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AAK profits rise in Q2 in spite of confectionery fats lag

By Oliver Nieburg+

Last updated on 23-Jul-2013 at 11:35 GMT

Infant nutrition sales to Asia offsets poor performance in confectionery fats division. Pictured: AAK's Swedish factory
Infant nutrition sales to Asia offsets poor performance in confectionery fats division. Pictured: AAK's Swedish factory

Specialty fats supplier AAK has reported 12% growth in operating profits in its second quarter (Q2) results despite declining confectionery fat sales.

The rise was driven by strong food ingredients sales to infant nutrition manufacturers in Latin America. The company’s chocolate and confectionery fats segment continued to decline over the period.

Food ingredients division rise

AAK’s operating profit was at a record high for Q2 at SEK 244 million ($37.6m).

Company CEO and president Arne Frank said in a statement: “Food Ingredients continued to demonstrate very strong development, particularly in Infant Nutrition and Latin America. Food Service and Bakery also showed volume growth while Dairy and commodity volumes in the UK and Scandinavia continued to decline somewhat.

The company’s largest business segment, food ingredients, which includes bakery, dairy and infant nutrition products, grew profits 18% to SEK 184 ($28.4m). The segment was helped by last year’s acquisitions of Oasis Food Company in the US and Crown Foods A/S in Denmark.

Chocolate and confectionery fats slowdown

However, operating profit in chocolate and confectionery fats was flat at SEK 65m ($10m) as sales in the category fell 13% to SEK 964m ($149m) due to lower raw material prices and exchange rates.

“The performance of the business area is expected to improve significantly during the second half of 2013,” said the company in its quarterly interim report.

AAK also operates in technical products and feed. Its operating profit in this business area grew 15% to SEK 23m ($3.5m).

Frank said he was optimistic for the second half of the financial year.

“The main drivers are expected to be the strong Food Ingredients business and the expected recovery in the second half of 2013 for Chocolate & Confectionary Fats,” he said.

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