AAK fattened by 12% profit increase

05-Feb-2014 - Last updated on 05-Feb-2014 at 12:28 GMT

AarhusKarlshamn (AAK), the Sweden-based oils and fat producer, has reported a 12% increase in operating profit in the fourth quarter (Q2), driven by recovery in its chocolate and confectionery fats division.

The jump in operating profit measures the company’s core profit after production costs but before tax, interest and income from other investments.

“Prudently optimistic”

The firm’s CEO and president, Arne Frank, said the company remains “prudently optimistic about the future”.

“The main drivers are the continued positive underlying development in food ingredients and the continued improvement in chocolate and confectionery fats,” Frank said.

Across divisions

The group is split across the business areas food ingredients, chocolate and confectionery fats and technical products and feed.

The company said that its Q4 operating profit of 212 million Swedish Krona (SEK) (€24m) for its food ingredients division was in line with an exceptionally strong fourth quarter last year. Its chocolate and confectionery fats division stood at SEK 115m (€13m) by the end of the year, up 40% on the same time period the previous year. Elsewhere, its technical products and feed area recorded an improved operating profit of 14%, reaching SEK 24m (€2.7m) in Q4.

Increasing volumes

In November last year it was announced that AAK will become the exclusive supplier of fats and oils to UK food firm Premier Foods. AAK UK managing director, Martin Craven, said at the time that the development would double AAK's volume sales to Premier Foods.

In this latest financial report, the company has announced an 8% increase in volumes in Q4.

Earlier in the year, the company acquired Turkey-based oils and fats supplier Unipro from Unilever for an undisclosed sum.

AAKtion

In January this year the company launched, AAKtion, to take it through 2014-2016. The initiative focuses on organic growth within sales, innovation and execution.

It will involve structural and management changes which aim to strengthen the firm’s focus on Asia. AAK said it is critical for its future growth that it gets a stronger foothold in these markets. Likewise the programme will see more consolidated European sales with one strong sales organisation. The company said Europe needs dedicated management and partly different strategies since it is a more mature market.

AAK has production facilities in Denmark, Mexico, the Netherlands, Sweden, the UK, Uruguay and the US.