AarhusKarlshamn (AAK) has reported that volumes increased by 3 percent (organic growth negative 1 percent) compared to the first quarter 2013. Speciality and high-end semi-speciality volumes in Food Ingredients developed very well. Infant Nutrition specialities continued its strong trend and the recent improvements in Dairy Fat Alternatives continued further.
Commodity volumes were low this quarter. Chocolate & Confectionery Fats volumes developed favorably with a more profitable product mix including a good growth in CBE and high-end semi-specialities. Technical Products & Feed also improved.
Net sales increased by SEK 118 million mainly due to the acquisition of Unipro. Unipro, which was acquired in September 2013, developed according to plan.
"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 ", said Arne Frank, CEO and President.
Operating profit was a record high for the first quarter, reaching SEK 287 million (242), an improvement of 19 percent. The impact of currency translation was negative SEK 1 million. Operating profit per kilo continued to improve at SEK 0.72 (0.62), an increase of 16 percent. Operating profit per kilo in Food Ingredients was SEK 0.69 (0.63), largely affected by a favourable product mix with stable growth in specialities and high-end semi-specialities. Operating profit per kilo in Chocolate & Confectionery Fats improved by 29 percent at SEK 1.51 (1.17), as a result of a better product mix with higher CBE volumes and margins. Technical Products & Feed improved by 5 percent at SEK 0.41 (0.39) per kilo. The costs for Group Functions have increased SEK 6 million mainly as a consequence of the increased management ambition related to AAKtion, specifically Innovation, by adding resources for new product development.
Net financial cost The net financial cost increased slightly, amounting to SEK 26 million (23).
Cash flow and Investments Operating cash flow in the first quarter amounted to SEK 81 million (213). As earlier predicted and communicated working capital increased and the increase amounted to SEK 176 million (decrease by 4 last year). Working capital is expected to continue to increase due to the expected growth in Chocolate & Confectionery Fats.
After net investments amounting to SEK 167 million (95), cash flow was negative SEK 86 million (positive 118). AAK strategic investment in Brazil AAK has decided to commence construction of a new speciality and semi-speciality factory in Jundiai, São Paulo, Brazil. This investment is expected to be approximately SEK 400 million over a two-year period. The start-up of the new factory is planned for the latter part of 2015 and fully utilized it will increase AAK´s total capacity by 100,000 to 120,000 MT.
The new factory will expand our product portfolio of Food Ingredients and Chocolate & Confec-tionery products in Brazil and particularly strengthen our ability to supply Bakery and Dairy solutions as well as further develop our Chocolate & Confectionery business. The new factory will include an Innovation Center which will give our customers the possibility to work closely with AAK´s Customer Innovation team. AAK acquires bakery fats specialist in Belgium On April 9, 2014 AAK announced agreement to acquire the oils and fats business of CSM Benelux NV in Merksem. The company is a leading bakery fats supplier to the bakery markets in Belgium, the Netherlands and France. The acquired business employs around 100 people and had revenues of approximately SEK 970 million in 2013.
The business produces a variety of bakery fat solutions, margarines and pumpable shortenings. The acquisition includes the factory in Merksem, an experienced sales force, application specialists offering customized solutions, and a bakery innovation center. The innovation center will give customers the opportunity to work closely with AAK´s Customer Innovation teams.
The equity/assets ratio amounted to 44 percent (43 percent at 31 December 2013). Net debt at 31 March 2014, amounted to SEK 2,260 million (SEK 2,255 million on 31 December 2013). At 31 March 2014, the Group had total committed credit facilities of approximately SEK 4,798 million (4,716 as of December 31, 2013), with SEK 2,388 million of unused committed credit facilities at quarter-end.
