Vegetable oils and fats producer AAK has released an interim report outlining strong second-quarter growth, with its Food Ingredients segment as the main driver, underscoring the strategic launch of its plant-based portfolio. The report closely follows two launches: AkoPlanet, a portfolio of tailor-made solutions for plant-based dairy, ice cream and meat alternatives; and Cobao Pure, an innovative chocolate solution marketed as delivering significantly improved bloom-retarding effects and shelf-life extension.
The company’s organic volume growth is reported at 3 percent for Q2 of 2019, where its Chocolate & Confectionery Fats segment enjoyed the strongest growth at an increase of 15 percent. Operating profit, which includes a positive currency translation impact of SEK 19 million (US$2 million), reached SEK 518 million (US$55.1 million), an improvement of 14 percent. Total volumes for this quarter reached 565,000 MT. Earnings per share increased by 18 percent, to SEK 1.42 (US$0.15).
“Chocolate & Confectionery Fats had another stable quarter and we continue to see a strong demand for high-end solutions,” says Johan Westman, AAK’s CEO. “The strongest developments were in Europe and South Latin America. As expected, lower than normal raw material yields continued to impact operating profit negatively. Our investment projects to increase capacity and strengthen our supply chain are progressing according to plan and are expected to be completed by year-end.”
Cash flow from operating activities this quarter amounted to SEK 408 million (US$43 million). Net result reached SEK 362 million (US$38.55 million), an improvement of 17 percent. Return on Capital Employed (ROCE), was 15.5 percent (from 15.8 percent on December 31, 2018).
“Dairy, Bakery and Foodservice [also] led the way, but there was good contribution from Special Nutrition as well,” adds Westman. “The strongest regional developments were in the US, North Latin America and Asia.”
AAK’s Technical Products & Feed area reported increased operating profit by 9 percent in lieu of a strong performance in 2018. “The continued good momentum was particularly driven by the feed business,” says Westman.
The company will continue to further its product development in the space of on-trend plant-based alternatives. “We offer plant-based, healthy, high value-adding oils and fats solutions by using our customer co-development approach and we see favorable underlying trends in our markets,” notes Westman. “Thus, we continue to remain prudently optimistic about the future.”
The vegetable oils and fats player sees the new plant-based alternatives portfolio as “one of the most important pillars for AAK,” as Henning Villadsen, Business Development Director, AAK, told from the floor of IFT Food Expo 2019 in New Orleans, US (June 2-5). “This is where we can deliver something to this very fast-moving plant-based segment – and where we can guarantee good taste, sustainability and health. We can provide the right storytelling at the end of the day, to the consumer, with proof to support it,” Villadsen explained.
AAK has had an active year so far, starting with the inauguration of its Customer Innovation Center in Singapore to further strengthen its capabilities and customer co-development approach in the Southeast Asian market in October 2018. The state-of-the-art center focuses on applications within Chocolate & Confectionery Fats, Bakery, Ice cream and Dairy, and Special Nutrition.
Early this year, the company acquired Dutch company MaasRefinery B.V., which also specializes in toll refining of vegetable oils and fats for the food industry. The acquisition increased AAK’s capacity and supported existing production facilities, as well as enabling continued growth.
The company also invested in expansion within the Chinese market, in March. AAK has made an approximately SEK 300 million (US$32 million) investment, in a bid to increase capacity and support volume growth for, in particular, its Special Nutrition and Bakery segments.
