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Introduction & Market Context
AAK AB, a global leader in plant-based oils and fats, reported strong financial results for the second quarter of 2025, with operating profit increasing 16% at fixed exchange rates despite a 2% decline in volumes. The company’s Q2 presentation, delivered on July 17, 2025, highlighted AAK’s continued focus on specialty solutions and optimization initiatives while reaffirming its long-term strategic goals.
The market reaction was somewhat mixed, with AAK’s stock dipping 0.56% following the earnings release. According to available trading data, the company is currently trading near its 52-week low, suggesting potential value opportunity despite the strong operational performance.
Quarterly Performance Highlights
AAK’s Q2 2025 results demonstrated resilience in a challenging market environment. The company achieved an operating profit of SEK 1,162 million, representing a 16% year-over-year increase at fixed exchange rates when excluding one-time restructuring costs and the Hillside divestment. Profitability remained strong with operating profit per kilo reaching SEK 2.37, an 18% increase year-over-year at fixed exchange rates.
As shown in the following financial highlights chart, the company maintained strong financial metrics across several key indicators:
Performance varied significantly across AAK’s three business segments. The Food Ingredients segment saw a 3% decline in volumes but managed to increase operating profit by 4% and operating profit per kilo by 7%, demonstrating the company’s ability to improve profitability despite volume challenges.
The Chocolate & Confectionery Fats segment experienced a similar pattern with volumes down 7% but net sales up 15% and operating profit per kilo increasing by 11%, reflecting higher value specialty products and improved pricing.
The most impressive performance came from the Technical Products & Feed segment, which posted remarkable growth with volumes up 18%, net sales increasing 19%, and operating profit surging 178% year-over-year. This exceptional growth highlights the success of AAK’s optimization efforts in this segment.
Strategic Initiatives
AAK’s presentation emphasized its ongoing transformation from a decentralized, unaligned organization to one that is increasingly aligned while maintaining decentralized operations. This strategic shift is driving improved performance across the company’s global footprint, as illustrated in the following slide:
The company’s strategy centers around five innovation themes that anchor its product development efforts to meet evolving consumer demands. These themes encompass sustainability, performance, health, experience, and future technologies:
AAK is also making selective investments in emerging technologies with the potential to drive significant impact in the oils and fats industry. These include developing new plant-based oil sources, fermented microbial oils, and Power-to-X technologies that convert carbon dioxide, water, and energy into organic materials.
Sustainability remains a core focus for AAK, with the company tracking progress across three key areas: climate impact mitigation, protecting forests and ecosystems, and advancing wellbeing and human rights. The presentation highlighted that 91% of AAK’s palm oil is now verified deforestation-free, moving toward its target of 100%.
Forward-Looking Statements
AAK has raised its 2030 aspiration to become the first choice for plant-based oil ingredients while delivering double-digit compound growth. The company’s financial target is to grow operating profit by an average of 10% per year over time, supported by a comprehensive financial framework:
The company’s confidence in these targets is bolstered by its strong historical performance. AAK has demonstrated consistent profitability improvement even during periods of market volatility, with average operating profit growth of 9% from 2015-2021, followed by accelerated growth of 21% in 2022, 43% in 2023, and 19% in 2024.
To support its growth objectives, AAK is implementing a cost-saving program targeting approximately SEK 300 million in annual savings. The company’s capital allocation strategy balances investments for growth, strategic acquisitions, and returns to shareholders, maintaining a solid balance sheet with potential for leverage up to 3x Net debt/EBITDA to support transformational opportunities.
Competitive Industry Position
AAK positions itself as a differentiated midstream company in the global value chain for plant-based oils and fats. The company’s diverse portfolio includes multiple oil types, with palm oil (49%), rapeseed/canola oil (13%), and palm kernel oil (12%) comprising the largest portions.
The company’s global presence spans multiple industries, with 43% of volume in Europe, 41% in the Americas, and 15% in Asia, Middle East, and Africa. AAK operates 19 production plants, 25 sales offices, and 16 customer innovation centers worldwide, serving industries ranging from chocolate and confectionery to personal care and technical products.
AAK highlights how its products are integrated into various aspects of daily life, from morning skincare routines to evening meals, positioning the company as an essential provider of ingredients for everyday consumer products:
Challenges and Outlook
Despite the strong profit performance, AAK faces several challenges that were acknowledged in the earnings call but less prominently featured in the presentation. These include softer demand in the bakery and chocolate segments, high inflation affecting consumer spending, and market volatility, particularly in cocoa prices.
The company’s planned headcount reduction as part of its cost-saving initiatives also poses potential operational risks, while geopolitical tensions and potential tariff impacts could disrupt supply chains.
Nevertheless, AAK’s management expressed "prudent optimism" about the company’s long-term potential, emphasizing its commitment to driving earnings growth through commercial execution, optimization programs, and potential mergers and acquisitions. The company expects to achieve its target of SEK 3+ per kilo profitability by 2030, supported by its ongoing "Deep Dive" and other optimization initiatives.
Full presentation:
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