Malmo / SE. (aak) Swedish AAK Group (former AarhusKarlshamn AB) has decided to make a controlled exit from its operations and investments in Russia. In March, AAK communicated a temporary halt of deliveries to, and sales in, Russia. Since then, a careful evaluation has been carried out, resulting in a decision to permanently wind up the business in the country. The company has initiated this sensitive and difficult process, focusing on executing it in a controlled manner to ensure both legal compliance and the safety of its employees. Russia makes up for some 3 percent of AAK’s volumes, as measured in metric tons.
Part of the exit refers to leaving a local joint venture (JV), in which AAK holds a 75 percent stake. The aim is to reach an agreement to let the AAK stake revert to the partner from which it was originally acquired. The JV makes up for approximately half of AAK’s volumes in the country or 1.5 percent of the Group’s total volumes, as measured in metric tons – most of which are reported in Food Ingredients.
The remaining half of the Russian volumes are imported to and sold via AAK’s Russian sales company, which will be closed. Most of these volumes are reported in business area Chocolate + Confectionery Fats. AAK is now working diligently to re-route as much as possible of this to customers in other geographies.
The exit and its effects
The exit is estimated to lead to a cost of SEK 300 to 350 million, affecting the income statement in the second quarter. Given an expected gradual transfer of volumes, AAK estimates that the total impact on operating profit will be in the range of SEK 75 to 100 million in 2022.