2 The Co-Development Company
Forward-looking statement
This presentation includes forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. This presentation contains a number of forward-looking statements including, in particular, statements about future events, future financial performances, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand. AAK has based these forward-looking statements on its views with respect to future events and financial performance. Actual financial performance of the entities described herein could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. Forward-looking statements represent estimates and assumptions only as of the date that they were made. The information contained in this presentation is subject to change without notice and AAK does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.
3 The Co-Development Company
Agenda CEO
CFO
Infant Nutrition
US – special focus CalOils
Dairy
Asia – special focus India/China
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AAK speakers
Arne Frank CEO
Fredrik Nilsson CFO
Torben Friis Lange President AAK Asia
Terry Thomas President AAK USA and Canada
Henning Villadsen Marketing Director, Dairy
Karel Stoschek President Infant Nutrition
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The Co-Development Company
2,700
100 Global
Leading
Talented Employees
Sales in countries
positions
footprint
More than
20 Production and Customization plants
25 Sales offices
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September YTD
Volume 1,442,000 MT (up 1% organically y/y)
* Excluding non-recurring items ** Fixed FX and comp. units
Operating profit* SEK 1,180 million (up 15% y/y, up 13% y/y**)
Operating profit per kilo* SEK 0.82 kg (up 8% y/y, up 12% y/y**)
ROCE R12M 15.7% (unchanged since December 2015)
Cash flow from op. activities SEK 369 million (last year 1,075)
EPS SEK 17.03 (up 3% y/y)
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FI – January to September
870
890
910
930
950
970
990
2015 2016
Volume ('000 MT)
600
625
650
675
700
725
750
2015 2016
Operating profit (SEK million)
0,50
0,60
0,70
0,80
0,90
2015 2016
Operating profit per kilo (SEK)
+5% +11%
+6%
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FI volume – January to September
0255075
100125150175200225250275300325350375400425
Bakery Food Service InfantNutrition
DairySolutions
Other nichespecialities
Frying &Other
commodity
MT
2012
2013
2014
2015
2016
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FI EBIT– January to September
0
25
50
75
100
125
150
175
200
225
250
275
Bakery Food Service InfantNutrition
DairySolutions
Other nichespecialities
Frying &Other
commodity
SEK
mill
ion
2012
2013
2014
2015
2016
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FI EBIT/kg– January to September
0,000,200,400,600,801,001,201,401,601,802,002,202,402,602,803,003,20
Bakery Food Service InfantNutrition
DairySolutions
Other nichespecialities
Frying &Other
commodity
SEK
/kg 2012
2013
2014
2015
2016
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FI organic growth – January to September
-5%
0%
5%
10%
15%
20%
25%
Bakery Food Service Infant Nutrition Dairy
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CCF – January to September
200
220
240
260
280
300
2015 2016
Volume ('000 MT)
375400425450475500525550
2015 2016
Operating profit (SEK million)
1,60
1,70
1,80
1,90
2,00
2015 2016
Operating profit per kilo (SEK)
+19% +18%
-1%
The Co-Development Company 13
Cocoa butter price
For information regarding cocoa and cocoa butter please refer to information at www.icco.org
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Since last Capital Market Day
Acquisition
Product development AAKtion
New factories in Brazil and China
CSR
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On plan
Sales
Customer co-development
Innovation Service
Quality
Productivity
The first choice for value-adding vegetable oil solutions
SALES INNOVATION EXECUTION
PEOPLE
Behind plan
Ahead of plan
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AAK Palm Oil Policy Source palm oil produced without destruction of
High Conservation Value (HCV) areas High Carbon Stocks (HCS) forest Peatland of any depth
Ensure Free, Prior and Informed Consent (FPIC) takes place prior to new plantation development
Strongly act on any violations
Increase volume of RSPO certified palm oil
Ensure traceability in our palm oil supply chain To mills by 2014 To plantations by 2017 – under review
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Progress on sustainable palm oil Strong engagement with suppliers
Signed the AAK Palm Oil Policy Traceable to mill Independent risk assessment by Proforest Workshops at supplier locations On-site third party verification Tight and continuous follow-up Smallholder projects
Strong engagement with customers Training global sales force Workshops with customers and retailers
Continuing dialogue with all key stakeholders
Founding member and continuing on the RSPO Board
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Women group program in Burkina Faso and Ghana now reached approx 117,000 women with 99,000 in Burkina Faso
Pre-financing and micro credits done in May-July in front of the coming season
Very good results on quality Very small credit losses
Great interest from several large customers
Women Deliver is the world’s largest global conference on girls’ and women’s health, rights, and well-being
AAK was part of an exhibition showing the efforts that businesses are doing to make a positive difference for women in developing countries
CSR within shea in West Africa
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Biodiesel
Very high use of rapeseed oil and palm oil for biodiesel particularly within the EU
Encouraging information on potential “second generation” of biodiesel
New rules and then potentially followed by a “second generation” would over time significantly reduce the pressure on the availability of these raw materials
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Medium and fast growing markets
Nordics West Europe
USA CEE CIS
Asia Latin America
69%62%
47%38%
25%
18%18%
31%35%
35%
13%20% 22% 27%
40%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006 2009 2012 2016 2020
Slow growing markets Medium growing markets Fast growing markets
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Agenda Inauguration of new factory in Brazil
New speciality and semi-speciality edible oils factory Major step forward for our global growth strategy Closer to our customers in a key market
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California Oils Corporation
Annual volume of 110,000 MT Revenues of approximately SEK 1,350 million in 2015 Factory in Richmond, California Production facility offers capabilities across AAK’s core product spectrum
Dairy Infant Nutrition
Frying Confectionery
Strengthen AAK’s presence in a very important market Transform AAK into a true national speciality and semi-speciality edible oils company in the US Bring AAK's customer co-development approach to a national level in the US and Canada Focus on cross-selling AAK products, leveraging customers and customer co-development
Bakery
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Management ambition, 2010–2016* Ambition probably reached in 2016 but with some support of M&A and partly translation differences
Much larger investments in organization for;
Organic growth, particularly in China and Brazil R&D, people and IP
Situations in Russia, Ukraine, Middle East and Brazil not anticipated in 2010
* As expressed at the Capital Market Day November 10, 2010
800 800
400
400
Acquisitions Organic growth Productivity Operating profit 2010
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Our strategy for future profitable growth
Innovation &
Mix
Organic growth Efficiency Selective
acquisitions Efficiency
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World population is increasing
7.3 billion in 2015 8.5 billion in 2030 16%
By 2030, 5 billion will be living in urban areas – up
from 3.5 billion 43%
45% of all population growth is in Asia
Global middle class population will grow by 150% *United Population Fund; UN projections; Reuters
Strong business drivers
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Population growth* - market opportunity
Production plants Customization plants Sales offices Sourcing operations Customer innovation centres
+12% (420m)
+13% (53m)
+12% (60m)
* United Nation population growth 2015-2030
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Current market growth estimates
Production plants Customization plants Sales offices Sourcing operations Customer innovation centres
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AAK year to date vs market growth
Production plants Customization plants Sales offices Sourcing operations Customer innovation centres
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AAK’s position in growing markets
North America Strong position with national wide presence through recent acquisition
Asia Pacific Invested in future growth through greenfield in China and a perfect match between surging population in India and our stake in AAK Kamani
South Latin America Invested for future growth with greenfield in Brazil, new product launches and complete team This year, these areas represent more than 50% of AAK volumes, with
substantial capacity increase pending through greenfields and acquisitions. We target to continue to grow faster than the markets
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Our drivers
Health No trans Low sat
Dairy fat alternatives and Plant based dairy Nutrition Costs optimization for
Customers Retailers Consumers
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M&A? - AAK has a very good track record of selective add on acquisitions and their integrations
California Oils Corporation (US) Q3/2016 TLC/Belovo (Belgium) Q4/2015 Miyoshi Oils & Fats Co. (JV, Japan) Q4/2015 Kamani Oil Industries Pvt Ltd. (JV, India) Q3/2015 Frita brand from Unilever (Turkey) Q3/2014 FANAGRA (Colombia) Q3/2014 CSM Benelux NV (Belgium) Q2/2014 Unipro (Turkey) Q3/2013 Crown-Foods (Denmark) Q2/2012 Oasis Foods Company (US) Q2/2012 Golden Foods/Golden Brands (US) Q3/2011
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A history of double-digit EBIT growth
0%
5%
10%
15%
20%
25%
0%
5%
10%
15%
20%
25%
Q312
Q412
Q113
Q213
Q313
Q413
Q114
Q214
Q314
Q414
Q115
Q215
Q315
Q415
Q116
Q216
Q316
AAK quarterly EBIT growth y-o-y
Quarterly growth Average growth Average organic growth
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Next management ambition?
We have built and continue building a very solid foundation
We are supported by very strong business drivers Strong organization with strong executive and local management Clear and very well aligned strategy and strategy execution High activity levels in the AAK Acceleration and AAKtion programs as well as in the 2017-2019 coming company program
So why slow down?
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Management ambition for the coming years
Average 10% year-over-year
EBIT improvement* &
Supporting a good and consistent
EPS improvement
* Excluding acquisitions and at fixed FX
Innovation &
Mix
Organic growth
Efficiency Selective acquisitions
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Concluding remarks
Based on AAK’s customer value propositions for Health and reduced costs Customer product co-development and solutions approach
We continue to remain prudently optimistic about the future
The main drivers;
We are expecting a continued positive underlying development for Food Ingredients We are expecting continued improvement in Chocolate & Confectionery Fats