Raw material price hikes boost sales for AAK

By Oliver Nieburg

- Last updated on GMT

Raw material price hikes boost sales for AAK

Related tags: Food ingredients, Value added, Aak

AarhusKarlshamn (AAK) has posted modest growth in its fourth quarter (Q4) and final year results driven by raw material price increases and strong performance in its core food ingredients segment.

The company saw record profits for value added products in its food ingredients arm during the quarter.

Improved volumes also positively impacted sales.

Results roundup

Q4 net sales were up 14% on last year to €509m (SEK 4.4bn) due to increased raw material prices and a better product mix. This led to increased full-year net sales of €1.9bn (SEK 16.6bn).

Operating profit for the quarter improved 10% to €30m (SEK 265m) thanks to record figures in the food ingredients segment. For the full year, this translated to €103m (SEK 911m) in profit, up 11%

The food ingredients arm of the company boosted its profits by 14% during the quarter, largely due to volume increases of 5%

The company’s chocolate and confectionery fats business also saw growth. However, AAK’s technical products and feeds arm suffered in a challenging market that the firm said would not let up in the next two quarters.

Volumes up

AAK said that its volumes had increased 2% during the quarter, partly due to the impact of its Golden Foods/Golden Brands acquisition in July last year.

Volumes for the food ingredients business increased from 222,000 MT to 234,000 MT, accounting for the lion share of total company volumes.

Investments

AAK spent €10.3m (SEK 91m) during the quarter to expand its US production capacity and to carry out routine maintenance.

It also reduced its workforce by around 40 employees as it streamlined activities in Scandinavia and the UK.

The company’s UK operations are being restructured to focus upon speciality products as profits had been hit by declining commodity volumes.

AAK CEO and president Arne Frank said the company remained “prudently optimistic for the future mainly driven by the Food Ingredients business”.

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