AAK (AAK) Q3 2024 earnings summary

Executive summary

• Achieved 4% year-over-year volume growth across all business areas, with operating profit per kilo up 13% at fixed currencies, driven by optimization programs and favorable market conditions in chocolate and confectionery fats.

• Operating profit increased by 18% at fixed currencies, and operating cash flow reached SEK 515 million, impacted by higher working capital.

• Net debt/EBITDA remained stable at 0.39, and ROCE reached 22.1% on strong operating profit.

• Announced divestment of the North American Foodservice facility, expected to close by year-end 2024, generating a one-time cash flow of SEK 600 million.

• Sustainability progress includes verified deforestation-free palm oil rising to 89% in H1 2024.

Financial highlights

• Q3 2024 volumes rose 4% to 551,000 MT; operating profit up 18% at fixed currencies to SEK 1,256 million.

• Operating profit per kilo: SEK 2.28 (+6% YoY, +13% at fixed FX); operating cash flow: SEK 515 million.

• Net sales decreased 4% to SEK 11,171 million, mainly due to currency translation.

• ROCE (R12M) reached 22.1%, up from 19.1% at year-end 2023.

• Cash flow impacted by seasonal raw material sourcing, EUDR compliance preparations, and higher raw material prices.

Outlook and guidance

• Committed to achieving an average operating profit growth of 10% over the long term.

• Management remains prudently optimistic amid dynamic market conditions and tougher year-on-year comparisons.

• Strategic update to be presented at Capital Markets Day in November 2024.

• Ready for upcoming EU Deforestation Regulation, though a potential delay adds uncertainty.

• No abnormal customer stocking behavior observed in Q3; Q3 and Q4 typically stronger than Q1 and Q2.