AAK accelerates optimisation in line with strategic direction

The ongoing COVID-19 pandemic continues to profoundly impact people, societies, and business operations across the world. Over the last few months, extensive restrictions and lockdown measures have been implemented in most countries globally.

This, in turn, has resulted in a negative impact on demand and earnings within most industries that AAK serves. In response, the company will be optimising its cost base in affected segments without jeopardising its long-term capabilities and strategic initiatives.

Johan Westman, president and CEO of AAK, explained: “In spite of the short- to mid-term impact from the COVID-19 pandemic, we see no reason to adjust our view on the strong favourable underlying long-term trends in our markets, and we continue to remain prudently optimistic about the future. However, in order to support our long-term ambition, we have decided to accelerate the optimisation of our structure.”

AAK has initiatied structural measures including cost items affecting comparability of about SEK 200 million (US$21.4 million), which will be reported in the operating profit in Q2 2020. While approximately 35-40% is expected to impact cash flow, the company is confident that these measures will generate annual savings of about SEK 150 million (US$16 million) and are expected to reach full run-rate by H2 2021.

“The planned initiatives, including mainly global workforce reductions and procurement savings, are fully in line with our strategic direction to optimise our bakery, dairy and foodservice businesses, and will also fund strategic investments in other segments, for example, plant-based foods,” Westman added.