AAK.ST — mttssn research

HOLD

Conviction: MEDIUM

A specialty vegetable-oils-and-fats franchise (chocolate/confectionery fats, plant-based, special nutrition) run on an 'operating profit per kilo' model — SEK 2.45/kg (from 2.25), with 18 consecutive years of operating-profit growth. FY2025 operating profit excl. IAC SEK 4,925M (+9% at constant FX) despite −3% volumes, as margin/kilo more than offset. Adjusted ROIC ~14.9% > 8% WACC (EP +SEK 1,750M). Fairly-to-modestly valued (rDCF ~−3% at 5%, PEBV ~1.41). HOLD with a modest BUY-lean / quality bias; base SEK 248.

Adj. ROIC

14.9%

WACC 8% → spread +6.9pp

Economic Profit

+SEK 1,750M

+SEK 1,750M @ 8% WACC (~7pp spread)

FCF Yield

2.3%

FCF funds dividend; WC-absorptive

Price / Target

SEK 240 → SEK 248

+3% base; HOLD

Revenue (LTM)

SEK 45.7B

LTM; volumes −3%, margin/kilo +

EBIT Margin

10.3%

Op profit/kilo SEK 2.45 (from 2.25)

EV / IC

2.55×

Enterprise value / invested capital

Net Debt

n/a

Modest net debt; WC inventory+AR ~SEK 18.3bn

Thesis

AAK is a specialty vegetable-oils-and-fats franchise — high-value chocolate & confectionery fats, plant-based and special-nutrition applications — run on an 'operating profit per kilo' model that reached SEK 2.45/kg (from SEK 2.25), the key value metric. The franchise is genuinely durable: customer co-development and reformulation create switching costs, and the company has delivered 18 consecutive years of operating-profit growth (an ~18% EBIT CAGR since 2020). FY2025 operating profit excl. IAC was SEK 4,925M, +9% at constant FX even as volumes fell ~3% on soft consumer demand — margin/kilo expansion more than offset the volume decline.

We make one normalization: adding back the SEK 250M Fit-to-Win restructuring charge (the sole FY2025 IAC, targeting ~SEK 300M of annual run-rate savings by mid-2026), which sits in the FY2025 anchor. PPA amortization is small (SEK 30M) and kept in opex. The result: adjusted ROIC ~14.9% on IC SEK 25,343M clears the 8% WACC for EP +SEK 1,750M (~7pp spread). The chief balance-sheet feature is working capital — inventory SEK 11,906M + receivables SEK 6,442M (~SEK 18.3bn gross), an inherent feature of a commodity-input specialty processor that ties up capital but supports the per-kilo margin model.

Valuation · reverse-DCF & scenarios

On adjusted NOPAT (SEK 3,777M) the reverse-DCF base is ~−3% to the SEK 239.8 price at 5% growth and +9% at 10% (PEBV ~1.41, EV/IC ~2.6x) — the market prices ~6-7% sustained growth, a modest premium that the per-kilo expansion track record and Fit-to-Win savings can justify.

Base SEK 248 (modest upside; ~6-7% growth + savings ramp); bull SEK 280 if margin/kilo expansion and the SEK 300M savings flow through (the 10% case); bear SEK 205 if volume softness and FX headwinds persist (no-growth case).

Market-implied growth

+6.4%

NOPAT CAGR over 5y the EV already requires

No-growth value / share

SEK 203

84% of price; rest = priced-in growth

ROIC − WACC

+6.9 pp

ROIC 14.9% vs WACC 8.0% — positive = value creation

CAP (priced-in)

12.6 yrs

years of excess returns the price implies (fades to WACC)

The market pays today’s enterprise value for roughly 6.4% NOPAT growth over 5 years. The business earns 15% on capital against a 8% cost of capital (spread +6.9 pp); the no-growth value is SEK 203/share (84% of price), so the rest is priced-in growth.

Scenario	24m target	Impl. g	Upside	Prob.	Driver
Bull	SEK 280	+12%	+17%	30%	Margin/kilo expansion + Fit-to-Win savings flow through
Base	SEK 248	+8%	+3%	45%	~6-7% growth priced; per-kilo model justifies it
Bear	SEK 205	+0%	-15%	25%	Volume softness + FX headwinds persist
Prob-weighted	SEK 247	—	+3%	100%	Scenario-weighted expected value

Sensitivity — fair value / share at WACC × growth

WACC \ g	0%	3%	5%	8%	10%	15%
6.50%	278	306	326	358	381	445
7.25%	234	256	271	296	313	360
8.00% (base)	203	219	231	250	263	299
8.75%	179	192	201	216	226	253
9.50%	160	170	177	189	197	217

Green = fair value above the current price of SEK 239.80. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.

Method & data. NOPAT SEK 3,777, invested capital and ROIC 14.9% are observed (adjustments.json); WACC 8.0% and terminal g 2.5% are assumptions. EV→equity uses net debt SEK 2,187. The model holds ROIC constant (no fade) over the explicit horizon; the CAP figure instead fades excess returns to WACC.

⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.

Key drivers

1. Per-kilo margin expansion

Operating profit/kilo SEK 2.45 (from 2.25) — the core value engine offsetting soft volumes.

2. Fit-to-Win savings

~SEK 300M annual run-rate savings by mid-2026 — a margin tailwind.

3. Specialty-fats moat

Customer co-development + reformulation switching costs; 18-year profit-growth streak.

4. Above-WACC returns

Adjusted ROIC ~14.9% > 8% WACC, EP +SEK 1,750M.

Key risks

Volume softnessFY2025 volumes −3% on soft consumer demand; a deeper slowdown pressures the per-kilo model.
FX translationA SEK 331M FX headwind cut reported EBIT in FY2025 — earnings are translation-sensitive.
Working-capital intensityInventory + AR ~SEK 18.3bn ties up capital; commodity-input price swings flow through it.
Full-ish valuationPEBV ~1.41, rDCF ~−3% at 5% — quality is largely priced.

Conclusion

AAK is a durable specialty-fats compounder — 18 straight years of operating-profit growth, a per-kilo value model lifting margin against soft volumes, adjusted ROIC ~14.9% and EP +SEK 1,750M — fairly-to- modestly valued at PEBV ~1.41. HOLD with a modest BUY-lean / quality bias; base SEK 248.

Accumulate on volume- or FX-driven weakness; the Fit-to-Win savings and continued per-kilo expansion are the levers that re-rate it.

Footnote evidence & sources

Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open

Adjustment / figure	Value	Source	Why mttssn treats it this way
Net sales (LTM)	45,666	Financial highlights — R12M column 📄 p.2	AAK's own disclosed rolling-12-month net sales on the Q1 2026 highlights table; equals FY2025 46,021 + Q1'26 11,388 - Q1'25 11,743. Confirms exact LTM reconciliation.
Net sales (FY2025 anchor)	46,021	Consolidated income statement 📄 p.124	Audited FY2025 net sales line. Total operating income (incl other operating income 332) = 46,353, which matches the Borsdata revenue anchor.
Operating profit / EBIT (LTM reported)	4,699	Financial highlights — R12M column 📄 p.2	Disclosed R12M operating profit; = FY 4,675 + Q1'26 1,285 - Q1'25 1,261. Used as reported-EBIT spine of the LTM.
Operating profit excl. IAC (LTM, company adj EBIT)	4,949	Financial highlights — R12M column (footnote: IAC = Fit-to-Win, Q2 2025) 📄 p.2	AAK's own adjusted EBIT R12M. Our adjusted EBIT (4,699 + 250 add-back) equals this exactly so APM divergence is 0.0%.
Items affecting comparability (Fit-to-Win restructuring)	250	Directors' Report — performance & financial position 📄 p.45	Sole FY2025 IAC: 'a non-recurring restructuring cost of SEK 250 million in the second quarter, impacting Group function.' Quantifies the single NOPAT normalization; sits inside the FY anchor (no IAC in either Q1).
Operating profit per kilo excl. IAC (LTM)	2.47	Financial highlights — R12M column 📄 p.2	AAK's headline APM — value capture per kilo (vs 2.32 reported). The metric that matters because revenue is commodity-pass-through. Segment detail: Choc & Conf Fats 4.22, Food Ingredients 2.41, Technical Products & Feed 0.65 (Q1 pages 6-8).
Goodwill	2,141	Condensed balance sheet 31.03.2026 📄 p.12	Goodwill 2,141 at 31.03.2026 (FY2025 2,108, Note 13 page 161). Modest at ~10% of equity; accumulated impairment flat at 27 — no impairment; movement is FX + IAS 29 only. Three CGUs = the three business areas.
Working capital — inventory	11,906	Condensed balance sheet 31.03.2026 📄 p.12	Inventory 11,906 (FY 11,752). The dominant operating-asset line; commodity-price-driven (shea/palm/rapeseed), partly fair-valued as hedged items. With AR 6,442 it drives AAK's large invested-capital base and volatile operating cash flow.
Working capital — accounts receivable / payable	6,442	Condensed balance sheet 31.03.2026 📄 p.12	Accounts receivable 6,442 (FY 5,834) vs accounts payable 3,404 (FY 2,970). Net trade WC is large and swings with raw-material prices and sales seasonality — Q1'26 WC release of +220m vs -1,399m in Q1'25 explains the OCF swing.
Lease liabilities	441	Condensed balance sheet 31.03.2026 (FY detail Note 15 p.164) 📄 p.12	Total lease liabilities 441 (339 non-current + 102 current); ROU 411 vs PPE 8,198 = 5%. Land/buildings + vehicles, peripheral, so EXCLUDED from IC. FY lease interest 19 already below EBIT (no NOPAT add-back).
Interest-bearing debt (excl leases)	3,470	Condensed balance sheet 31.03.2026 📄 p.12	Liabilities to banks non-current 395 + current 3,066 + other interest-bearing current 9 = 3,470. Component of IC. AAK-disclosed net debt 2,187 (page 4); net debt/EBITDA 0.39x — modest leverage.
Cash and cash equivalents	1,598	Condensed balance sheet 31.03.2026 📄 p.12	Cash 1,598. operational_cash = 2% x revenue = 913; excess_cash 685 deducted from IC.
Total equity	21,523	Condensed balance sheet 31.03.2026 📄 p.12	Total equity 21,523 (parent 21,449 + NCI 74). Base of IC. Reserves line @ 31.03.2026 = -999 (accumulated translation OCI), stripped to give equity_ex_oci 22,522.
Accumulated OCI (translation reserve)	-999	Comprehensive income / Reserves (FY Changes-in-Equity p.128) 📄 p.11	FY closing Reserves -1,545 (built entirely from OCI: opening 1,002 + OCI -2,547, dominated by translation -2,545) + Q1'26 translation OCI +546 = -999. Negative FX translation reserve so equity_ex_oci rises and IC up ~999 and ROIC down. Stripped because FX swings are not operating capital decisions.
Income tax / effective tax rate (LTM)	-1,076	Condensed income statement (FY Note 11 p.159) 📄 p.11	LTM tax -1,076 on PBT 4,543 = 23.68% effective rate (FY 23.7%; Q1'26 disclosed ~23%). Used to tax adjusted EBIT to NOPAT.

Analysis history

How the mttssn view has evolved — each prior dated note is preserved.

2026-06-15 · HOLD/MEDIUM · Streamlined — this version
2026-06-08 · HOLD/MEDIUM · Streamlined
2026-05-31 · Buy/high

Quality · Buffett tenets11 / 15

Understandable business●●●

Specialty vegetable oils & fats — chocolate/confectionery fats, plant-based, special nutrition; the 'operating profit per kilo' value model is highly legible.

Durable moat●●●

Wide-ish: customer co-development and reformulation switching costs in specialty fats, plus 18 consecutive years of operating-profit growth — a genuine specialty-ingredients franchise.

Able & honest management●●○

Disciplined, per-kilo value focus; one IAC (the SEK 250M Fit-to-Win restructuring targeting ~SEK 300M run-rate savings by mid-2026) — kept transparent.

Financial strength●●○

Adjusted ROIC ~14.9% clears the 8% WACC (EP +SEK 1,750M, ~7pp spread); modest net debt, but a working-capital-heavy commodity-linked balance sheet (inventory + AR ~SEK 18.3bn).

Margin of safety●○○

Reverse-DCF ~−3% at 5% growth, PEBV ~1.41 — fairly valued; quality is priced, the Fit-to-Win savings the swing factor.