Malmo / SE. (aak) Swedish AarhusKarlshamn AB (AAK) announced its Interim Report for the Fourth quarter and Year-end 2012. Chief Executive and President Arne Frank comments:
Record high operating profit driven by an extraordinary performance in Food Ingredients Operating profit adjusted for hurricane Sandy («Sandy») reached a record high for the fourth quarter of 292 million SEK (265), an improvement of ten percent compared to the corresponding quarter in 2011. Operating profit per kilo adjusted for Sandy amounted to 0,74 SEK (0,69), a significant improvement largely attributable to a continuing trend away from low margin commodity volumes. In addition, Food Ingredients had a very favourable product mix and unusually high production yields. Business Area operating profit adjusted for Sandy*:
- Food Ingredients reached a record high fourth quarter of 220 million SEK (151), an improvement of 46 percent
- Chocolate + Confectionery Fats reported operating profit of 82 million SEK (115)
- Technical Products + Feed reported stable profits at 21 million SEK (21)
Operating profit for the fourth quarter including Sandy* effects amounted to 271 million SEK (265), an improvement of two percent. Earnings per share increased by four percent, from 4,82 SEK to 5,01 SEK. Sales amounted to 4’205 million SEK (4’483), reflecting lost sales related to Hurricane Sandy and lower raw material prices. Continued very strong operational cash flow Continuing strong cash flow in the fourth quarter amounted to 439 million SEK (499), including a reduction in working capital of 112 million SEK (289). With the raw material price evolution during the second half of 2012, AAK will display a continuing reduction in working capital in the first half of 2013. The proposed dividend is 5,25 SEK (4,75) per share an increase of 0,50 SEK or eleven percent.
Business development
During the fourth quarter Group volume increased by two percent. Food Ingredients continued to demonstrate very strong development, particularly in Bakery and Infant Nutrition, while commodity volumes in the UK continued to decline. Further, Scandinavia lost some low margin volumes. Chocolate + Confectionery Fats continued as expected to be challenged and Technical Products + Feed stabilized. The AAK plants in New Jersey, US which were affected by Hurricane Sandy are back in operation. Sandy negatively impacted operating profit in the fourth quarter by estimated 21 million SEK. AAK Acceleration and recent acquisitions We continue to see positive effects of the AAK Acceleration program (Growth-Efficiency-People). Recent acquisitions are developing in line with plans.
Concluding remarks
The impact on our industry from the more difficult general economy in Europe is, as we all know, really difficult to predict. However, based on AAK´s customer value propositions for health and reduced costs, our customer product co-development and solutions approach and the AAK Acceleration program, we continue to remain prudently optimistic for the future. The main drivers are expected to be our strong Food Ingredients business and the expected recovery in our Chocolate + Confectionery Fats business. The performance of the Chocolate + Confectionery Fats business is expected to stabilize in the first part of 2013 and, provided the cocoa butter price remains at the current more normal level. It is expected to start improving significantly during the second half of 2013.
