AAK confectionery arm contributes to fall in profits

Although the company reported net sales of SEK 3,930m (€448.5m) up from SEK 3,788 last year, operating profit fell by 13.2 per cent in Q4, down to SEK 251m.

The company put this down to raw material price hikes. The vegetable fats supplier said its cash flow fell by two-thirds to SEK 757m last year as higher crop prices meant that group raw material inventories tied up a greater proportion of its capital.

“For 2011 we have a cash flow challenge because of significant raw material price increases that occurred in 2010 but with a time lag affecting 2011,” ​said CEO Arne Frank.

Confectionery profits down​

In terms of gross contribution, the company’s Chocolate & Confectionery Fats arm suffered from margin pressure, while AAK’s Technical Products & Feed continued to report improvements in all areas.

The operating profit for the confectionery division was SEK 106m, a decrease from SEK 147m in the fourth quarter of 2009.

Compared to last year, volume increased by 1 percent but this did not compensate for lower margins, said the company.

For the full year operating profit for the Chocolate & Confectionery Fats section was also down SEK 341 from SEK 394. Volumes increased by 1 percent compared to 2009.

Net sales for this business area improved by SEK 25m or 2 per cent on account of volume growth and price increases (mainly palm oil).

However, the company highlighted cocoa butter market prices as a contributor to the fall in profits.

AAK pointed to emerging markets and acquisitions as focus areas of growth.