AAK (AAK) Q2 2024 earnings summary

Executive summary

• Achieved 4% volume growth to 525,000 MT in Q2 2024, with operating profit up 27% to SEK 1,118 million, driven by Chocolate & Confectionery Fats and Food Ingredients, while Technical Products & Feed declined due to a one-off production stop.

• Operating profit per kilo increased 22% year-over-year to SEK 2.13; return on capital employed reached 21.5%.

• Operating cash flow was SEK 1,002 million, solid despite higher working capital from increased volumes.

• Major sustainability progress: 83% deforestation-free palm oil sourcing and 93% traceability to plantation by end-2023, with bio-boilers at Aarhus reducing CO2 emissions by over 90% and saving SEK 100 million annually.

• Investments in EUDR compliance and sustainability, including SEK 100 million for European facility upgrades and IT systems.

Financial highlights

• Q2 2024 operating profit: SEK 1,118 million (+27% YoY); profit for the period: SEK 809 million (+32% YoY); volume reached 525,000 MT (+4% YoY).

• Operating profit per kilo was SEK 2.13 (+22% YoY); net sales: SEK 11,033 million (-2% YoY).

• Dividend payout of SEK 960 million in Q2.

• CapEx for Q2 was just over SEK 300 million; SEK 570 million year-to-date; full-year guidance remains SEK 1.2 billion.

• Temporary stock buildup for EUDR expected to negatively impact cash flow by SEK 500 million in H2, reversing in H1 2025.

Outlook and guidance

• Management remains prudently optimistic, targeting average operating profit growth of 10% over time, with ongoing investments in compliance and operational efficiency.

• EUDR-related working capital effects expected to normalize in 2025.

• Focus on balancing value and volume, with extra costs for traceability and legality verification due to EUDR.