CEO%20AGM%20presentation%20May%2019%202009%20

Annual General Meeting 2009

Jerker Hartwall President and

CEO

Annual General Meeting 2009, CEO 22

Agenda for today

This is AAKAAK and the financial crisisStrategyBusiness AreasResultCash flowThe future


AAK is the world’s leading producer of

vegetable speciality fats


This is AAK

Total sales: approx SEK 17 billion (13)

EBIT 2008, SEK 851 million (653) (exclusive of final settlement of insurance compensation)

2,500 employees

9 production plants in 7 countries

Head office in Malmö, Sweden


AAK US

AAK Mexico

AAK DenmarkAAK UK

AAK Sweden

AAK Latin America

AAK The Netherlands

Production plants

Sales offices

AAK around the world


Sales per geographic areas 2008

Europa 75%

Övriga världen

8%

Nord/Syd-amerika

18%69 %

Europe69% (71%)

North/SouthAmerica25% (23%)

Rest ofthe world6% (6%)


Sales per Business Area

29%

61%

10%

Oils & Fats represent 90%of the sales

Food Ingredients

TechnicalProducts & Feed

Chocolate & Confectionery Fats

(10)(31)

(59)


Our vegetable raw material base

Rapeseed

Palm

Soya

Shea

Sunflower

Olive

Rapeseed

Soya

Palm

Shea

SunflowerOliveSoya


World production

0 10 20 30 40

Palm

Soya

Rapeseed

Sunflower

Palm kernel

Coconut

Peanuts

Olive

Million tonnes


Vegetable oils – character

Rapeseed– 6% saturated– 94% unsaturated, thereof 11% Omega 3*

Sunflower– 10% saturated– 90% unsaturated, 0% Omega 3

Olive oil– 15% saturated– 85% unsaturated, 0% Omega3

Palm oil– 50% saturated– 50% unsaturated, 0% Omega 3

Coconut oil– 91% saturated– 9% unsaturated, 0% Omega 3

* Omega 3 is good for the heart, the brain and theeyesight

AAK’s Business Areas


AAK’s Business Areas

Chocolate &ConfectioneryFats

- Speciality

Food Ingredients

- Speciality- Bulk

TechnicalProducts &Feed

- Speciality- Bulk

Global

Regional

Total sales10,400 MSEKEBIT 319 MSEK



Regional

AAK and the financial crisis


AAK and the financial crisis

Quotation from Year End report

”The effects on AAK of the financial crisis andweakened business climate are difficult to assess”

”However, due to the severity of the globaldownturn, the uncertainty is significantly largerthan in previous periods of recession”

”Political and credit risks are increasing, and theextent of consumers’ reaction to the downturn isat this stage difficult to predict”


Food Ingredients


The financial crisisand Food Ingredients

What has happened in the Food Ingredients market?

Limited volume effect globally

Fast change towards cheaper products

Continued fast development towardsnon-trans products with low contentof saturated fat

The retail business’ own brands(private label) are gaining compare tobranded goods


The financial crisisand Food Ingredients

What has happened in the Business Area Food Ingredients?

Limited volume effectStrong margin developmentPositive development in acquisitions

– Lion Foods, Croda Food Services, Rapsona

The strategy towards more specialityproducts continues according to planWe are good at re-formulating quickly

EBIT SEK 80 million (60)Margin development +16%, 1.66 SEK/kg to 1.93 SEK/kg


Lowest price

Bulk producer

- High contentof technology

- Speciality producer

Raw materials Raw materials

AAK – a world leader in vegetablespeciality fats


Chocolate & Confectionery Fats


Quotation from businessBarry Callebaut: Public report of results for first six months of fiscal year 2008/09

“… negative growth in global chocolate consumption for the first time in more than a decade. In some key Western European and North American chocolate markets consumption declined by between 5% and 9%.”

“Many food manufacturers, artisans and retailers reduced their stocks in the wake of economic uncertainties and were reluctant to place new orders.”

The financial crisisand Chocolate & Confectionery Fats



Quotation from businessNestlé: First-quarter sales performance 2009:

“In Eastern Europe, the combination of the economic downturn, the increase in the cocoa price and currency devaluations resulted in reduced demand.“

Mars: Nathalie Roos, president of Mars Chocolate France at a press conference on April 2 2009:

“Activity at its Haguenau factory, that makes Mars bars, milky ways and M&M’s, will be reduced by 10 per cent in comparison to 2008 following a flexi-time agreement signed with the local unions.”

“We are feeling the full impact of new purchasing patterns by consumers.”



What has happened in the Chocolate & Confectionery Fats market?

Volume decrease in the Western world in the range of 5-10%Volume decrease in Eastern Europe more than 10%Asia is showing a stable developmentDevelopment towards cheaper productsThe retail business’ own brands (private label)are gaining compare to branded goodsDestocking


Destocking

AAK Chocolate producers Retailers



Destocking


AAK Chocolate producers Retailers


What has happened in the Business AreaChocolate & Confectionery Fats?

Comprehensive destocking at customers’

Great caution in Eastern Europe

Volumes down by 20%

EBIT SEK 74 million (139)Margin development +26%, 4.73 SEK/kg to 5.94 SEK/kg



Technical Products & Feed


The financial crisisand Technical Products & Feed

What has happened in the Technical Products & Feeds market?

Recession in the car industry globally

Recession in the paper and chemical/technicalindustries

Over-capacity in the business

Feed industry not yet effected


The financial crisisand Technical Products & Feed

What has happened in the Business AreaTechnical Products & Feeds?

Deliveries to the car industry heavily reduced

Deliveries to the paper and chemical industries heavily reduced

Deliveries to the feed industry not yet effected

EBIT SEK 13 million (20) Margin development +4%, 0.79 SEK/kg to 0.82 SEK/kg


Our strategy


From crop to consumerWhere AAK is located in the primary value chain

Farmers(Raw materials)

Producers ofingredients

(Oils & Fats)

FoodProducers Retailers Consumers

• AAK

• Loders Croklaan, Fuji Oil

• ADM, Cargill, Bunge

•United Plantations Berhad

•IOI, Kuok Group, etc.

•Lantmännen

• Nestlé, Kraft, Unilever

• Mars

• Cadbury

• Ferrero

• Wal-Mart

• Tesco

• Metro

• ICA


Strategy

AAKAAK

LodersFujiOthers

World market Speciality solutions

Global niche strategy


Growth strategy

Bulk products Speciality solutions

10 30 >100

Volumes

Market

1

Profitability index


From bulk tomore speciality products

EBIT

Speciality

Bulk

Speciality products for

- Chocolate

- Baby food

- Bakery

- Cosmetic

- Acquisitions

Bulk

Time


Growth strategy

Product development

Specialisation

Selective acquisitions

- Bulk products

- Strong customer base established over a long time


Growth – strategy

Product development

Specialisation

Selective acquisitions

- Bulk products

- Strong customer base established over a long time

Croda Food Services

Enzymotec

Rapsona

Lion Foods


New speciality products for many applications


InFat – The right fat for infants

Quality similar to mother milk

Gives significant increase of energy intake and calcium absorption

Gives calm digestion and optimal skeleton development


Example of our specialisation strategy

Simple oils Baby Food

More speciality fats

High degree of speciality Enzymotec

2008

2007

2000

Advanced LipidsJoint Venture between AAK and Enzymotec

New factory


New speciality factory– for infant formula


Bakery


Example of our specialisation strategy

Simple oils Bakery fat

Acquired bakeryfat producer

No. 1

in bakery fats

Bakery process aid

Croda Food Services

Year

2007

2000

AAK The Bakery Fat Specialist


Food Ingredients – Specialityproducts create global business

AAK US

AAK Mexico

AAK DenmarkAAK UK

AAK Sweden

AAK Latin America

AAK Netherlands



AAK US

AAK Mexico

AAK DenmarkAAK UK

AAK Sweden

AAK Latin America

AAK Netherlands

- Speciality fats for bakery- Infant formula


Result 2008


2008

Sales +32 %, SEK 17.207 million (13.005)

Operating profit +30%, SEK 851 million (653)(exclusive of final settlement of insurance

compensation)

Increased volumes and margins withinChocolate & Confectionery Fats and Food Ingredients

Positive development in the acquisitions made in recent years within Food Ingredients


Important events 2008

The most important events were the start-up of our new CBE factory and the re-start of the older factory in Aarhus, Denmark, which was damaged in the December 2007 incident

A new factory in Karlshamn was commissioned in September, providing a significant capacity increase in the fast-growing speciality products for infant formula

Acquisition of the Swedish company Rapsona withproducts for restaurants, catering and bakeries

Through our strong presence in West Africa we have a steady in-flow of shea, which is the most important raw material for our CBE products


First quarter 2009


First quarter 2009

Sales +15 %, SEK 4.223 million (3.683)

Operating profit -24%, SEK 157 million (207)

Improved cash flow and stronger balance sheet


Insurance

Negotiations about the compensation are ongoing but have not yet been completed.

AAK still expects additional significant positive effects from insurance compensation on operating profit partly related to 2008, partly related to 2009 and cash flow.

50


Operating profit, first quarter 2009,per Business Area

SEK million

0

20

40

60

80

100

120

140

TPF FI CCF

200720082009


Operating profit, rolling 12 months

52


Operating profit, rolling 12 months

53

Excl finalinsurancecompensation

Cash flow


PalmRaps Soya

Raw material price development


Cash flow from ongoing business(before investments), rolling 12 months

-1000

-800

-600

-400

-200

0

200

400

600

Q4 2006

Q1 2007

Q2 2007

Q3 2007

Q4 2007

Q1 2008

Q2 2008

Q3 2008

Q4 2008

Q1 2009

SEK million

Rationalisation project continues


AAK’s rationalisation project

First wave of synergiesSEK 200 million

2005 – 2007

Second wave of synergiesSEK 100 million

2007 – 2010

TotalSEK 300 million

2005 – 2010


Specialisation of the Swedish and Danish sites (second wave)

• The project is developing as planned and will provide a strong base for further rationalisations

Cost synergies of approx. SEK 100 millionFully implemented during 2010One-off costs of SEK 150 million, accounted for in 2007

- of which SEK 50 million did not have any cash flow effect


The future


Roadmap to growth in the coming years

EBIT

Food

Serv

ice

Chocol

ate

fats

,

CBE

Applications

Dairy

Fat

Alte

rnat

ives

,

DFA

Cosm

etic

s

Bake

ry

New

pr

ojec

ts

Infa

ntfo

rmul

a


The future– Chocolate & Confectionery Fats


Cocoa Butter Equivalents,future opportunities

Cocoa Butter Equivalents Cocoa butter

The same quality Cocoa butterCheaper raw material Expensive raw materialExact quality Variation in quality-------------------------------------------------------------------

Cocoa Butter Equivalents=

Better and cheaper raw material

AAK AAK


Chocolate consumption bygeographic area – CBE potential

New CBE potential


The future– Chocolate & Contectionery Fats

The use of CBE increases. CBE is cheaper and has thesame functionality as cocoa butter

AAK has created the world’s largest CBE centrein Aarhus, Denmark

AAK has developed the best shea supply


The future– Food Ingredients


The future– Food Ingredients

The driving force is health, e.g. non-trans products, low content of saturated fats

Fast re-formulation to cheaper products

Changes are positive for a speciality company as AAK


Strategy – driving the product mix towardsincreased share of speciality products

Profit

Bulk oils

Infant formula

Bakery fats

FoodService

Speciality products

20082000


The future for AAK

We develop the speciality strategy

We make selective acquisitions

We are under development to become a more balanced company

We are well positioned – based on investments made, geographic platforms,and strong product development


Vegetablehealthy oils have

an excitingfuture

AAK is in a strong position to benefit

from theseopportunities


AAK has an interesting future

CEO%20AGM%20presentation%20May%2019%202009%20

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