Earnings call transcript: AAK Q3 2025 sees profit rise amid currency headwinds

AAK AB reported a 9% increase in operating profit at fixed exchange rates for the third quarter of 2025, despite facing currency headwinds that limited growth to 2% at reported rates. The company’s stock saw a slight decline of 0.15% in pre-market trading, closing at 266 SEK, as the market digested these mixed results and other strategic developments. According to InvestingPro analysis, AAK maintains a "GOOD" Financial Health score, with particularly strong marks in profitability metrics.

Key Takeaways

• Operating profit increased by 9% at fixed exchange rates.
• Volume declined by 2% year-on-year but rose 4% sequentially.
• AAK launched a new product and entered a joint venture for plant expansion.
• Stock price decreased slightly by 0.15% in pre-market trading.
• Currency headwinds impacted overall financial performance.

Company Performance

AAK’s performance in Q3 2025 demonstrated resilience in a challenging market environment. The company achieved a 9% increase in operating profit at fixed exchange rates, although reported rates showed a modest 2% growth due to currency headwinds. Volumes fell 2% year-on-year but saw a sequential increase of 4%, reflecting some recovery. The company’s revenue reached $4.86 billion in the last twelve months, with a healthy gross profit margin of 27.9%.

Financial Highlights

• Operating profit increased by 9% at fixed exchange rates.
• Operating profit per kilo reached SEK 2.47, up 5%.
• Net debt/EBITDA ratio stood at 0.61.
• Return on capital employed was 21.6%.

Market Reaction

AAK’s stock price decreased by 0.15%, trading at 266 SEK, which is closer to its 52-week low of 240.8 SEK. This slight decline suggests a cautious market response, influenced by currency impacts and volume declines. InvestingPro analysis indicates that AAK is currently undervalued, while maintaining its impressive 16-year streak of consecutive dividend raises. For deeper insights into undervalued opportunities, explore the Most Undervalued Stocks list.

Outlook & Guidance

The company remains prudently optimistic about its long-term potential and is committed to its 2030 aspirations. AAK aims for volume growth through commercial excellence and is monitoring shea kernel export restrictions. Profitability improvements are expected to continue, supported by analyst consensus recommendations that maintain a "Buy" rating. The company’s strong balance sheet, with a current ratio of 1.81 and moderate debt levels, positions it well for future growth opportunities.

Executive Commentary

CEO Johan Westman emphasized the company’s focus on profitable growth, stating, "We will not compromise our margin discipline or our leadership in advanced product solutions to chase short-term volume gains." He also highlighted initiatives aimed at strengthening volume performance through commercial excellence.

Risks and Challenges

• Currency fluctuations continue to pose a risk to reported financial results.
• Volume declines in key markets such as Mexico, Turkey, and China could impact future performance.
• High food prices and market saturation may limit growth opportunities.
• Potential supply chain disruptions and export restrictions on shea kernels.
• The need to manage cost optimization while maintaining operational efficiency.

Q&A

During the earnings call, analysts inquired about AAK’s shea sourcing strategies and the dynamics of the cocoa butter alternatives market. The company detailed its volume growth initiatives and addressed the effects of currency translation on its financial results.

Full transcript - AAK AB (AAK) Q3 2025:

Tomas Bergendahl, CFO, AAK: For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Today’s event will last for 45 minutes. Now, I will hand the conference over to the speakers, CEO Johan Westman and CFO Tomas Bergendahl. Please go ahead.

Johan Westman, CEO, AAK: Thank you. Good morning, everyone. Thank you for joining us today, and thank you for your interest in AAK. As you heard, with me today is also our CFO, Tomas Bergendahl. Please turn to slide number two. What we will cover today is quarterly highlights, selected events, business and financial updates, followed by some concluding remarks from my end. We’re scheduled to do this for about 40 minutes, including a Q&A session at the end. With that, please turn to page three. Just a reminder, this presentation includes forward-looking statements that come with risks and uncertainties. These are our views on future events and financial performance, but actual results may differ. Please keep that in mind when we go over the material. With that, please turn to page number four. Starting with the quarterly highlights for Q3 2025.

As you’ve seen in the Q3 report published earlier this morning, we delivered a solid quarter overall, broadly in line with the previous one, with strong operating profit despite somewhat soft volumes. Operating profit in the third quarter increased by 9%. This excludes the year-over-year impact of the Hillside divestment, as well as the SEK 85 million currency headwind. When including the effects of currency translation, operating profit grew by 2% compared to the corresponding period last year. Tomas will go over the main drivers behind the effects impact a bit later in this presentation. Volumes declined slightly, 2% year-on-year, but increased 4% sequentially. Looking at the year-on-year comparison, the volume decline was mainly driven by an 8% reduction in Chocolate and Confectionery Fats. Food Ingredients excluding the Hillside divestment was flat, while Technical Products and Feed decreased by 1%.

Just as a reminder, the Hillside divestment refers to last year’s sale of our North American food service business. That business accounted for roughly 5% of our total volumes and is therefore weighing on the reported year-on-year development, an effect that will continue also in the fourth quarter. Profitability was strong. We had an operating profit per kilo reaching SEK 2.47 in the third quarter. This represented an increase of 5% or 12% at fixed exchange rates, both excluding the Hillside divestment. This improvement was driven partly by continued internal optimization, including productivity and procurement improvements at our oil refining plants, as well as our Fit-to-Win cost optimization program, and partly by better portfolio and price management, with continued high sales of specialty solutions. Favorable market conditions for cocoa butter alternatives further supported the third quarter profitability.

Turning to cash flow, operating cash flow was positive at SEK 542 million, driven by strong underlying earnings, partially offset by a negative contribution from working capital. Our net debt/EBITDA stands at 0.61, and return on capital employed reached a solid 21.6%. Both numbers excluding the restructuring cost we recorded in quarter two. All in all, a solid third quarter result with a 2% absolute growth in operating profit despite the significant headwind from currencies. With that, please turn to the next page. Before we go into the business and financial updates more in detail, let me briefly cover some highlights, a few events since our last call. I’d like to start by acknowledging a very sad loss. As previously communicated, on September 21, a tragic incident occurred at our facility in Louisville, Kentucky, U.S., resulting in the loss of one of our dear colleagues.

Emergency services responded immediately, and the affected part of the plant was shut down as a precaution. Since then, our focus has been to support those impacted, ensuring access to appropriate assistance, and honoring the memory of our much-valued colleague. We are cooperating with authorities in ongoing root cause investigation and have engaged both internal and external experts to understand exactly what happened. Safety and care for each other remain our highest priorities, and we are committed to learning from this incident and taking all necessary steps to prevent a reoccurrence. Turning to our strategic development, AAK AB has entered into a joint venture with Kuala Lumpur Kepong Berhad, or KLK, to build a specialty palm fractions plant in Pasir Gudang, Malaysia.

The joint venture, which we’ve named Nura Specialty Oils and Fats, or Nura, will strengthen our upstream access to sustainable, high-purity specialty fractions used in, for example, the production of cocoa butter alternatives, one of the key growth drivers within Chocolate and Confectionery Fats. For AAK, the total investment amounts to roughly SEK 300 million to be implemented over the next three years. The plant is expected to ramp up in 2028 and reach full contribution in 2029. By broadening our supply base and reinforcing upstream integration, Nura will complement our longstanding supplier partnerships in the region, increase resilience, and support the long-term profitable growth of Chocolate and Confectionery Fats. Moving on to shea sourcing and the development in West Africa, shea is one of AAK’s more important raw materials and a key input in the production of cocoa butter equivalents or alternatives.

Each year, we source shea kernels from across West Africa, where hundreds of thousands of women are engaged in the collection process. In recent months, several countries have introduced export restrictions on raw shea kernels. We are closely monitoring that situation and remain in dialogue with local authorities, industry associations, as well as suppliers. While these restrictions have created a short-term uncertainty in the supply chain, AAK has long invested in the direct sourcing, local partnerships, and traceability programs across the shea belt. These initiatives strengthen our resilience and help us adapt quickly to regulatory changes. At this stage, the export restrictions are not expected to have a material impact on our ability to serve customers. Our diversified sourcing model, combined with longstanding local relationships, helps us ensure continuity of supply. Finally, as we entered the fourth quarter, AAK reached a milestone, our 20-year anniversary at AAK.

Twenty years ago, on October 1, 2005, Aarhus United and Karlshamns merged to form AarhusKarlshamn, today known as AAK. The merger combined more than a century of expertise in plant-based oils and fats, laying the foundation for the global leader we are today in high-specialty fat solutions. This anniversary is a meaningful reminder of our strong heritage and the power of combining technical excellence with global reach, with innovation and sustainability focus, strengths that continue to define and drive AAK today. With those events, we turn to the next slide, starting with business area highlights for Food Ingredients. Overall, volume performance in Food Ingredients was mixed. Excluding the impact of the Hillside divestments, volumes were on par with the same period last year. While this represents an improvement compared to the second quarter decline, performance is still somewhat soft in bakery. All other key segments were stable or slightly growing.

Operating profit per kilo came in at SEK 2.40 compared to SEK 2.33 in the third quarter last year, excluding the Hillside divestment. That is an increase of 3% despite the currency headwind of SEK 0.18 per kilo. If we look at this at fixed exchange rates, and again excluding Hillside, operating profit per kilo increased by 11%, which is a very, very solid improvement. In total, operating profit excluding Hillside increased by 3% to SEK 766 million, including a negative currency translation effect of SEK 57 million. On a constant currency basis, and excluding Hillside, operating profit was up 10% year-on-year in Food Ingredients. With that, moving over to business area highlights for Chocolate and Confectionery Fats, slide seven. In Chocolate and Confectionery Fats, volumes decreased by 8% year-on-year, following a very strong 12% uptick in the third quarter last year. It’s worth keeping that in mind.

Compared to the previous quarter, volumes were up 7% sequentially, mainly reflecting normal seasonality in the year. Overall, the challenging market environment and elevated chocolate prices have continued to weigh on consumer demand. At the same time, the sequential improvement, both compared with the previous quarter and within the quarter, may point to somewhat more stable development. Operating profit per kilo remains strong, increasing to SEK 4.30 compared to SEK 3.95 a year ago. Currency translation had a negative impact of SEK 0.23 per kilo. At fixed exchange rates, operating profit per kilo was up 15% in the quarter. In total, operating profit came in at SEK 525 million, in line with the same quarter last year, but at fixed exchange rates, operating profit increased by about 5%. With that, moving into business area highlights for Technical Products and Feed on the next page.

Volumes declined by 1% compared to the same period last year, with higher sales in Technical Products, partly offset by lower volumes in Feed. Operating profit per kilo increased to SEK 0.67, up 5% from SEK 0.64 last year. In total, operating profit reached SEK 46 million compared to SEK 45 million a year ago, an increase of about 2%. With that, we have now covered the three business areas. I will now hand it over to Tomas to provide a review of the third quarter financial results. Thank you, Johan, and good morning, everyone. Please turn to slide nine. Let me take a moment to explain the effects impact we’re currently seeing affecting our results. The effect we refer to here is primarily a translation effect, meaning it arises when we convert profits generated in other currencies, for example, the U.S.

dollar or the Mexican peso, into our reporting currency, the Swedish krona. As the krona has appreciated against most of our key currencies throughout the year, the value of those foreign earnings becomes lower when translated into krona, even though the underlying performance in local currency terms remains strong. It’s important to stress that this is not a reflection of weaker operations or lower margins, but rather a year-on-year comparability accounting effect linked to currency movements. As you can see on the slide, we faced a strong FX headwind, mainly coming from the U.S. dollar, the Turkish lira, and the Mexican peso, against which the Swedish krona has strengthened during the year. That the effect comes from these specific currencies is a result of the magnitude of earnings for AAK in each country, combined with the respective currency movements versus the Swedish krona.

For the year-to-date period, this has resulted in a total FX headwind of SEK 251 million, representing a year-over-year negative impact of roughly 7% on the EBIT result, mainly driven by the weaker Mexican peso, but also heavily impacted by the U.S. dollar and the Turkish lira. In the third quarter alone, the headwind was SEK 85 million, also representing a year-over-year negative impact of 7% on the EBIT result, with the U.S. dollar being the largest driver, followed by the Turkish lira. Moving to the next slide, slide 10. Operating cash flow amounted to a positive SEK 542 million in the quarter. Working capital increased, as Johan mentioned before, mainly driven by inventory, as well as accounts receivables to some extent, which had a negative impact on the cash flow for the quarter.

Inventory increased with roughly SEK 700 million in the quarter, driven by higher volume levels of palm, partly driven by the preparation for the introduction of EUDR at the end of the year. Accounts receivables increased by roughly SEK 200 million, driven by sequentially higher sales. The impact in the quarter on working capital from accounts payable is very limited, as it remained stable during the quarter. CapEx amounted to SEK 321 million in the quarter, comprised mainly of investments related to maintenance, productivity improvements, as well as capacity increases and de-bottlenecking. For the full year, we continue to estimate the CapEx spend at around SEK 1.25 billion. Free cash flow amounted to a positive SEK 221 million in the quarter. Turning to the next slide, slide 11.

Return on capital employed for the quarter is slightly down from the 22.4% achieved in Q4 2024, ending up at 21.6% adjusted for the one-time restructuring cost recognized in Q2 2025. This was driven by an increase in capital employed and, as previously mentioned, mainly driven by the increase in working capital. When we look at the next slide, the net debt/EBITDA ratio was reduced slightly to 0.61 in the quarter compared to Q2 2025, but up slightly from the low of 0.29 in Q4 2024. The increase from the end of 2024 is mainly driven by the dividend that we paid in May of 2025, as well as an increase in the previously mentioned working capital. The ratio remains at a level that provides us with continued financial stability and flexibility.

With that, I will hand it back to Johan for a summary and concluding remarks before we open up for questions.

Operator: Thank you, Tomas, and please turn to the next slide. Before we move to the Q&A session, I’d like to take a moment to outline how we are approaching the current environment and the actions underway to strengthen volumes. First and foremost, we will not compromise our margin discipline or our leadership in advanced product solutions to chase short-term volume gains. Our focus remains firmly on profitable growth. As we demonstrated over time, AAK continues to deliver strong profitability even at lower capacity utilization, proving the resilience of our model and a cost base that remains well covered. That said, parts of the end market remain challenging, with high food prices continuing to weigh on consumer spending. To address this, we are executing a focused commercial push to capture pockets of growth opportunities. We are working plant by plant to identify and drive volume opportunities.

Using the spirit of AAK in a decentralized structure, our focus is clear: prioritized regions and key customer segments where we can leverage AAK’s broad portfolio, our co-development capabilities, and plants with available production capacity to create value for our customers. A strong co-development example is our recent Ilexao EN10 launch that we did. It’s a next-generation CBE supercompound that not only offers a high-performing, cost-efficient alternative to cocoa butter, but also reduces material loss for our customers, improving their throughput time, and minimizes maintenance time in enrobing, all while maintaining excellent end product quality for our customers’ products. This is a great illustration of how we combine innovation, co-development to strengthen partnerships and help our customers succeed. We will maintain our leadership position supported by a simplified pricing mechanism that improves our ability to close EBIT positive deals faster and more effectively. That’s where our focus is.

Finally, we have a strong pipeline of commercial opportunities that our teams are actively pursuing across different markets. In summary, we are acting decisively, staying disciplined on profitability, leveraging our commercial strength, and positioning AAK to deliver on the 2030 aspiration that we have earlier communicated. With that, I move into some concluding remarks, and then we’re happy to take questions. We saw continued profitability gains with several actions on the way to strengthen volumes, excluding the impact from the Hillside divestment. Operating profit increased by 9% at fixed exchange rates. Volumes were up 4% sequentially, but down 2% year-over-year, again excluding the Hillside divestment. Profitability remains strong, with operating profit per kilo reaching $2.47. Looking ahead, we remain prudently optimistic about our long-term potential, and we are fully committed to deliver on our 2030 aspiration.

Here and now, we are executing targeted initiatives to strengthen volume performance with a clear focus on commercial excellence and deeper customer engagements. With that, I hand it back to the operator, and we are happy to take any questions from the audience.

Tomas Bergendahl, CFO, AAK: If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Johan Fredrik from SEB. Please go ahead.

Good morning, Johan and Tomas. Thank you for taking my questions. A first one on your actions to drive volume growth. Could you provide maybe some more specific details on which regions and customer segments you are prioritizing in the sort of short term? What is the realistic timeline to see measurable volume improvements from these initiatives?

Johan Westman, CEO, AAK: First and foremost, I would like to mention that I said in the call the AAK spirit. I think those of you who follow AAK have seen how we try to be very systematic, hands-on, practical, if you will, whether that is optimizing our cost base or running factory optimization. This is another example where we are leveraging our decentralized structure, being out there in the different countries of the world close to our customers. We are again using, call it an AAK, very practical and pragmatic model to kind of strengthen the connection between how we source and how we run our plants, and then with the go-to-market teams trying to strike a deal that is positive for a specific plant, not just by lowering prices across the board. I’m happy to hand it over to Tomas for maybe one or two examples.

Lastly, from my point of view, we already see traction in these activities. Yeah. I would also say, as Johan said, I mean, we are a very decentralized company, and these efforts, like most of the other efforts that we run in AAK to improve our operations and bottom line, are very locally focused. This is the case here as well, where we look at the applicable markets. The focus, back to your question, is different in different markets depending upon how the markets are developing and what opportunities we see.

What we can say as well is that we’ve strengthened the approach on the margin calculation on these types of deals to be more precise and be more competitive in the market, knowing exactly how that will hit our bottom line in a positive way as we take these additional volumes, including shorter and faster decision lines in order to strike deals when we have them in front of us.

Okay, got it. Thank you for clarifying that. Another question, if I may, on the shea or shea export ban. I understand, of course, that you have a strong position locally, but you state that there is currently no material impact. Still, if there’s an export ban, there is an export ban, right? Regardless of local relationships and whatnot, my question really is, are there any countries that have not implemented an export ban that you’re able to source from currently, or do you have enough inventory to not be affected initially? If so, how long can that inventory suffice?

Thank you. Great question. It’s a bit of both or all of it. Let me first say that yes, there are countries where we can still export. That’s what we are doing, but also that we are not only dependent on kernels per se. We can also work with crude shea oil, if you will. We also have local. What we have is we have sourcing presence in most of the countries in West Africa. That’s one strength of AAK. We’ve been working with this for many, many years. We’re absolutely present in many of these countries. That includes having relationships and partnerships with local producers that could crush locally. With that, we can still use oil and then refine all the steps, call it downstream from the crush, if you will.

What we are doing is we’re executing a couple of activities to, one, secure as much kernels as we can. Two, if that’s not possible, we then try to do local crushing and export oil or same refined oil, and then we refine further. That’s how we are approaching it. Yes, we also haven’t had stocks of kernels. Just to be clear, I think the export bans where they do exist are on kernels, not on crude oil if crushed locally, right? Just to be clear on that. The target by these countries seems to be to get companies to invest in local crushing and so forth. It’s not to stop shea from being extracted, if you will, shea oil.

No, that was my impression as well, and that makes much sense. Thank you so much for taking my questions.

Thank you.

Thank you.

Tomas Bergendahl, CFO, AAK: The next question comes from Setu Sharda from Barclays. Please go ahead.

Yeah, hi. Thanks for taking my question. I have got three questions. The first one is on your CBEs. You have highlighted the favorable market conditions for cocoa butter alternatives as a margin driver. Cocoa butter prices have fallen sharply YTD. How exposed are you to the further price normalization in this? My second question is again related to Chocolate and Confectionery Fats margins. You have seen volume pressure and FX headwinds, but still your margins have improved meaningfully in Q3. Can you unpack the key driver behind this resilience and how sustainable are they into Q4 and next year? My third question is on the shea kernel export ban. As you answered that, you are procuring the oil. If the ban continues longer term, what does it mean for your crushing capacity in Europe? Would you need to impair that asset and invest in local processing in Nigeria?

Johan Westman, CEO, AAK: Thank you. We’ll take the questions one by one. First, on the CBE market, I’ll go back a little bit to detail out the market dynamics. We offer a cocoa butter equivalent that replaces cocoa butter in the formulation of chocolate and confectionery products. In chocolate, that is in many countries restricted to only replacing 5% of the ingredient mix, which means that the rest is including cocoa butter. As you know, the sharp price increases have led to those products leading to higher inflation on these products, higher prices because of cocoa butter mainly. In other products, it’s a higher degree of inclusion. I think all in all, you have seen that the consumption of chocolate and the inflation have weighed on consumer demand, which has a negative impact on the underlying volume for the total chocolate and confectionery market, which we have also highlighted in our report.

The question is, I think it’s actually positive that prices come down because that means that it releases pressure on the end product price, if you will. The question is, with further stabilization or further price reduction, would that come to a point where we would not have a benefit with a CBE versus cocoa butter? Then the prices need to come down significantly because we have in very, very long history, even when prices were lower on cocoa butter, we have had a cost-competitive alternative to cocoa butter with our cocoa butter equivalents. That’s worth keeping in mind. For those that have now, due to high cocoa prices, reformulated into a well-functioning CBE, I see very little logic why you would go back to cocoa butter if cocoa butter is still more costly than a CBE because you have already proven the reformulation and the quality of the product.

I think it’s worth keeping in mind that just because they come down doesn’t mean that the opportunity for CBE falls off. We have been helped, and we have articulated what is favorable market conditions. When the cocoa price has been high, we have been helped probably more in the way that customers are reformulating, now taking the chance to maybe use a cocoa butter equivalent in products where they did not use cocoa butter equivalents before. When speaking about favorable market conditions, it’s not all about price and margin versus cocoa butter. It’s also about driving volume for our product range, which has been favorable over the last years. Continuing with your second question regarding the improved Chocolate and Confectionery Fats margins in Q3 and how that’s maintained, it goes in line a bit with what Johan mentioned on the first question in response to that one.

The fact that if you look back before the sharp increases in cocoa prices, we were still able, of course, to generate good margins. It has increased over time. We see our internal efficiency programs delivering on a continuous basis, as we’ve mentioned before as well. It’s not just price that we’re talking about here either. The cocoa butter equivalents, for example, as a replacement of cocoa butter, is not just a replacement. It’s also adding a lot of good functionality into the end product. That’s something that’s valued by our customers and something they’re prepared to pay for as well. Yes. All right. If we go to the third question, which was relating to, what about what is it with our shea crushing assets if we can’t get kernels? Let’s be sure we do crush, but only in one site of our 19 sites, we do crush.

If we could not get kernels, yes, that’s right, we wouldn’t be able to crush. That could potentially lead to a small write-down of assets in that camp. Keep in mind that crushing is only the first step in refining shea oil to the component that we then blend into a solution for cocoa butter equivalents or for skincare, by the way, that we sell into skin solutions in the cosmetic industry. That is not a significant impact. We are evaluating, we’ve done this over many, many years. We’re looking at make-buy and where to have our assets. We have invested a lot in our own crushing and refining of shea, that’s for sure. We are continuously looking to source, and we have been sourcing crude shea oil from West Africa also in prior years. Now we might do that to a higher extent or larger extent.

Going forward, we are obviously looking at where to invest going forward. It might be that we would end up investing more in West Africa or strengthening partnerships in West Africa. Crushing is only the first step in a value-adding chain to arrive to a cocoa butter equivalent at the end.

Thank you. That’s great help.

Tomas Bergendahl, CFO, AAK: The next question comes from Priya Patel from UBS. Please go ahead.

Hi, thanks for taking my questions. I have three. Firstly, you alluded to some softness in bakery. I was just wondering if you could comment on how much bakery declined by. In Chocolate and Confectionery Fats, I just wanted to ask if you could comment on how volumes developed by product. How did the CBEs perform versus fillings and spreads, for example? Finally, just on the Fit-to-Win savings, how much impact did you see in Q3? Are you still targeting $50 million by the end of the year? Thanks.

Johan Westman, CEO, AAK: Great, thank you. When we talk about bakery and the softness there, we see in the quarter, I would say, single-digit year or quarter-over-quarter reduction. That continues at the same sort of pace that we’ve seen throughout 2025, improving slightly, I would say, in Q3, but still negative. It’s the same markets that we’ve seen the weakness and softness before. We’re talking primarily Mexico, but also Turkey and China, where we see softness. We see support from that, particularly in China, from Nielsen data of bakery and the segment coming down quite significantly, actually. All right. The second question was on CCF volumes by product. When we click down a level on CCF volumes, it’s mainly within spreads and filling fats where we would see the decline. Cocoa butter alternatives are doing relatively better.

One could argue that even within the portfolio, it is a weaker demand in the lower value-added products and more stable in the higher value-added products if you look at it from a mixed perspective. The third question around Fit-to-Win, it’s actually progressing very well. We are implementing the program across the organization. We have, for example, seen a 30% reduction in travel so far, which is very encouraging. We’re also moving forward on the headcount reduction that we mentioned before, up to 5% of our 4,000 employees. We have seen better traction in Q3 than expected. The $50 million that we expected to have for the full year of 2025 will likely be closer to double what we’ve seen there. When you look at the overall cost reduction of $300 million, that’s still the expectation by mid-year 2026.

The pace is just picking up a bit quicker than we expected initially.

Great, thank you.

Tomas Bergendahl, CFO, AAK: The next question comes from Joan Lim from BNP Paribas Exane. Please go ahead.

Hello. A couple of questions from me, please. In theory, with lower cocoa prices, it should help chocolate volumes recover. Can you help me understand how long it typically takes to see the benefits of this on end demand? Based on your conversations with customers, have you seen innovation activity start to pick up, especially for the holiday season and into Easter next year? My second question is on pricing. Pricing has been a significant contributor to top-line growth in the past quarters. With vegetable oil prices now coming back down, how much price can AAK hold on to in the more specialty areas like your CBEs? You mentioned simplified pricing mechanisms to increase your ability to strike EBIT positive deals. Maybe you can help us with an example there, please. The last one is to pick up on previous questions on volume expectations.

You talked about favorable market conditions for cocoa butter alternatives. Can you give some examples of what you’re doing more with customers? How do you expect this to shape volumes for Q4 in 2026? Is there a stronger pipeline that you’re seeing at the moment? Thank you.

Johan Westman, CEO, AAK: Thank you. On the CCF, if we start, the first question there was, as you said yourself, if you see cost or inflation easing, that could absolutely, in the theoretical model, at least should lead to a higher demand or at least consumer not be feeling those price pressure on the shelf in retail, right? That is positive in that sense. When you look at how we supply, if you will, it’s back to what I mentioned before. We supply an alternative. The reformulations are done by the customers with support of us. That is an ongoing activity. It has been accelerated, of course, with the dramatic increase of cocoa prices that you saw. If you’re asking how short term, it’s just very recently that cocoa butter came down. We engage with our customer more on a yearly, quarterly basis. You don’t change things overnight.

I don’t think we’ve seen the impact of lower cocoa prices at all yet. We will have to see what that leads to at the end of the day. I think the best way to look at that is what do you see in communication from the consumer goods products we supply to their production again. As it relates to the second question on raw material prices coming down to some extent in terms of cocoa butter and so forth, we do see, of course, those changes. That is something that we’ve lived with for a long, long time, especially over the last five to six years, where volatility and uncertainty have been much, much greater than what we’ve seen in the past. I would say pricing is a piece of it, definitely not the whole benefit that we’ve seen so far.

We also have all the programs that we’ve been working with internally in terms of efficiency and so forth, driving our EBIT per kilo margin. Just to make sort of a step back in time a bit, we saw raw material prices come up significantly from 2020 to 2022, then dropping down by about 50%, and then remaining flat for a year, year and a half, and now increasing again. We have been able to manage this in the past very successfully, continuing to increase our EBIT per kilo. We expect to do so also in the future. The focus is not leveraging the fluctuation in raw material prices, but rather bringing the value to our customers and then doing market-based pricing more and more. As you know very well, we don’t play the market on raw materials.

We hedge it back to back as best we can to continue to increase our EBIT per kilo. On your last question, can we exemplify a little bit more? What are we doing in this commercial push? One piece is about speeding up and simplifying price calculations, making sure that we are connected within the company. A quicker, call it, connect between sourcing, operations, and go-to-market so that we understand where we can have a positive impact on getting leverage on fixed cost, if you will, by making sure that we’re covering our variable cost and then striking an EBIT positive deal. Our focus, and we’ve said that, let’s not forget, our financial target is EBIT growth. We’re always trying to drive EBIT growth. That could be done by margin, could be done by volume, or ideally in a combination of the two. That’s how we focus.

That’s why we are not necessarily prioritizing one or the other, but we’re always focusing on can we make a creative EBIT deal. To give you some examples of what we are doing, we are, for example, apart from simplifying price mechanisms and so forth, also targeting customers, a commercial push country by country. One example is that we have, in a few countries, singled out customers where we haven’t been that active, maybe smaller customers that we didn’t do business with before, and structurally going after them. We’ve seen some positive uptake quickly in some of those markets. That’s one example. The other one is what we mentioned here is the co-development with customers. For example, bringing a new, better solution to market. In this case, a CCF for chocolate and confectionery ingredient that is giving that functionality in the chocolate.

The real benefit for the customer here is that we are improving their production. When doing enrobing, you have always the challenge in a production site where you get a buildup of material, you get clogging, if you will, of your production line. You need to do maintenance. You need to clean the line, and then you start running again. With this solution, we reduce that downtime because you can run longer before that buildup or clogging becomes a problem. In essence, we are offering our customer a quality product for the end solution, but with the capability of running their lines faster, longer, so they could increase their capacity, and with that, reduce their landed cost for finished product. These are examples of what we are doing to drive volume, both short term and also in a long-term perspective with innovation.

Thank you very much. Just to follow up, how does the pipeline look for Q4 in 2026? If we are thinking about the holiday season.

That is for our internal optimization and not for display to competition. We’re working actively with our pipeline.

Okay, thank you very much.

Thank you.

Operator: This is your operator speaking. We are reaching the end of the session. Let’s take the last question and move to closing remarks.

Tomas Bergendahl, CFO, AAK: The next question comes from Victor Hansen from DNB Carnegie. Please go ahead.

Johan Westman, CEO, AAK: Thank you. Thank you, operator. Hi, Johan and Tomas. A couple of questions. I’ll try to keep it short. I was curious about Food Ingredients improving sequentially. Could you give us any comments on how you would say you are faring versus the market? If you, during the quarter, saw any recovery or if it was evenly down throughout the quarter? Thanks. Thank you. Yes, it’s improving sequentially. I would say, as we’ve seen, a bit of softness in bakery. Bakery is also the one coming back. Dairy is continuing to show strength. To your specific question, yes, it is sequentially. During the quarter, we saw continuous improvement throughout into September as well. Okay, good. On bakery, where you still have some weakness, would you say that this is due to destocking or are Food Ingredients, the Q3 volumes, fairly close to current consumer demand? Yeah.

I would say that it’s not a structural destocking in bakery. Bakery is a very local market, first of all. We supply bakery globally, but most of the companies within the bakery industries, if you will, are local players, country by country. What is more dominating here is the reduction in China, Turkey, and a few other countries where we serve. That is more the weight on bakery than a structural, call it bakery across the world dynamic. Okay, thanks. I’ll stop there. Thank you.

Tomas Bergendahl, CFO, AAK: There are no more questions at this time. I hand the conference back to the speakers for any closing comments.

Johan Westman, CEO, AAK: Thank you. Thank you for all your questions and interest. Again, we delivered a strong quarter with 9% operating profit growth at fixed FX, and we remain focused on our activities to also drive volume going forward. Thank you for your interest and for your questions.

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