Continued profit growth rests on four pillars.
As for most companies, Covid-19 continued to affect AAK during 2021. Still, we managed to improve our profit by 18 percent excluding items affecting comparability and at fixed currency rates, year-over-year, a clear indication of the sustainable nature of our business. AAK has over the past decade grown faster than the underlying markets in our focus areas, speciality and semi-speciality solutions.
Our ambition for the coming years stands: to achieve an average 10 percent year-over-year improvement in operating profit, with good growth in earnings per share. The journey to achieve this rests on four pillars:
Market data shows that in terms of volumes, the oils and fats market in total is growing approximately 3 percent per year*, supported by a growing world population, but also by consumer trends such as health and well-being, sustainability, premiumization, convenience, customization, and transparency – which AAK is well positioned to benefit from.
High value-adding solutions
Through our unique customer co-development approach, our expertise in speciality oils and fats, and our focus on global key drivers, we intend to continue to grow faster than the oils and fats market as a whole.
The competition in the industry is quite intense and many global competitors deliver large volumes of bulk products with limited margins. AAK’s response is to focus more on the speciality segment in which there is a great demand for co-developed and high-quality premium solutions that adds value to our customers. An important example is our natural and plant-based solutions that are on trend with consumer demands for health and nutrition. Sustainability is another competitive advantage as AAK, with our focus on traceability and sustainability throughout the value chain, is considered a trustworthy partner.
To adapt to the pandemic and to optimize our structure, particularly through tight cost management, we have taken important measures over the past few years. The optimization program initiated during 2020, for example, generated annual savings of about SEK 150 million, and in 2021, we decided to consolidate our bakery production in Europe. These initiatives are fully in line with our strategic direction. Optimization also applies to our individual production sites where we continuously seek to improve productivity as well as minimize our environmental impact.
Despite considerable investments to increase capacity and several acquisitions to add both capacity and new capabilities, we have over recent years built a very strong balance sheet. We have a proven track record of making successful acquisitions and have acquired 15 companies during the past decade. The pandemic, with its restrictions, has made these types of investments somewhat more difficult during the past few years. However, in 2021, we increased our lecithin footprint by acquiring BIC Ingredients, the lecithin arm of BIC International Holding. Going forward, we will continue to make selective acquisitions based on geographic expansion (particularly in emerging markets but also in more mature markets where we have limited or no presence), technology and capabilities, as well as adjacent product portfolios.
*Transparency market research, HIS Global, 2018