financial performance - aak
TRANSCRIPT
The Co-Development Company
Financial performance
Capital Market Day 2020
Fredrik NilssonChief Financial Officer
The Co-Development Company
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.
Forward-looking statements
The Co-Development Company
Solid growth throughout 2020, apart from Q2 which was heavily impacted by the Covid-19 pandemicGrowth in year-over-year profit in all our segments in Q3
AAK has a strong track record and continues to deliver in uncertain times
Q1 Q2 Q3
509
546518
411
569
602+7%
-21%
+6%
20192020
Historic growth… …continued
11 12 13 14 15 16 17 18 190
500
2,500
1,000
2,000
1,500
SEK million/000’ MT
Operating profitVolumes
The Co-Development Company
Operating profitLower cost base creates leverage – cost-saving measures initiated in Q2
185
100
115
3533
1,400
0
1,500
50
1,550
1,350
1,450
1,600
1,650
2019 YTD
1,596
1,558
Mix Other 2020 YTDCosts
SEK million
FXVolume
-2%
The Co-Development Company
Update on our accelerated optimization efforts
Non-recurring restructuring costs of SEK 200 million related to long-term structural measures
Annual savings of SEK 150 million to be generated with full run-rate impact by second half of 2021
Non-recurring income of SEK 206 million linked to an optimization of the company’s capital structure
Net impact from non-recurring items on reported operating profit was positive SEK 6 million in the second quarter
Planned savings end of Q2 2021
Run-rate end of Q3 2020
Progress of announced savingsScope and nature of announced savings measures
The Co-Development Company
Actions to optimize costs provide strong platform for profit growthBoth short- and long-term cost-saving measures implemented
Long-term
Headcount reductions Optimizing procurement
Short-term
Headcount Furloughs, temps, unfilled vacancies Reductions in travel, trade shows, etc.
Savings measures Year-over-year savings, fixed FX
-1
-3
-10 -5 0%
Year-to-date
-4
-9
-10 -5 0%
Production
SG&A
Q3
Production
SG&A
The Co-Development Company
Continued profit growth rests on four pillars
VolumeGrowth at least in line with market growth
MixIncrease co-developed solutions
Structural growthM&A and brownfield/greenfield investments
OptimizationFocus on productivity
10%
The Co-Development Company
Strong cash flow in the first three quarters drives decreased net debt
813 53
1153,000
3,200
0
200
2,000
2,200
2,800
2,600
2,400
Acqusitions
2,977
1/1-2020
3,117
505
Cash flow from operations
CAPEX Other 30/9-2020
SEK million
-140
Net debt development year-to-date
The Co-Development Company
Net debt remains low – reduces financial risk and creates room to maneuver
0 0.00
4,500 2.00
3,000
3,5001.50
1.00
2,500 0.50
4,000
Q419
Net debt/EBITDA
Q120
Q118
Q417
SEK million
Q2 17
Q3 17
Q218
Q318
Q418
Q219
Q220
Q119
Q320
Q319
Net debt /EBITDA incl IFRS 16Net debt /EBITDA IFRS 16 impact Net debt
Net debt and debt ratio
The Co-Development Company
Diversified debt portfolio reduces financial risk and creates flexibility
Debt profile
3000
1,200900600
1,5001,8002,100
537
0
< 1 year
SEK million
1-3 year 3-5 year >5 year
1,220
2,100
Maturity profile
68%
32%
Long Term
Short Term
Committed credit facilities of SEK 6,891 million
Short-term
Long-term
The Co-Development Company
Dividend policy to pay out 30–50 percent of net profitBoard of Directors has proposed a dividend of SEK 2.10 for 2019; Extraordinary General Meeting on Nov. 2610 percent CAGR in earnings per share over the last 10 years
Dividend
0.00
7.00
1.00
2.00
3.00
4.00
5.00
6.00
18 20*15
SEK
10 1911 12 13 14 16 17
5.22
2.36 2.45 2.622.98
3.53 3.70 3.954.71
5.86 6.02
+10%
Earnings per share
0.00
0.50
1.00
2.00
1.50
2.50
1.12
0.79
SEK
15
2.10
1311 12 14
1.00
16 17 18 19 20*
0.71 0.750.88
1.291.46
1.631.85
10
+11%
Dividend per share
* Rolling 12 months
The Co-Development Company
Due to the Covid-19 pandemic, certain investments have been postponed
CAPEX overview
994 972810 723 800 784
123449
535
100
600
0
300
900
1,200
1,500
884
1,117
20172016
723
SEK million
2015
0
850 -1,000
0
2018 2019 2020*
810
2021
1,4211,335
AcqusitionsCAPEX
Long-term CAPEX overviewCAPEX priorities
Recent major investments
Safety
Efficiency measures
Capacity expansion
China INFAT® factory
AAK Kamani
*Rolling 12 months
The Co-Development Company
Successful management of the capital structure has resulted in lower tax rate
2015 2016 2017 2018 2019 2020 2021
30
0
26
1
27
23
29
25
28
24
%Guidance 2021
tax rate 24%
Reported tax rate
The Co-Development Company
85–90 percent of AAK’s operations in the United Kingdom is
distributed within the United Kingdom
Main expected cost drivers identified as tariffs on goods sold and
imported into and out of the United Kingdom
Other effects include
Build-up of safety stocks
Additional staff to handle customs, logistics and VAT compliance
Mitigating actions will be taken to limit effects
Preparations to mitigate effects of Brexit remain in place
The Co-Development Company
Despite a challenging environment M&A remains a key enabler in accelerating the execution of our strategy with strong leadership throughout our regions
CapacityGeographic expansion
Technology and capabilities
Adjacent product portfolios
M&A
Invest in continued growth
Bet for the future Optimize performance
Maintain current strategy
The Co-Development Company
Concluding remarks
We generate shareholder value by delivering organic as well as acquisitive growth. Our strong track record of delivering growth in earnings per share and dividend is supported by a solid balance sheet with well diversified funding. Thus, we continue to remain prudently optimistic about the future.
The Co-Development Company
www.aak.com
Thank you