AAK AB (publ.)

Hello, everyone, and welcome to AAK's first quarter result presentation. My name is Johan Westman. I'm the president and CEO of AAK. Together with me today, I also have our CFO, Thomas Bergendahl. Please turn to next slide. As always, I will start by going over the financial highlights for the quarter, as well as some selected events. Thomas will take you through a detailed review of the financials before a short wrap up and after that Q&A. Now, page four. We have started the year on a strong note with a combined profitability and organic volume growth. It's encouraging to see volumes returning to growth after a period of somewhat softer volume performance. With the added volumes, We are delivering profitability not only through our global optimization programs, but also via the operating leverage that comes with our organic volume growth. As a result, we are experiencing continued growth in operating products. Looking a bit closer at the volume development, we grew organically with 3% in the first quarter compared to the same period last year. This was driven by growth in both chocolate and confectionery fats as well as food ingredients while volumes in technical products and feed declined slightly profitability measured as operating profit per kilo was strong and grew year over year this was driven mainly by our global optimization program which we also reviewed at the quarter four conference called as well as the operating leverage that we have from the increased volumes. Driven by the improved profitability and rising volumes, operating profit grew 32% compared to the first quarter last year. And at fixed foreign exchange rates, operating profit increased by 38% year-on-year. Operating cash flow was solid, but declined year on year, mainly due to higher receivables following the increased volumes and despite higher profit. Return on capital employed was strong with 20.4%, driven by the higher operating profit.

Please now turn to slide number five.

As some of you might have seen already, AAK has received a silver medal in Ecovary's annual sustainability rating and is among the top 15 percent globally. We ranked in the 93 percentile and we increased our overall score from 65 to 7, mainly in the categories of labor and human rights and sustainable procurement. In addition, We are proud to be in the sixth place in the recently published report, Sustainable Corporations 2023. It was a busy quarter as we also inaugurated our new innovation center of excellence for baking applications in Belgium. As you are all very familiar with at this point, co-development and product innovation are at the core of what we bring to our customers. Before going into the performance of the respective business areas, I would like to address the recent discussions regarding a raw material shipment from earlier this year. Earlier this year, we identified a shipment of raw material that did not meet our quality standards. The raw material was traced back to a part of one shipment. In accordance with established protocols and regulations for these type of events, affected customers and relevant food authorities were notified it has further been concluded that the incident occurred during transport by a third party operator and not while being processed in aak facilities it involves one incident within a confined space aboard one vessel in essence an isolated event Our production has not been affected by the event and has remained uninterrupted. I would also like to emphasize that this event has been well known, documented, and has been professionally and well handled by the effective customers and our own quality team. With that, we're moving into the business areas at page six, and I start with food ingredients. Within food ingredients, our volumes grew organically with 2%, primarily different by the sub-segments dairy and bakery. With maintained strong margins and optimization effects, and on top of that, the leverage on increased volume, we reached a very strong operating profit and margin operating profit per kilo. Operating profit was up 34% year-on-year, and operating profit per kilo was up 31% year-on-year, despite negative FX effects, both at an all-time high for AAK. With that, moving into chocolate and confectionery fats on page 7. Here we see an even stronger organic volume growth. Our volumes grew 7% year-on-year. This is thanks to high demand for our spread solutions and also supported by good demand for our cocoa butter alternatives. We see a very strong operating profit and operating profit per kilo on the back of continued optimization as well as good leverage on the increased volumes. And with that, we're moving into page eight, technical products and fees. Sequentially, we follow the trend of the later part of last year. Volumes were down 1% year-on-year, but up 5% sequentially. Operating profit was down versus the same quarter last year due to a negative mix and lower margins on the residuals that we have and that are sold to biofuel solutions. In a more long-term perspective, we are still at decent levels if you compare to some years back. And also, as we look ahead, there is still a very interesting opportunity around replacing mineral oil-based ingredients in technical products and solutions, right? So for AAK, this is an area where we focus, where can we apply our knowledge in order to leverage potential for replacing fossil-based ingredients in other sectors? With those comments on the business areas, I am happy to hand it over to our CFO, Tomas Bergendahl.