AAK (Buy, TP: SEK295.00) - 2024 likely to be a record year

Q1 was solid, with adj. EBIT 17% above consensus, driven by still-strong EBIT/kg and a return to organic volume growth. With high cocoa prices set for the near future and AAK’s solid position in helping customers shift into non-cocoa solutions (along with an ongoing factory optimisation programme), we still like AAK’s earnings momentum. We reiterate our BUY and have raised our target price to SEK295 (270) on higher estimates.

AAK (Buy, TP: SEK270.00) - Yet another strong quarter

We consider this a positive report for AAK, including adjusted EBIT 17% above consensus, strong cash flow, EBIT/kg above SEK2 once again and an EBIT margin above 10%. We expect consensus 2024e adj. EBIT to come up c5–10% on the results and believe a positive share price reaction is warranted.

Retail Sector Report - ReTales Q4 2023

Retail Sector Report - ReTales Q4 2023

Retail Sector Report - ReTales Q4 2023

Retail Sector Report - ReTales Q4 2023

AAK (Buy, TP: SEK270.00) - Surging cocoa price sweet spot

Although high cocoa prices for a prolonged period are likely negative for the chocolate industry in general (pressuring volumes), the surge in cocoa butter prices in 2023 and YTD should be near-term positive for AAK in prompting its customers shift to its product formulations. We reiterate our BUY and SEK270 target price.

AAK (Buy, TP: SEK270.00) - Nearing 10% EBIT margin

Q4 marked a strong end to 2023, and with similar raw materials price dynamics so far in 2024, we expect a solid start to Q1. With most of the improvements in EBIT/kg being internal efficiency and positive mix effects, we believe AAK is well positioned to further grow profits in 2024. We reiterate our BUY and have raised our target price to SEK270 (260) on our higher estimates.

AAK (Buy, TP: SEK260.00) - Yet another strong quarter

We consider this a positive report for AAK, including Q4 adj. EBIT c12% above consensus, driven by very strong EBIT/kg surpassing its 2030 ambition for the second quarter in a row. We expect consensus 2024e adj. EBIT to come up c3–4% on the back of the report and believe a positive share price reaction is warranted.

AAK (Buy, TP: SEK260.00) - Earnings momentum still attractive

We are neutral ahead of the Q4 report, as we are largely in line with consensus on adj. EBIT. We expect AAK’s earnings momentum to continue on lower input costs, still-favourable currency effects, and a better mix, as higher prices should more than offset lower volumes. We reiterate our BUY and SEK260 target price, as we continue to find the valuation and earnings momentum attractive.

AAK (Buy, TP: SEK260.00) - Structurally higher margins

The Q3 results were in line with pre-warned figures, with an upbeat Q4 outlook and still-strong cash flow. Although no firm 2024 outlook was given, AAK was upbeat in its comments for the adj. EBIT margin returning to healthy levels following the raw materials headwinds of 2022. We reiterate our BUY and SEK260 target price as we still like AAK’s earnings momentum and cash flow generation.

AAK (Buy, TP: SEK260.00) - Estimates not updatedEstimates not updatedS...

We consider this a positive report for AAK, including Q3 adj. EBIT in line with pre-announced figures and still-strong cash flow, driven by higher profits and inventory normalisation. AAK expects to finish the year in line with its average performance in the first nine months. We expect consensus 2023e adj. EBIT to be raised by c2–3% on the better than expected Q4 guidance, and we expect a positive share price reaction.

AAK (Buy, TP: SEK260.00) - 2030 EBIT/kg ambition reached

AAK yesterday announced a reverse Q3 profit warning, with adj. EBIT 30% above consensus, primarily driven by strong EBIT/kg, reaching its 2030 ambition of SEK2.0 about six years early. We reiterate our BUY and have raised our target price to SEK260 (230) driven by higher estimates.

AAK (Buy, TP: SEK230.00) - Sticky prices into H2

We expect AAK to report solid Q3 adj. EBIT (4% above consensus), driven by still-strong earnings momentum on lower input costs, favourable currency effects, and a better mix, as higher prices should trump lower volumes. We reiterate our BUY and SEK230 target price, as we continue to find the valuation attractive.

Northern Lights

AAK (Buy, TP: SEK230.00) - Taking profitability to the next level

A solid Q2 was supported by price management, higher margins in all businesses, and healthy cash flow backed by better working capital despite soft volumes. We still like AAK’s earnings momentum on top of its strong balance sheet and ongoing working capital release in H2. We reiterate our BUY and SEK230 target price.

AAK (Buy, TP: SEK230.00) - Strong Q2 and cash flow

We consider this a positive report for AAK, with Q2 adj. EBIT 7% above consensus, driven by better than expected EBIT/kg as volumes fell shy of expectations. We also note that working capital continues to improve, with Q2 cash flow a strong SEK1.6bn. We expect consensus 2023e adj. EBIT to come up 1–2% on the back of the report and believe a positive share price reaction is warranted.

AAK (Buy, TP: SEK230.00) - Solid earnings momentum

With still-strong earnings momentum on lower input costs, a better mix, and AAK being a relative beneficiary of the weak SEK, we remain positive overall, forecasting Q2 adj. EBIT growth of 28% YOY (largely in line with consensus), as better pricing should trump lower volumes YOY. We reiterate our BUY and SEK230 target price.

Northern Lights

Northern Lights

AAK (Buy, TP: SEK230.00) - Underlying cash flow still strong

Q1 adj. EBIT was as pre-warned, but EPS was softer, hit by higher interest costs. With the slightly disappointing working capital release mostly explained by an accounts-payable timing effect, we continue to expect a capital release in the coming quarters as raw-materials prices continue to trend down. We reiterate our BUY and SEK230 target price.

AAK (Buy, TP: SEK230.00) - Q1 in line with pre-warned figures

We consider this a mixed report for AAK, including figures in line with the pre-warned level, weaker cash flow than expected, and EPS coming in slightly below consensus. We expect broadly unchanged consensus 2023e adj. EBIT on the back of the report, but EPS to come down by 0–1%. We expect a slightly negative share price reaction following the results.