In March, AAK communicated a temporary halt of deliveries to, and sales in, Russia. The company said that it has taken a careful evaluation which has resulted in a decision to permanently wind up the business in the country.
AAK said it has initiated this ‘sensitive and difficult process’, focusing on executing it in a controlled manner to ensure both legal compliance and the safety of its employees. Russia makes up for some 3% of AAK’s volumes, as measured in metric tons.
Join venture exit
Part of the exit refers to leaving a local joint venture, in which AAK holds a 75% stake. The company said the aim is to reach an agreement to let the AAK stake revert to the partner from which it was originally acquired. The joint venture makes up for approximately half of AAK’s volumes in the country or 1.5% of the group’s total volumes, as measured in metric tons.
The remaining half of the Russian volumes are imported to and sold via AAK’s Russian sales company, which will be closed. Most of these volumes are reported in business area Chocolate & Confectionery Fats. AAK is now working diligently to re-route as much as possible of this to customers in other geographies.
Income statement cost
The exit is estimated to lead to a cost of SEK 300–350m, affecting the income statement in the second quarter.
“As I write this, the war in Europe is still ongoing, directly impacting millions of people, including AAK colleagues and partners in the region. We stand with all of those impacted by this tragedy,” said Johan Westman, President and CEO.