarter AAK made a final assessment. This resulted in a negative goodwill of SEK 135 million. The planned integration costs of SEK 120 million that were recorded in the third quarter remained unchanged.
Accordingly, a non-recurring, net positive impact of SEK 15 million has been reported on the line "Operating other income" in the Income Statement on page 13.
During the third quarter AAK acquired 4.5 percent of the non-controlling interest in AAK Mexico from United Plantation Berhad. AAK now owns more than 99 percent of the shares in AAK Mexico.
Melker Schörling announced in October, 2016 that he will leave his position as Chairman of the Board of AAK AB (publ.) at the Annual General Meeting on May 17, 2017. The Nomination Committee will make a proposal for new Chairman. Melker Schörling will continue to support and act as adviser to AAK's Management as well for the Board of AAK.
As earlier communicated, Ulrik Svensson left his position as CEO of Melker Schörling AB (publ.) at the end of the year. At the same time he left his position as Board member of AAK AB (publ.).
No significant changes have taken place in relations or transactions with related parties since 2015.
AAK is a global company represented in many countries and as such is exposed to a number of commercial and financial risks. Accordingly, risk management is an important process for AAK in its work to achieve established targets.
Efficient risk management is an ongoing process conducted within the framework of business control, and is part of the ongoing review and forward-looking assessment of operations.
AAK's long-term risk exposure is assumed not to deviate from the inherent exposure associated with AAK's ongoing business operations.
For a more in-depth analysis of risks, refer to AAK's Annual Report for 2015.
This interim report is prepared in accordance with the Swedish Annual Accounts Act and IAS 34, Interim Financial Reporting. For information regarding the accounting policies applied, see the Annual Report for 2015. The accounting policies are unchanged, compared with those applied in 2015. A number of new and amended standards are effective for periods beginning after January 1, 2016. None of these is expected to have a significant effect on the consolidated financial statements of the Group or the Parent company.
New ESMA (European Securities and Markets Authority) guidelines on Alternative Performance Measures (APMs) are effective for the financial year 2016. Accordingly, AAK publishes the explanation of use, definitions as well as reconciliations of its APMs to IFRS financial statements.
AAK presents APMs to reflect underlying business performance and to enhance comparability from period to period. APMs should not be considered as a substitute for measures of performance in accordance with the IFRS.
Definitions of Alternative Performance Measures can be found at www.aak.com under the Investor tab. For reconciliation of Alternative Performance Measures, see pages 17–18.
For definitions, see the Annual Report for 2015.
At the Annual General Meeting 2016, Mikael Ekdahl (Melker Schörling AB), Lars-Åke Bokenberger (AMF Fonder), Henrik Didner (Didner & Gerge Fonder), and Johan Strandberg (SEB Investment Management) were elected members of the Nomination Committee. Mikael Ekdahl was elected Chairman of the Nomination Committee.
The Annual General Meeting will be held on May 17, 2017 at 2 p.m. CET in Malmö, Sweden (Malmö Arena). The Annual Report for 2016 will be available at www.aak.com from April 19, 2017 and is expected to be distributed to the shareholders during the week starting April 24, 2017. The report will at that time also be available at AAK's headquarters.
Shareholders who wish to participate at the Annual General Meeting must be registered in the share register maintained by Euroclear Sweden AB on May 11, 2017. To be eligible to participate in the Annual General Meeting, shareholders with nominee-registered holdings should temporarily re-register their shares in their own names through the agency of their nominees so that they are recorded in the share register in good time before May 11, 2017. Notification of attendance should be made to AAK's head office no later than 4 p.m. CET on May 11, 2017.
The Board of Directors and the CEO propose that a dividend of SEK 8.75 (7.75) per share be paid for the financial year 2016. The proposed recording day for the dividend is May 19, 2017. It is expected that the dividend will reach the shareholders on May 24, 2017.
The Parent Company is a holding company for the AAK Group. Its functions are primarily activities related to the development and administration of the Group.
The result for the Parent Company after financial items amounted to negative SEK 14 million (1).
Interest-bearing liabilities minus cash and cash equivalents and interest-bearing assets totalled a negative of SEK 1,301 million (negative 1,007 as of December 31, 2015). Investments in intangible and tangible assets amounted to SEK 5 million (4).
The Parent Company's balance sheet and income statement are shown on pages 13–14.
AAK AB (publ.) is the Parent Company of the AAK Group. The company has prepared its financial reports in accordance with the Annual Accounts Act and RFR 2 Reporting for legal entities.
No major change in the parent company since year-end.
Malmö, February 3, 2017
Melker Schörling Arne Frank Märta Schörling Chairman of the Board Chief Executive Officer Board member
Marianne Kirkegaard Lillie Li Valeur Annika Westerlund
Board member Board member Trade union representative
Leif Håkansson Trade union representative
For further information, please contact: Fredrik Nilsson CFO Mobile: +46 708 95 22 21 E-mail: [email protected]
The information is that which AAK AB (publ.) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Act. The information was submitted for publication, through the agency of the contact person set out above, at 07:50 a.m. CET on February 3, 2017.
We have reviewed the condensed interim financial information (interim report) of AAK AB (publ.) as of December 31, 2016 and the twelvemonth period then ended. The board of directors and the CEO are responsible for the preparation and presentation of the interim financial information in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA,
and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.
Malmö, February 2, 2017
PricewaterhouseCoopers
Sofia Götmar-Blomstedt Authorized Public Accountant
| Group | Parent | |||||
|---|---|---|---|---|---|---|
| Q4 | Q4 | Full year | Full year | Full year | Full year | |
| SEK million | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 |
| Net sales | 6,326 | 5,266 | 22,057 | 20,114 | 95 | 80 |
| Other operating income | 44 | 47 | 109 | 194 | 0 | 0 |
| Total operating income | 6,370 | 5,313 | 22,166 | 20,308 | 95 | 80 |
| Raw materials and supplies | -4,741 | -3,884 | -16,362 | -15,008 | - | - |
| Other external expenses | -558 | -513 | -1,973 | -1,833 | -63 | -96 |
| Cost for remuneration to employees | -492 | -425 | -1,726 | -1,590 | -101 | -88 |
| Amortization and impairment losses | -124 | -117 | -464 | -431 | -1 | -1 |
| Other operating expenses | -5 | -1 | -26 | -37 | -3 | -15 |
| Total operating costs | -5,920 | -4,940 | -20,551 | -18,899 | -168 | -200 |
| Operating profit (EBIT) | 450 | 373 | 1,615 | 1,409 | -73 | -120 |
| Income from shares in group companies | - | - | - | - | 63 | 125 |
| Interest income | 1 | 1 | 6 | 3 | 0 | 0 |
| Interest expense | -43 | -27 | -159 | -99 | -4 | -4 |
| Other financial items | -4 | -3 | -17 | -18 | - | 0 |
| Total financial net | -46 | -29 | -170 | -114 | 59 | 121 |
| Result before tax | 404 | 344 | 1,445 | 1,295 | -14 | 1 |
| Income tax | -117 | -99 | -405 | -350 | -5 | -1 |
| Net result | 287 | 245 | 1,040 | 945 | -19 | 0 |
| Attributable to non-controlling interests | 4 | 6 | 37 | 12 | - | - |
| Attributable to the Parent company's | 283 | 239 | 1,003 | 933 | -19 | 0 |
| shareholders |
| Group | Parent | |||||
|---|---|---|---|---|---|---|
| Q4 | Q4 | Full year | Full year | Full year | Full year | |
| SEK million | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 |
| Profit for the period | 287 | 245 | 1,040 | 945 | -19 | 0 |
| Items that will not be reclassified to profit or loss: |
||||||
| Remeasurements of post-employment benefit obligations |
6 | 16 | 5 | 19 | - | - |
| 6 | 16 | 5 | 19 | - | - | |
| Items that may subsequently be reclassified to profit or loss: Translation differences Fair-value changes in cash flow hedges Tax attributable to fair-value changes in cash flow hedges |
194 2 0 196 |
-62 8 -2 -56 |
189 23 -5 207 |
44 25 -6 63 |
- - - - |
- - - - |
| Total comprehensive income for the period | 489 | 205 | 1,252 | 1,027 | -19 | 0 |
| Attributible to non-controlling interests Attributible to the Parent company's shareholders |
2 487 |
4 201 |
36 1,216 |
7 1,020 |
- -19 |
- 0 |
| Group | Parent | ||||
|---|---|---|---|---|---|
| SEK million | 31.12.2016 | 31.12.2015 | 31.12.2016 | 31.12.2015 | |
| Assets | |||||
| Goodwill | 1,686 | 1,567 | - | - | |
| Other intangible assets | 357 | 377 | 5 | 3 | |
| Tangible assets | 5,164 | 4,295 | 4 | 1 | |
| Financial assets | 32 | 52 | 5,485 | 5,476 | |
| Deferred tax assets | 201 | 97 | - | - | |
| Total non-current assets | 7,440 | 6,388 | 5,494 | 5,480 | |
| Inventory | 4,850 | 3,599 | - | - | |
| Accounts receivables | 3,027 | 2,426 | - | - | |
| Current receivables | 1,281 | 1,024 | 145 | 193 | |
| Cash and cash equivalents | 586 | 459 | - | - | |
| Total current assets | 9,744 | 7,508 | 145 | 193 | |
| Total assets | 17,184 | 13,896 | 5,639 | 5,673 | |
| Equity and liabilities | |||||
| Shareholders' equity | 7,522 | 6,597 | 4,243 | 4,590 | |
| Non-controlling interests | 54 | 53 | - | - | |
| Total equity including non-controlling | |||||
| interests | 7,576 | 6,650 | 4,243 | 4,590 | |
| Liabilities to banks and credit institutions | 2,857 | 2,132 | - | - | |
| Pension liabilities | 134 | 128 | 8 | - | |
| Deferred tax liabilities | 520 | 454 | - | - | |
| Non-interest-bearing liabilities | 320 | 288 | - | - | |
| Total non-current liabilities | 3,831 | 3,002 | 8 | - | |
| Liabilities to banks and credit institutions | 217 | 287 | - | - | |
| Accounts payables | 3,258 | 2,383 | 9 | 6 | |
| Other current liabilities | 2,302 | 1,574 | 1,379 | 1,077 | |
| Total current liabilities | 5,777 | 4,244 | 1,388 | 1,083 | |
| Total equity and liabilities | 17,184 | 13,896 | 5,639 | 5,673 |
No changes have arisen in contingent liabilities.
| SEK million | Total equity capital |
Non controlling interests |
Total equity incl. non-controlling interests |
|---|---|---|---|
| Openings equity January 1, 2016 | 6,597 | 53 | 6,650 |
| Profit for the period | 1,003 | 37 | 1,040 |
| Other comprehensive income | 213 | -1 | 212 |
| Total comprehensive income | 1,216 | 36 | 1,252 |
| Non-controlling interest Dividend |
37 -328 |
-35 - |
2 -328 |
| Closing equity December 31, 2016 | 7,522 | 54 | 7,576 |
| SEK million | Total equity capital |
Non controlling interests |
Total equity incl. non-controlling interests |
|---|---|---|---|
| Openings equity January 1, 2015 | 5,755 | 45 | 5,800 |
| Profit for the period | 933 | 12 | 945 |
| Other comprehensive income | 86 | -4 | 82 |
| Total comprehensive income | 1,019 | 8 | 1,027 |
| New issue of shares | 107 | - | 107 |
| Dividend | -284 | - | -284 |
| Closing equity December 31, 2015 | 6,597 | 53 | 6,650 |
During 2015, 569,400 new shares have been issued which have increased equity by SEK 107 million.
| SEK million | Asset | Liability |
|---|---|---|
| Financial instruments reported in balance sheet December 31, 2016 |
||
| Raw material hedge contracts | 246 | 504 |
| FX hedge contracts | 223 | 173 |
| Interest rate swaps | - | 46 |
| Total derivatives financial instruments | 469 | 723 |
| Fair value adjustment inventory | 246 | 1 |
| Total financial instruments | 715 | 724 |
| Q4 | Q4 | Full year | Full year | |
|---|---|---|---|---|
| SEK million | 2016 | 2015 | 2016 | 2015 |
| Operating activities | ||||
| Operating profit | 450 | 373 | 1,615 | 1,409 |
| Depreciation and amortization | 124 | 117 | 464 | 431 |
| Other non-cash items | -37 | -20 | -37 | -100 |
| Cash flow before interest and tax | 537 | 470 | 2,042 | 1,740 |
| Interest paid and received | -42 | -30 | -163 | -114 |
| Tax paid | -78 | -71 | -403 | -270 |
| Cash flow before changes in working capital | 417 | 369 | 1,476 | 1,356 |
| Changes in inventory | -277 | -246 | -818 | -292 |
| Changes in accounts receivables | 52 | 193 | -489 | 126 |
| Changes in accounts payables | 563 | 139 | 814 | 148 |
| Changes in other working capital items | 88 | 206 | 230 | 398 |
| Changes in working capital | 426 | 292 | -263 | 380 |
| Cash flow from operating activities | 843 | 661 | 1,213 | 1,736 |
| Investing activities | ||||
| Acquisition of intangible and tangible assets | -326 | -426 | -977 | -994 |
| Acquisition of operations and shares, net of cash acquired | -2 | -123 | -449 | -123 |
| Proceeds from sale of property, plant and equipment | 1 | 0 | 5 | 1 |
| Divestment of operations and shares | - | - | - | 100 |
| Cash flow from investing activities | -327 | -549 | -1,421 | -1,016 |
| Cash flow after investing activities | 516 | 112 | -208 | 720 |
| Financing activities | ||||
| New share issue | - | 23 | - | 107 |
| Changes in loans | -342 | -78 | 645 | -344 |
| Dividend paid | - | - | -328 | -284 |
| Cash flow from financing activities | -342 | -55 | 317 | -521 |
| Cash flow for the period | 174 | 57 | 109 | 199 |
| Cash and cash equivalents at start of period | 403 | 392 | 459 | 264 |
| Exchange rate difference for cash equivalents | 9 | 10 | 18 | -4 |
| Cash and cash equivalents at end of period | 586 | 459 | 586 | 459 |
| Q4 | Q4 | Full year | Full year | |
|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | |
| Number of shares, thousand | 42,288 | 42,288 | 42,288 | 42,288 |
| Earnings per share, SEK* | 6.69 | 5.65 | 23.71 | 22.17 |
| Earnings per share incl. dilution, SEK** | 6.69 | 5.64 | 23.71 | 22.12 |
| Earnings per share incl. full dilution, SEK*** | 6.69 | 5.65 | 23.71 | 22.16 |
| Equity per share, SEK | 177,87 | 156,77 | 177,87 | 156,77 |
| Market value on closing date, SEK | 599,50 | 627,50 | 599,50 | 627,50 |
* The calculation of earnings per share is based on weighted average number of outstanding shares.
** The calculation of earnings per share is based on weighted average number of outstanding shares including dilution from outstanding subscription options (in accordance with IAS 33).
*** Earnings per share after full dilution is calculated by dividing net income for the period by the total number of average outstanding shares for the period including a conversion of all outstanding share options to ordinary shares.
| 2015 | 2016 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Full | Full | |||||||||
| SEK million | Q1 | Q2 | Q3 | Q4 | year | Q1 | Q2 | Q3 | Q4 | year |
| Food Ingredients | 195 | 221 | 230 | 257 | 903 | 229 | 238 | 251 | 278 | 996 |
| Chocolate & Confectionery Fats | 136 | 116 | 166 | 135 | 553 | 159 | 146 | 190 | 169 | 664 |
| Technical Products & Feed | 23 | 22 | 11 | 32 | 88 | 29 | 23 | 24 | 24 | 100 |
| Group Functions | -33 | -33 | -31 | -36 | -133 | -36 | -39 | -34 | -36 | -145 |
| Total AAK Group excl. non recurring items |
321 | 326 | 376 | 388 | 1,411 | 381 | 368 | 431 | 435 | 1,615 |
| Acquisition costs and non-recurring items |
- | 13 | - | -15 | -2 | - | - | -15 | 15 | - |
| Total legal operating profit AAK Group |
321 | 339 | 376 | 373 | 1,409 | 381 | 368 | 416 | 450 | 1,615 |
| Financial net | -27 | -30 | -28 | -29 | -114 | -38 | -39 | -47 | -46 | -170 |
| Result before tax | 294 | 309 | 348 | 344 | 1,295 | 343 | 329 | 369 | 404 | 1,445 |
| % | Q4 2016 |
Q4 2015 |
Full year 2016 |
Full year 2015 |
|---|---|---|---|---|
| Food Ingredients | ||||
| Organic volume growth | -2 | 2 | -2 | 5 |
| Acquisitions/divestments | 8 | 6 | 7 | 8 |
| Volume growth as reported | 6 | 8 | 5 | 13 |
| Chocolate & Confectionery Fats | ||||
| Organic volume growth | 16 | -2 | 13 | -2 |
| Acquisitions/divestments | 0 | 4 | 5 | 1 |
| Volume growth as reported | 16 | 2 | 18 | -1 |
| Technical Products & Feed | ||||
| Organic volume growth | 0 | 3 | 4 | -2 |
| Acquisitions/divestments | 0 | 0 | 0 | -1 |
| Volume growth as reported | 0 | 3 | 4 | -3 |
| AAK Group | ||||
| Organic volume growth | 2 | 1 | 2 | 3 |
| Acquisitions/divestments | 5 | 5 | 5 | 5 |
| Volume growth as reported | 7 | 6 | 7 | 8 |
| Q4 | Q4 | Full year | Full year | |
|---|---|---|---|---|
| SEK million | 2016 | 2015 | 2016 | 2015 |
| Operating profit (EBIT) | 450 | 373 | 1,615 | 1,409 |
| Add back depreciation and amortization | 124 | 117 | 464 | 431 |
| EBITDA | 574 | 490 | 2,079 | 1,840 |
| SEK million | Full year 2016 |
Full year 2015 |
|---|---|---|
| Total assets | 17,184 | 13,896 |
| Cash and cash equivalents | -586 | -459 |
| Financial assets | -3 | -8 |
| Accounts payables | -3,258 | -2,383 |
| Other non-interest-bearing liabilities | -2,293 | -1,571 |
| Capital employed | 11,044 | 9,475 |
| Operating profit (Rolling 12 months) | 1,615 | 1,409 |
| Return on Capital Employed (ROCE), % | 14.6 | 14.9 |
|---|---|---|
| SEK million | Full year 2016 |
Full year 2015 |
|---|---|---|
| Inventory | 4,850 | 3,599 |
| Accounts receivables | 3,027 | 2,426 |
| Other current receivables, non-interest-bearing | 1,277 | 1,016 |
| Accounts payables | -3,258 | -2,383 |
| Other current liabilities, non-interest-bearing | -2,293 | -1,571 |
| Working capital | 3,603 | 3,087 |
| Full year | Full year | |
|---|---|---|
| SEK million | 2016 | 2015 |
| Current interest-bearing receivables | 3 | 8 |
| Cash and cash equivalents | 586 | 459 |
| Pension liabilities | -134 | -128 |
| Non-current liabilities to banks and credit institutions | -2,857 | -2,132 |
| Current liabilities to banks and credit institutions | -217 | -287 |
| Other interest-bearing liabilities | -1 | -3 |
| Net debt | -2,620 | -2,083 |
| SEK million | Full year 2016 |
Full year 2015 |
|---|---|---|
| Shareholders' equity | 7,522 | 6,597 |
| Non-controlling interests | 54 | 53 |
| Total equity including non-controlling interests | 7,576 | 6,650 |
| Total assets | 17,184 | 13,896 |
| Equity to assets ratio, % | 44.1 | 47.9 |
For information regarding cocoa and cocoa butter please refer to information at www.icco.org
AAK will host a conference call on February 3, 2017 at 1 p.m. CET. The conference call can be accessed via our home page, www.aak.com.
The annual and quarterly reports are also published on www.aak.com.
The interim report for the first quarter 2017 will be published on April 20, 2017.
The Annual General Meeting will be held on May 17, 2017.
The interim report for the second quarter 2017 will be published on July 17, 2017.
The interim report for the third quarter 2017 will be published on October 26, 2017.
The fourth quarter and year-end report for 2017 will be published on February 5, 2018.
This report contains forward-looking statements. Such statements are subject to risks and uncertainties as various factors, many of which are beyond the control of AAK AB (publ.), may cause actual developments and results to differ materially from the expectations expressed in this report.
The report has been translated from Swedish. The Swedish text shall govern for all purposes and prevail in the event of any discrepancy between the versions.
Fredrik Nilsson, CFO Phone: +46 40 627 83 34 Mobile: +46 708 95 22 21 E-mail: [email protected]
We develop and provide value-adding vegetable oil solutions in close collaboration with our customers, enabling them to achieve long lasting business results.
We do so through our in-depth expertise in oils & fats within food applications, working with a wide range of raw materials and broad process capabilities.
Through our unique co-development approach we bring together our customers' skills and know-how with our capabilities and mindset. By doing so, we solve customer specific needs across many industries – Chocolate & Confectionery, Bakery, Dairy, Special Nutrition, Foodservice, Personal Care, and more.
AAK's proven expertise is based on more than 140 years of experience within oils & fats. With our headquarters in Malmö, Sweden, 20 production facilities and customization plants, and sales offices in more than 25 countries, our more than 2,800 employees are dedicated to providing innovative value-adding solutions to our customers.
So no matter where you are in the world, we are ready to help you achieve long lasting results.
We are AAK – The Co-Development Company.
AAK AB (publ.)
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