Infant Nutrition

Karel Stoschek Director Infant Nutrition

Infant Nutrition – January to September

2

32

48 52

6655

010203040506070

2010 2011 2012 2013 2014

Volumes ('000 MT)

1659

82104

123

020406080

100120140

2010 2011 2012 2013 2014

Operating profit (SEK million)

0.50

1.231.58 1.58

2.24

0.00

0.50

1.00

1.50

2.00

2.50

2010 2011 2012 2013 2014

Operating profit per kilo (SEK)

3

The first 1,000 days

Infant milk formula includes all essential nutrients and energy for infants to grow and develop normally

Vegetable oils and fats provide the essential building blocks for the body, including the brain and the eyes

Oils and fats account for 50% of the energy in the formula

Toddlerhood Baby Breast feeding Pregnancy

4

Global baby food retail value Estimate 2014

44.8US$ B.

2.7US$ B.

5.4US$ B.

8.9US$ B.

61.8US$ B.

0

10

20

30

40

50

60

70

Global market Other babyfood

Dried babyfood

Preparedbaby food

MILKFORMULA

Standard formula 30%

0-6 months

Follow-on formula 23%

6-12 months

Toddler formula 39%

+12 months

Special formula 8%

Premature, allergy

Source: Euromonitor International, Sep 2014

72%

5

Infant milk formula market Estimate 2014

Source: Euromonitor International, Sep 2014

2.4 million MT/yr infant milk formula ~660,000 MT /yr oils & fats

Consolidated market: Top 4 companies have 57% share Top 10 companies have 73% share

29% global value share Local companies increasing share >100 brands in the market

6

China: new infant milk powder policy

August 2013 “Fonterra”

China FDA announced they will review the IMF

production policy

December 2013 China FDA revised version

of policy

May 2014 China FDA published the list of

companies that passed the audit

September 2014 NZ companies got import

licences back to China

China FDA audits for IMF producers

Audit in China - integrated supply chain:

Local toll-production stopped

Local base-powder production stopped

Local packing operation stopped

Outcome:

China FDA approved 82 Infant Milk Formula

producers

They are approved for 2014-2017

1/3 of producers’ licenses not renewed

7

China market remains attractive

Source: Euromonitor International, Sep 2014

8

17

25

0

5

10

15

20

25

2010 e2014 e2016

China infant milk formula retail value

22,3 %

24%

76%

0%

20%

40%

60%

80%

100%

IMF

Top-5 brands

Other

China infant milk formula - brand share Future consolidation expected

407

727

989

0

200

400

600

800

1000

2010 e2014 e2016

China infant milk formula total volume

15,6 %

Market growth remains attractive Market value is likely to grow faster than volume

Future market consolidation expected

E-commerce channel expanding

’000

MT

$ Bn

The first choice for value-added vegetable oil solutions Single oils Organic (approved by COFCC)

MCT

Low 3MCPD

Go to market

The natural choice for healthy development Customised oil blends

The ideal combination

Security from start to finish

Specifications guaranteed

8

INFAT is sold by Advanced Lipids a joint venture of AAK and Enzymotec.

A clinically-proven ingredient

One step closer to human milk

9

AAK Customer case

End consumer

Toll producer

Brand Owner

Customer Pain: With Brand owner:

Food safety

Tailored fat composition

CSR

With Toll producer:

Correct quality

Effective logistics solution

Product analysis

AAK co-development: With Brand owner:

Sourcing the raw materials

Global view on market

Developing an unique blend

With Toll producer:

Regulatory and specifications

Logistics solution

Tailored service package

10

Expanding organic category

0

20

40

60

80

100

120

2010 2011 2012 2013 2014

Source: Mintel, November 2014

New launches – Organic baby food

Organic baby food market is strong in EU

Fast growing in China and Asia AAK is the only company in Europe to have a certificate from COFCC to produce vegetable oils for organic infant milk formulas for China Akonino® Organic

11

Average annual volume growth 2010-2016 (Euromonitor total milk formula volume growth)

Global growth rate: +7% by volume

Source: Euromonitor International, Sep 2014

-1%

+6%

+10%

+4%

+16%

+7%

+4% +1%

12

AAK increasing market share

CAGR (MT) 2010 - 2014

0%

5%

10%

15%

20%

Market AAK

13

AAK position for future growth

Category Growth Trends

Economic growth and job creation

Increase number of women in workforce

Middle class and dual-income family emerge

Increasing spend on premium nutrition

Commitment on quality

Continues investment in customer co-development

Balanced portfolio to match customer needs: Semi-speciality blends

Speciality blends

Speciality single oils

Geographical development: Malaysia

Brazil – greenfield

China – greenfield

Europe – preparing for customers’ capacity increases