AAK AB (publ.)

Welcome to the AAKQ22026 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Today's event will last for 45 minutes. Now I will hand the conference over to the speakers, CEO Johan Westman and CFO Tomas Bergendahl. Please go ahead.

Thank you. Good morning everyone and thank you for joining us for today's call and also for your interest in AAK. With me today to review our second quarter results is our CFO Thomas Bergendahl. Also joining us for today's call is Niall Sands, President Commercial Development and Innovation and a member of our Executive Committee. Niall is here to share additional perspective on our commercial development and innovation agenda, as well as the role of our Kaukua and confectionery fat solutions in the current market environment. Good to have both of you with me on the call. With that, please turn to page number two. We will cover quarterly highlights, selected events, and a business and financial update, followed by concluding remarks. The presentation is scheduled for 45 minutes in total, including a Q&A session at the end. Page number three, as usual, a bit about the forward-looking statements. This presentation includes forward-looking statements that come with risks and uncertainties. These are our views on future events and financial performance, but actual results may differ. With that, let's move to slide number four. the quarterly highlights for Q2. Market conditions remained cautious during the second quarter, broadly in line with the business environment we saw in the first quarter. Following a strong start to the year, both volume and profitability were somewhat softer in the second quarter. However, for the first six months, both volumes and operating profit at fixed currencies remained above last year, representing a solid first half performance. Group volumes declined by 1% compared with the second quarter in 2025. The decline was mainly driven by dairy and food service, which continued to be affected by challenging market conditions. In addition, we had some production related challenges at our site in Karlsson that negatively affected volumes in food ingredients and technical products and feed. The estimated impact on group volumes was approximately one percentage point. Production at Karlsson has since returned to normal levels. Volumes in chocolate and confectionary fats declined slightly, but continued to outperform the broader chocolate market, which remained challenging. Operating profit per kilo amounted to SEC 2.25, a decrease of 5% compared with last year, excluding items affecting comparability. The decline primarily reflected price pressure in food ingredients, together with the production-related challenges in our site in Karlsson. The Carlson challenges had a negative impact of approximately two percentage points on group operating profit per kilo. Currency effects were neutral. Profitability in chocolate and confectioner fats remained strong in the quarter. Operating profit declined by 6% compared with the corresponding quarter last year, excluding items affecting comparability. This was driven by the lower operating profit per kilo and slightly lower volumes. The production related challenges in Karlsson amounted for approximately 3 percentage points of the decline. Currency effects were neutral on operating profit. Our operating cash flow remained strong and amounted to SEK 1.081 billion. supported by profitability and an improvement in working capital. Net debt to EBTA was at 0.68, reflecting our continued strong financial position. Return on capital employed amounted to 20%. And with that, please turn to the next page. Turning to a few strategic and sustainability highlights from the quarter. AAK became the first company to achieve gold status in the sustainable coconut charters assurance system audit with a score of above 95%. The result reflects strong performance across governance, traceability, risk management, reporting and verified chain of custody processes. This recognition supports our continued work to strengthen responsible coconut sourcing, improve traceability, and support smallholder farmers and help prevent deforestation. It also provides our customers with independently verified assurance on supply chain transparency and diligence, supporting their own sustainability reporting and compliance requirements. In May, we held AAK's annual general meeting in Malmö, with shareholders representing 75% of total votes. The AGM approved the proposed share buyback program as part of our updated capital allocation framework. The program amounts to SEK 1 billion per year over three years, subject to annual AGM approval, and is intended to support long-term shareholder value while maintaining financial flexibility. The AGM also approved an extraordinary dividend of SEK 3.85 per share. Finally, we announced a collaboration with Savor, a food technology startup to explore a new type of fat solution for dairy and bakery applications. The partnership combines Saver's carbon to fat technology with AAK's expertise in liquid chemistry and application development. The aim is to develop novel ingredient solutions that deliver on taste, texture, functionality, while supporting supply chain resilience through more diversified sources. The collaboration is initially focused on niche but growing customer demand, particularly in the US and Europe. for innovative fat solutions produced without the need for animals or farmland. With that, let's turn into the next slide for a review per business area, starting with food ingredients. Volumes were flat compared with the second quarter of 2025 with mixed performance across our segments. Dairy and food service declined while other parts of the business offset the majority of the decrease. Volumes were also negatively affected by the production related challenges at the Karlsson site. Operating profit per kilo amounted to SEC 2.14 compared with SEC 2.47 last year representing a decrease of 14%. Currency had a slight negative impact at fixed exchange rates operating profit per kilo decreased by 13%. The decline mainly reflect the price pressure in food ingredients together with the negative impact from the production related challenges in Karlsson. Operating profit decreased by 14% to 658 million, mainly due to the lower operating profit per kilo. Currency effects on operating profits were neutral. And with that, let's turn into the next page and the highlights for chocolate and confectionery fats. Volumes declined by 2% compared with the second quarter of last year. Even so, we continued to outperform the broader chocolate market, which remained challenging. Operating profit per kilo increased by 11% to SEK 4.36. Currency effects on operating profit per kilo were broadly neutral. and this was achieved despite a modest negative impact from the production-related challenges at the Colson site. Overall, operating profit increased by 9% to SEK 491 million, driven by the higher operating profit per kilo and partly offset by the lower volumes. Currency translation was neutral. And next slide for highlights in technical products and feed. Volumes declined compared to the second quarter of last year, with a mixed performance across the two segments. Technical products grew while feed declined. The decline in feed was mainly related to the production challenges at the Karlsson site following the annual maintenance stop where production remained offline longer than expected. Production has since restarted and returned to normal levels and we do not expect any lasting impact beyond the quarter. Operating profit per kilo was at SEK 0.37 broadly in line with last year. And overall operating profit decreased by 3% to SEK 24 million. With that, we have now covered the three business areas. And before handing it over to Tomas for a review of the second quarter financial results and an update on our 2030 strategic initiatives, I would like to invite Niall to provide some perspective on how the dynamics in the chocolate market are impacting our business. Niall, please. Thank you, Johan.

Please turn to the next slide. Given the interest in cocoa butter equivalents and cocoa butter, I'd like to spend a few minutes on how we think about this from an AAK perspective. At first glance, cocoa butter and cocoa butter equivalents may appear to address the same need, delivering the snap, gloss and melt that consumers expect from great tasting chocolate. But from especially oils and fats perspective, they are fundamentally different. The key is in the triglyceride composition. Natural cocoa butter is a strong benchmark. Its functionality is largely driven by a narrow group of triglycerides, primarily POP, BOS and SOS, which crystallize in a way that gives chocolate its characteristic structure, shine and melt. However, cocoa butter is also a natural raw material. This means it comes with variability linked to origin, season and crop conditions, and therein potential for significant price and supply volatility, as we have seen of late. This is where cocoa butter equivalents play an important role. In AAK, we do not view CBEs simply as substitutes, but rather as precision-designed specialty fats. By fractionating, blending, and even enzymatically adapting selected vegetable oils and fats, we can closely replicate the key triglyceride profile of cocoa butter while also tailoring functionality for specific customer needs. This gives us the ability to support customers in areas such as crystallization speed, hardness and snap, bloom resistance, viscosity, and performance for all climates, as well as production efficiency. Our objective in AEK, therefore, is not only to match cocoa butter, but to optimize performance for each customer's product, process, and market requirements. Coco butter will continue to play an important role. It offers authentic flavor release, strong mouthfeel, consumer familiarity, and premium position. But at the same time, CBEs offer a complimentary value proposition of more consistent quality, improved supply resistance, functional customization, and better process control. The important point is that this requires deep lipid chemistry and application know-how. Small differences in triglyceride composition can have a truly meaningful impact on tempering behavior, crystallization, and long-term bloom stability. This is where AAK has a clear role to play. It's our heartland. Our competitive advantage is not simply supplying oils and fats, but helping customers engineer for desired crystallization rates and functionality. By combining advanced vegetable oil processing, application expertise, and a deep understanding of triglyceride architecture, we help customers maintain sensory quality, improve productivity, and to build more resilient supply chains. So ultimately, the discussion is not simply cocoa butter versus cocoa butter equivalents. The real question is how can we engineer fat functionality to deliver the consumer experience expected from chocolate while giving manufacturers greater process control, supply resistance and cost competitiveness. For AAK, this is where we believe the value creation really lies.