AAK AB (publ.)

Welcome to the AAK Q3 2026 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 five on their telephone keypad. Today's event will last for 45 minutes. Now I will hand the conference over to CEO Johan Westman. Please go ahead.

Good morning, everyone. Thank you for joining us, and thank you for your interest in AAK. With me today to review our third quarter results is our CFO, Thomas Bergendahl, and Niall Sands, President, Commercial Development. With that, please turn into page two, or slide two. Today we will cover quarterly highlights, selected events, and a business and financial update, followed by some concluding remarks from us. The presentation is scheduled for 45 minutes in total, including a Q&A session at the end. Next page, please. 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 go to slide number four and start. highlights for Q3 2026. Market conditions and consumer sentiment remained subdued during the third quarter of 2026. Against this backdrop, volumes proved resilient, remaining in line with last year. Lower volumes in food ingredients, particularly in food service and bakery, were offset by growth in chocolate and confectionary fats and technical products and fees. Looking at the regional development, we saw growth in Asia, the Middle East and Africa, which compensated for lower volumes in the Americas and Europe. While volumes remained flat, profitability was below last year. Operating profit per kilo declined by 8% to SEC 2.27. This reflects lower operating profit per kilo across all three business areas, including a less favorable regional volume mix as a result operating profit decreased by eight percent compared to the same period last year driven by lower profitability across the business areas moving to cash flow in our financial position the quarter generated a strong operating cash flow of sec 1.496 billion and our balance sheet remains strong Net debt in relation to EBJ ended in the quarter at 0.56, providing significant financial flexibility going forward. Return on capital employed was 19.1%. And finally, regarding our long-term ambition, our financial targets and our 2030 ambition or aspiration remain unchanged. We continue to target average annual operating profit growth of around 10% over time, while outperforming the underlying market in volumes. At the same time, we remain committed to achieving an operating profit per kilo north of 3 sec per kilo by 2030. With that, let's move into the next page. Slide five. some key developments during the quarter. First, we have taken another important step in strengthening our health platform. AAK has started construction of a new lipid excipient manufacturing facility in India aimed at serving the pharmaceutical industry. The investment strengthens our capabilities in one of the world's most important pharmaceutical markets. The facility will establish in India as a pharmaceutical hub within our health platform, complementing our existing strengths in personal care, medical and lifestyle nutrition. As one of the world's largest producers of generic medicines, India plays a central role in global healthcare supply chains. By establishing local production, we will move closer to customers in a market where quality standards and regulatory requirements are particularly important. The facility will be located at our existing site in Koppoli outside Mumbai and is planned to become operational late 2027. Turning to innovation and technology. During the quarter, we also reached an important milestone for one of our proprietary technologies. Our patented dry fractionation technology is now set for its first commercial deployment at the Neura Specialty Oils and Fats Plant, currently being built in Malaysia. The technology will be used to produce specialty home mid-fractions, a key ingredient in high-quality cocoa butter equivalents for chocolate and confectionery applications. Complementing our existing Fractionation Capabilities, this technology enables a solvent-free production process and has the potential to reduce initial capital investments, lowering operating costs and reduce CO2 emissions, while maintaining the high-quality standards required for specialty fats. As a reminder, NURA is the joint venture announced in our third quarter report together with the Kuala Lumpur Kepong Berhad. The facility, which will be located in Pasir Gudang, Malaysia, will strengthen our upstream access to sustainable, high purity feedstock for cocoa butter alternatives, broaden our supply base, and further reinforce supply chain resilience. Finally, on sustainability, AAK was recognized as one of the top scorers on the RSBO shared responsibility scorecard. The scorecard measures how members contribute to responsible practices and support the production and consumption of certified sustainable palm oil. The recognition reflects our efforts across sourcing, supply chain initiatives or activities, customer engagement and operational improvements. It is also particularly meaningful given that AEK was a founding member of the Roundtable of Sustainable Palmore, which continues to play an important role in driving more sustainable practices across the industry. These achievements reflects our continued focus on strengthening our business through targeted investments, innovation, and sustainability leadership. And with that, I will hand it over to Niall for a review of the performance per business area. Please go ahead, Niall. Thank you, Johan.

Please turn to the next slide. Startinging with food ingredients, volumes declined by 1% compared with the corresponding quarter last year. the decline was primarily driven by lower volumes in food service and bakery. Looking at the regional development, volumes were lower across all three regions, with Europe accounting for the largest share of the decline, followed by the Americas. Volumes in Asia, the Middle East and Africa also decreased, albeit to a lesser extent. Looking into bakery, volumes declined compared with the corresponding quarter last year. The growth we experienced in Asia, Middle East and Africa, mainly driven by Turkey, was offset by lower volumes in the Americas and Europe, reflecting continued competitive pressure and softer demand. In dairy, volumes grew slightly following the weak volume performance in the second quarter of this year. Growth was driven by Asia, the Middle East and Africa, and in particular China, However, it was partly offset by lower volumes in Europe and the Americas, where the surplus of animal-based milk fat continued to have a negative impact on the business. Special nutrition volumes declined compared with the corresponding quarter last year. The decline was driven by weaker performance in the Americas, and in particular, the US, which more than offset the growth we experienced in Europe. food service volumes also declined compared with last year, primarily driven by weak performance in the UK. Turning to profitability, operating profit per kilo decreased by 9% to SEC 2.18, including a slight positive currency effect. At fixed foreign exchange rates, operating profit per kilo decreased by 10%, mainly driven by lower profitability in bakery and dairy, reflecting a more competitive pricing environment, as well as continued soft performance in food service. As a result, operating profit decreased by 10% to SIC 687 million. Currency effects had a slight positive impact during the quarter. At fixed foreign exchange rates, operating profit decreased by 11% compared with the corresponding period last year. Let's turn to chocolate and confectionry thoughts. Next slide, please. Volumes increased by 1% compared with the corresponding quarter last year. Looking at the regional development, performance was mixed during the quarter. We saw growth in Asia, the Middle East, and Africa, supported by expansion into new markets, while volumes declined slightly in both the Americas and Europe. From a product mix perspective, volumes were relatively slable, with a modest positive contribution from cocoa butter alternatives. Turning to profitability. Operating profit per kilo decreased by 6% to SEC 4.04. Currency translation had a positive impact of SEC 0.10 per kilo during the quarter. At fixed foreign exchange rates, operating profit per kilo decreased by 8%. While profitability remained at a high absolute level, it was below the very strong comparative last quarter. As previously favorable market conditions continued to normalize, the pricing environment became more competitive, which impacted profitability compared with the prior year period. Operating a profit amounted to sec 500 million, a decrease of 5% compared with the same quarter last year. Currency translation had a positive impact of SEC 13 million. At fixed foreign exchange rates, operating profit decreased by 5% compared with the corresponding quarter last year. Overall, the business delivered good volume growth and maintained a strong level of profitability despite a more normalized and competitive market environment. Next slide, please. Turning to technical products and feed. volumes increased by 1% compared with the corresponding quarter last year. Looking at the underlying performance, the development was mixed across the portfolio. Technical products delivered volume growth during the quarter while feed volumes declined slightly compared with last year. Turning to profitability, operating profit per kilo decreased by 32% to sec 0.45 compared with sec 0.67 in the corresponding quarter last year. the claim was driven by weak performance in the candle business during the quarter. As a result, operating profit totaled SEC 32 million compared with SEC 46 million in the corresponding period last year, representing a decline of 31%. Overall, the business delivered modest volume growth, but profitability was negatively impacted by the continued weak performance in candles.