AAK AB (publ.) ($AAK)

Welcome to the AAK Q1 2026 Report presentation. [Operator Instructions] Today's event will last for 45 minutes. Now I will hand the conference over to the speakers CEO, Johan Westman; and CFO, Tomas Bergendahl. Please go ahead.

Good morning, everyone. Thank you for joining us, and thank you for your interest in AAK. As you heard, with me here today to review our first quarter results is our CFO, Tomas Bergendahl. Please turn to page or Slide #2. Today, we will cover quarterly highlights, selected events and the business and financial update, followed by concluding remarks. This presentation is scheduled for 45 minutes in total, including questions and answers at the end. And with that, please turn to Page #3, regarding forward-looking statements. This presentation includes forward-looking statements that come with risks and uncertainties. These are our views on future events and financial performance, but actual results may differ. With that, please turn to Slide 4, quarterly highlights. We delivered a solid start to the year with both organic volume growth and continued strong profitability. As expected, currency translation had a negative impact on reported figures. Operating profit increased by 11% year-on-year at fixed exchange rates, including currency effects, growth was more modest at 2%, reflecting the headwind from FX during the quarter. Volumes amounted to 515,000 metric tons, corresponding to a 3% increase year-on-year. This marks a return to growth following a period of softer demand, supported by improved commercial execution. Profitability remained strong with operating profit per kilo, reaching SEK 2.49. This represents a 9% increase at fixed FX rates. The improvement was driven by continued internal optimization including productivity and procurement improvements across our oil refining footprint as well as the ongoing impact from our Fit-to-Win program. In addition, we benefited from improved portfolio and price management, positive operating leverage from higher volumes and supporting market conditions for cocoa butter alternatives. Operating cash flow was strong at SEK 1.395 billion. This was supported by earnings as well as positive effect from working capital. Tomas will elaborate a bit more on the drivers later in this presentation. Return on capital employed was 20.7%, excluding the onetime restructuring cost in Q2 last year. Net debt-to-EBITDA was at 0.39%, reflecting a strong balance sheet and continued financial flexibility. Overall, we are pleased with the start of the year, particularly the return to volume growth and continued strong profitability. At the same time, we are not satisfied, and we remain focused on further improving our performance. Our priorities remain clear: drive volumes, strengthen profitability and maintain discipline in execution. And with that, let's turn to the next slide. Some comments on selected events, starting with the annual report for 2025 published earlier this month. This is our first fully integrated report, combining financial and sustainability disclosures in line with the new CSRD regulation. This is now a requirement but also an important step in increasing transparency in how we report our sustainability impact. The key element is our first double materiality assessment, which forms the foundation for how we identify and report our most relevant impacts, risks and opportunities. The Sustainability Statement has also been subject to limited assurance by our external auditor. During the quarter, we also participated in the World Economic Forum in Davos. I represented AAK in discussions with industry leaders, policymakers and experts on topics central to our strategy, particularly the role of food systems in supporting better health outcomes. Building on this, we saw an increased focus on noncommunicable diseases where AAK was invited to contribute a broader system level perspective in relation to this. This aligns well with our role in complex value chains and our focus on scalable plant-based solutions. And importantly, Davos provides a platform to position AAK at the center of key global discussions and strengthen relationships that support our long-term strategic priorities. Turning to sustainability performance. We were awarded a silver medal in the 2026 EcoVadis assessment. We achieved a score of 74 out of 100, placing us in the top 12% of companies in our category. Rating reflects continued strength in areas such as environmental reporting and supply chain due diligence. Finally, an update on our new food service facility in Staffanstorp, Sweden. Construction is progressing well and according to plan, both in terms of time line and budget. The facility is expected to be fully operational by the end of this year, with production ramping up through 2027, replacing the current Dalby site. Once completed, the site will strengthen our food service platform through increased capacity, improved efficiency and more scalable operations. Overall, these developments reflect continued progress across our strategic priorities from transparency and sustainability through external engagement and capacity expansion. Please turn to the next slide for a review of performance per business area, starting with Food Ingredients. Volumes in Food Ingredients increased by 5% year-on-year. Growth was relatively broad-based across segments and regions. In Bakery, we saw a broad-based growth across all regions, led by Asia, the Middle East and Africa. In dairy, performance was mixed with overall volumes declining. Asia, the Middle East and Africa grew while the Americas declined. Special Nutrition grew slightly year-on-year driven by Europe, while other regions were softer. Food Service declined slightly compared to the first quarter last year. Operating profit per kilo amounted to SEK 2.42, down 7% year-on-year in the reported numbers. This includes a currency headwind of SEK 0.21 per kilo at fixed exchange rates, operating profit per kilo increased by 2%. Operating profit decreased by 2% to SEK 752 million. This includes a negative currency impact of SEK 66 million. At fixed exchange rates, operating profit increased by 6%. Next slide, please, over to Chocolate & Confectionery Fats. Volumes in Chocolate & Confectionery Fats declined by 1% year-on-year. Performance was mixed across regions. The Americas and Europe declined, while Asia, the Middle East and Africa grew. From a product mix perspective, the portfolio of cocoa butter alternatives developed positively and grew in the quarter, including CBSs that was flat year-on-year. This, together with higher volumes in spread was offset by lower volumes in filling fats and non-specialty single oil solutions. Operating profit per kilo increased to SEK 4.23. This includes a negative currency impact of SEK 0.43 per kilo. At fixed exchange rates, operating profit per kilo increased by 14%. Operating profit increased by 2% to SEK 532 million, Currency had a negative impact of SEK 54 million. So at fixed exchange rates, operating profit increased by 12% in the quarter. Over to the next slide and highlights for Technical Products & Feed. Volumes in Technical Products & Feed grew by 1% year-on-year. Performance was mixed across segments where Technical Products delivered growth in the quarter, while Feed declined slightly. Operating profit per kilo increased by 3% and reaching SEK 0.70. Operating profit increased by 4% to SEK 54 million. With that, we now covered the 3 business areas. I will hand it over to Tomas to review the first quarter financial results as well as a closer look at our current CapEx priorities. Over to you, Tomas.

Thank you, Johan. Good morning, everyone. Please turn to Slide 9. Operating cash flow amounted to a positive SEK 1.4 billion in the quarter. Working capital decreased, contributing to the positive cash flow. This was driven by a reduction in inventory and an increase in accounts payable while accounts receivable increased, driven by volume increase and seasonality, which then impacted negatively on the cash flow. The decrease of the inventory in the quarter of almost SEK 500 million was driven by lower inventory levels, partially offset by an increase in price of raw materials. CapEx amounted to SEK 290 million in the quarter, comprised mainly of investments related to maintenance, productivity improvements and capacity increases as well as debottlenecking. The CapEx spend for the full year of 2026 is expected to be slightly higher compared to '25 at roughly SEK 1.5 billion and in line with the indications given in the connection with the Q4 report. And I will come back to our CapEx spend later on in the presentation. Free cash flow amounted to a positive SEK 1.1 billion for the quarter. Turning to Slide 10. Return on capital employed for the quarter remained strong at above 20%, at 20.7% and on par with last quarter. Adjusted for the onetime restructuring cost of SEK 250 million recognized in Q2 2025. Year-over-year, the return on capital employed is slightly down from 22% mainly prompted by the increase in working capital driven by raw material prices. Turn to Slide 11, please. The net debt-to-EBITDA ratio came down from 0.6% in the previous quarter to 0.39% in Q1, close to the recent low of 0.29% in Q4 2024. And -- the ratio is expected to increase in Q2 2026, all else equal, driven by dividend and the initiation of the share buyback program provided that these are approved by the AGM. Turning to Slide 12. Let me briefly touch on capital expenditure. And as previously communicated and mentioned in this presentation, again, our investment level in '26 is expected to be somewhat higher than the recent year at around SEK 1.5 billion. Starting with project governance on the left-hand side, our investments follow a structured and disciplined process. Each year, we've built a 3-year rolling pipeline based on bottom-up input from our sites and regions. This is then prioritized and aligned through the annual strategic planning process in combination with the target selling of the coming year. For 2026, this translated into an initial pipeline of about SEK 2.5 billion, then we have prioritized this list down to approximately SEK 1.5 billion. The pipeline is split between maintenance optimization and growth projects. The first category, roughly SEK 600 million or 40% of the spend ensures operational stability, efficiency and sustainability across our existing footprint, while growth projects are focused on capability and capacity development, strengthening long-term competitiveness and enabling future volume growth. Moving to our current investments, making up the 2026 CapEx, these are focused on 3 main areas: firstly, supply chain resilience. Here, we're evaluating a potential investment in the C value chain in West Africa, including crushing in Ghana and processing the already announced progressing the already announced joint venture with K in Malaysia for specialty palm fractions both aimed at reducing volatility by supporting a more secure access to and quality of key raw materials. Second, capacity. This includes investments in food service, such as the new facility in Staffanstorp, Sweden that Johan mentioned before. and hot-fill capability in our Runcorn facility in the U.K., also food service, enabling impact pasteurization, cleaner label products without added preservatives. Thereby entry into adjacent categories. It also includes continued expansion in Carlson Sweden, all aimed at supporting future volume growth and a more flexible and scalable production footprint. Third, portfolio enhancement and technology. Here, we're increasingly investing in innovation, often in collaboration with external partners to meet future demand for healthier and more nutritious food, improved functionality such as taste and texture, more sustainable solutions and increased supply chain resilience and versatility. And this is closely linked to our better futures innovation pillar that we have shown and discussed before. Key areas include precision fermentation, Power-to-X technologies and enzymatic processes where we continue to build capabilities through both near- and long-term projects. We're also exploring new natural inputs for non-food applications from non-fossil sources, although this remains at an early stage. In addition, we're investing in a pharma facility in India, focused on non-active delivery systems, strengthening our position in higher value-added specialty ingredients and expanding into adjacent growth segments. While these investments are smaller in scale today, there are important building blocks for future growth and long-term competitiveness. Finally, on the right-hand side, from a capital markets perspective, these investments support derisking of supply chain capability and capacity for volume growth as well as stronger sustainability position. Together, this strengthens our ability to deliver long-term margin resilience and earnings growth. in line with our 2030 aspiration. And with that, I will hand it back to Johan for his summary and concluding remarks before we go for questions.

Thank you, Tomas, and please turn to the next page. To conclude, while the first quarter showed early signs of return to volume growth, market conditions remain somewhat cautious. Near-term visibility is still limited, and we, therefore, remain focused on the areas within our control. This means continued emphasis on disciplined commercial execution, operational efficiency and maintaining a strong cost and productivity focus. Looking further ahead, we remain prudently optimistic about our long-term potential. We are committed to progressing toward our 2030 aspiration with clear priorities across growth, profitability and impact. We will continue to invest in our capabilities, strengthen our portfolio and allocate capital in a disciplined way. All of this supports our ambition to deliver sustainable growth and long-term shareholder value. With that, I will hand it back to the operator and open up for questions.

[Operator Instructions] The next question comes from Johan Fred from SEB.

I will leave it myself to two, if I may. The first one on the volume development in Food Ingredients. So volume growth was, as you state, driven by non-specialty solutions and bakery. How does this align with your portfolio optimization strategy? Is this a deliberate mix shift to full capacity? Or is it more of a symptom of softness in higher value end of the market or something else maybe?

Thank you. We start with the volume question linked to food ingredients and bakery. To drive growth through a market situation that we described as a bit cautious and the dynamics that we see around us in the world, we have been focusing on and we have communicated our efforts and actions linked to commercial execution and returning to sales growth. In that includes a better and more, call it, educated decision process where we look at capacity in different factories, to look at whether we want to win a volume or not, if it has positive leverage. So to some extent, this is a result of filling factors, yes, but filling factors in a disciplined manner, protecting margin as far as we can. And I think that's what we see here. Okay, maybe a few more tons of non-specialty here and there, but still with positive leverage enough to be able to, as we report in fixed currencies, increase our earnings and even margin. So all-in-all, positive with the way we have executed that. Anything to add to that picture, Tomas?

No, I think it's just important to emphasize that the margin, as you can see, is flat versus last year despite that...

Or even slightly increase.

And then increasing at fixed rates, right? So that's the one to keep an eye on.

Yes. And -- state the volume growth was 5% in Food Ingredients, but the EBIT per kilo at fixed FS was only up 2%. So is the corporate here simply that growth is coming from on parts of the portfolio in Q1? Or is it something more structural?

No, I wouldn't say something wrong with that. But I think as I explained before, our target is to always go for earnings growth. So our #1 target is growing our earnings, operational profit. And that can come through margin expansion or volume or ideally both. And if we look at Food Ingredients, in particular, yes, volume growth is up 5% and operating profit is up 6%. One could argue, wouldn't you have higher leverage if the mix was the same. That would be correct, yes. But in order to fight for these volumes, we also need to do that where volumes exist and so forth. So I think we have deliberately tried to fill our factories. And that includes sometimes taking in business that is will it lower value-added while at the same time, focusing on growing the value-added part of the portfolio. So I would say that these are deliberate actions, and not to say that we are growing in the wrong segments, but rather we are using our capacity in our factories, and we're loaning them in a disciplined way.

And when you look at this, you also have to look at the whole company and how margins develop because as we mentioned before, we don't have food ingredients factories. They're also in combination with what we do on CCF and so forth, right? And if you look at that, and you see that we have a 3% volume increase. We also have a 9% margin improvement at fixed rates. And you can argue back and forth on fixed rates. But if we look at the local performance in local currency, those are the margin improvements that we see. So that's the underlying of the 3% volume increase. And if we also look at the comp within Food Ingredients, this was fairly high last year, 2.59% and versus Q4, we're up 3% per kilo in food ingredients as well. So I would say you do see the leverage in the numbers.

And that's an important comment that the factory loading is across both Food Ingredients and Chocolate & Confectionery and not just Food Ingredients.

The next question comes from Benjamin Wahlstedt from ABG Sundal Collier.

Turning the focus to CCF. So you highlight favorable market conditions for cocoa butter alternatives as a tailwind. You also note that cocoa butter prices have sort of softened from their peak. At what cocoa butter price level, does the economic case for a substitution weaken materially for your customers, do you think? And sort of how exposed is your EBIT per kilo or CCF margin to further normalization in cocoa prices. I know we've spoken about this at length previously. Just trying to get an update here.

Absolutely. Let's continue on that. I think, first of all, in an overall perspective, we have a view that it's rather more positive than negative that you see a normalization or coming back to normal on the cocoa prices, because what it did lead to you was heavy inflation in retail making Chocolate & Confectionery very expensive for consumers and even leading consumer product companies to do a bit of inflation, which has a negative impact on volume. So all-in-all, I would argue that this is positive, right? What we mean by positive contribution is that we have seen the elevated levels, they are still comparably high, and that gives you a further reason to look for cost-efficient alternatives to cocoa butter where we come into play. Now the stickiness and the stability or resilience in our earnings in CCF is also linked to the fact that our cocoa butter replacers are not just replacing. It also brings functionality which improves our customers' product. And that's where the stickiness is because you don't want to reformulate quarterly adjustment because of the movement in raw material. And back to your comment there on where is it -- where would it be concerning. I think to put it simply, it would only be really concerning if you would have a structural long-term price of cocoa butter that will be below the input cost of the alternatives. Because then you would argue that you would have a flip side that cocoa butter is more cost efficient than the alternatives. We are not there today, and we haven't been there has been maybe one point in time in history where that was the case, but that was for a short period of time. So we're not concerned with this. Theoretically, that could be a risk, but I do believe that if you would see structural volume decline in the alternatives, you would also see that input costs would fall as a result of lower volume on that and then you would have a correction again. So I think this is quite resilient, although you can never make promises on the future.

And I would also add to that, that as you know, when you look at the cocoa butter prices, they peaked about 12 months ago and haven't dropped since, right? So there is a a track record now also of lower prices back to if we can maintain our margins and so forth. The margin improvement in CCF, I think it was 3% including FX and 12% at fixed FX is mainly driven by mix. So you have a larger, even if the volume was flat, you have a higher volumes of high-margin products versus for CCF low-margin products in the quarter, right? So that's driving the continued improvement.

Perfect. I was wondering as well, if you could elaborate on the volume decline in CCF, perhaps specifically, you make a comment that non-specialized volumes declined. Could you elaborate or perhaps say what share of the volume decline for the segment as a whole is attributed to non-specialized volumes? And perhaps just say if that's a deliberate decision or how we should view that?

Yes. I mean we're -- if we speak about the decline, let's keep in mind, it's 1%. So it's kind of minor flattish. And we believe that our volume in the quarter is, if anything, slightly better than the market. So in that context, I think it's more like in line with market. So I wouldn't call it any drama around volume up or down. Within the mix, though, if we talk about that, then it's positive to see that our cocoa butter alternatives, which includes CBR's replacements or CBS substitutes and cocoa butter equivalents have performed well also within spreads, right? So these are high value-added solutions that we bring. That is deliberate to focus on that. But just as I mentioned a bit on 2 ingredients, we also try to load factories with decent volumes. So a lot of what we do, and that is under the umbrella of commercial execution and discipline. A lot of what we do is with intent and deliberate. However, it is very difficult to kind of find a perfect optimal between non-specialty and specialty in every given moment. We need to take contract by contract. But the focus long term of the company is to invest more into the higher value-added segments versus the lower value-added segment. So I wouldn't put too much emphasis on the mix since we speak small numbers, in terms of decline.

The next question comes from Victor Hansen from DNB Carnegie.

Victor here. A couple of questions from my side. I'll begin with food ingredients volumes. We've spoken a bit about it here today, but it comes in so many different categories. What is your qualified estimate of overall market volumes in Q1, within Food Ingredients?

It is, as you say, it's -- that's an area where it's more difficult to actually say what it is. I would say low single digit, if anything. But we have better...

Low single-digit decline or...

Yes. it's a soft environment still.

Just to add to that. What we do see, and that's new this quarter compared to the last, I'd say, 4 or 5 quarters is that we see Bakery growing again, which is really good to see. Dairy that has showed strength over the last 4 or 5 quarters is softening a bit, but that's because of high or low milk prices in the regions where we are present with our substitutes, right? So it's a bit dependent on that. So -- but really nice to see Bakery stacking up again.

Yes. Perfect. On CCF, we received some positive volume outlook from various Chocolate manufacturers here, quite recently. Is it reasonable to expect volume growth for AAK starting possibly already from Q2? Or does lead times point to a later point in time for you?

Obviously, lead times play a role here since we -- I always repeat that internally, externally, we supply to production of product. So there are lead times in our supply chain for sure. And then with regards to an outlook, we have also seen -- we've seen those comments from companies within our industry. We do not make a formal guidance. I think it's worth keeping in mind that we have some dynamics in the world that creates uncertainty. But should there be that these forecasts from other companies materialize, then that should be positive for the absolute volume growth of CCF. And that should be positive for AAK.

Perfect. I have a final question towards Tomas. It's on the cash flow. So cash flow was strong, and you had a medium-sized working capital release. I'm wondering is this just price driven? Or are you starting to trim the inventory days? And a follow-up to that question. generally, the inventory days have been increasing a lot for quite a few number of years now, and I know many investors are asking about this. So what are your thoughts on inventory days going forward? Will you prioritize working capital more going forward?

Thank you. I would say we have a big, big focus on working capital and had had for some time. That wasn't the case maybe if you go back a number of years for AAK. But last couple of years, we've had active projects in place to review our inventory levels to see how we can do things more efficient. For Q1, there are 2 impacts on the positive side. One is that our inventory levels are at a more efficient level. So we have decreased our inventory despite the 3% increase in volumes. There is also seasonality because 2 main crops, rapeseed and she kernels are only sourced in sort of late Q2, Q3, early Q4. And in Q1, we sort of used inventory without replenishing it because it's a season sort of acquisition of that inventory. So those 2 effects come in. What we do also see, as you can see in the presentation, there is price increases that are driving the inventory values the other way. And if you look at the long term, as you also reflect on, I would say that, yes, it has been a bit of a tough ride from an inventory perspective for us, but it goes back again to what was mentioned earlier in the call, we are very susceptible to the price levels of raw materials. So when price levels increase and if you compare it to before the pandemic, they're up 2.7x, 2.8x of where we were 5 years ago. I would say that we make sure that we can increase our prices to maintain our margins and increase them. And you've seen that over the past 5 years, we've done that really well. What is very difficult is to offset the raw material price increases in our inventory values. So if we replace an inventory item, if you will, for production. Last time we bought it, it costs $100. Now it costs $150. That will increase inventory levels because we also sit on working capital between sort of when we buy and when we receive funds from our customers in terms of paid receivables. So that is an effect that's very difficult to manage. But looking at the overall, we also see that when price drops as it did mid to late sort of Q3 2022, you see cash flow coming in, in a big way. We had very positive sort of cash flow coming in there. So that's 1 of the sort of complexities that we live with.

The next question comes from Matthew Abraham from Berenberg.

First one just is another one in reference, the food ingredient volume. You've mentioned that the Bakery has gone back to volume growth and Dairy now in volume decline. Just wondering if there's a mix effect there and the impact from that mix of sector EBIT per kilo, I appreciate you've spoken a bit about capacity utilization. But just wondering if the change in that volume growth dynamic is impacting that EBIT per kilo outcome?

Between Bakery and Dairy that is not a big explaining factor. I would rather say that the total mix that we talked about before that we we get the volume, we get the leverage from that, you could say, but at the same time, sometimes you have to give a bit of price or winning it and maybe a slight price reduction. The total mix is what's important, and that is a growth of absolute profit by 6% in fixed currencies. The one segment with higher EBIT per kilo is Special Nutrition, it has a slight positive volume increase, but still low numbers compared to the big volume drivers in Dairy and Bakery.

Okay. Understood. A follow-up question just in reference to the CapEx color that you provided, talking to increasing capacity. Just wondering how we should think about the evolution of margin given the capacity that you're adding to the group?

We are very -- and focusing much more on that. In our total optimization effort that we have commented and written about over some years, that has included a much tougher way, you could say, to get new CapEx on the table. So I wouldn't see that CapEx is from AAK would lead to margins are going down. We ate do that a bit more lagging that when we really need it, or to optimize production, that's when we add it. So we -- our ambition is to run a tight ship and focusing on margin expansion while adding capacity where needed.

And capacity additions are very local, where we see that the market -- there is potential in the market, right? So we are selective, I would say. Capability is a little bit different, where we can see that we can go into a market where we are already with new products or versions of new products and so forth. But on capacity, we are very select.

Okay. That's helpful. Just one more, if I may. The cocoa butter alternatives portfolio, can you just talk to the scale of the pipeline for that element of CCF and whether or not it's remained in growth despite the lower cocoa price backdrop?

Yes. Pipeline can't comment on -- or we do not disclose that. But we have a speaking about how we operate in CCF. CCF is one of the strongholds of AAK. Our center of excellence is well visited by our customers, and we are a go-to partner for our customers with regards to solutions to shorter and confectionery products. That could be for cost efficiency, for shelf life, for improved texture and taste, et cetera. So our pipeline is healthy in that manner that we have a continued focus and drive. With regards to cocoa butter prices, we have seen, as Tomas mentioned a bit, cocoa price was on the rise and now came down and you still see a stable development for AAK in that context. And over a long period of time, you have typically seen cocoa butter prices being higher than the closest alternative, which is our cocoa butter equivalents. Obviously, in a very short time frame, you could see that input costs could be higher for the alternative versus the cocoa butter price. But over time, we have -- it's been more normal to see that there is a healthy delta between the 2. So I'd rather see a positive development with cocoa prices coming down because it stops the structural inflation at the shelf in retail that we have seen with the sharp prices. So if anything, it should be positive for inflation going forward.

The next question comes from Erik Sandstedt from Kepler Cheuvreux.

Erik [indiscernible] with Kepler Cheuvreux. A few questions, please. On pricing, are you seeing any pushback from customers on pricing given the challenging market environment, and I'm thinking about CCF in particular?

Thank you. I think that is more a given than anything else. We live in a global environment with many big customers, global players, professional procurement organizations. There is always a element of negotiation and price. And obviously, our customers have seen inflationary items hitting them, if you will. And with that comes a focus on costs. But that's the name of the game. We see that all the time. That's also where companies with a professional long-term global perspective, can also support. Some of our solutions are, in fact, a more cost-efficient solution than the alternative. There's always going to be a question on price. I don't see that changing a lot at the moment. It's just a standard rather than anything else.

Yes, makes sense. And then in terms of group function costs, were quite low this quarter. Is this driven by the efficiency program? Or were there other sort of more temporary factors at play here? And what is a normalized level going forward, group function costs?

Yes. There are some from quarter-to-quarter, sometimes some onetime effect. But I would say that -- and you see that if you look back at the history. But I would say that 1 of the main drivers is, of course, the cost reduction program that we're running as well since April of last year. But each quarter is a bit different in terms of group function. And I would say that maybe looking at around SEK 80 million or so per quarter would be a rough average, I think, to stick to. But it may vary from quarter-to-quarter.

Perfect. And then just finally a follow-up on the previous discussions about spare capacity. Did you say how much spare capacity you actually have now? And how it compares to historical and normal levels

It's changing all the time, as we've said before, right? I mean, it depends on what type of product we run through each factory. So it's a moving target, if you will. But we've indicated before, and we can do so now again, I think we are at the same level that we've seen before around sort of 15%, but it varies between the different units. And it's very sort of local in how it works, right? But that's where we are, more or less, I would say, in line with the previous indications.

So maybe adding to it after a few years with volume decline, including efficiency and optimization program internally, we've freed up capacity, if you will. So around those average 15% free capacity will be something to work with.

Yes. And actually, maybe 1 final follow-up here, if I may. In terms of FX for the remainder of the year here, is it fair to assume that Q1 now was the sort of peak headwind at current spot rates?

Yes. If you look at everything else equal, the way it is now, yes, Q1 will be the biggest quarter in 2026. It will continue to be negative throughout the year, but it will be on a declining level from Q1, if you will. And we saw that in Q1 as well, month-to-month, January made up about half of the FX effect for Q1. So yes, we will see a decline, but it will still be negative throughout the year. And I think again, I'm not sort of projecting it. But if you just take the calculation where we are now with the current rates and disregard that they will probably move going forward, you will probably be at around sort of 2,300 for the full year -- million. But again, things change then, right? But that's where we are if you make the calculations today.

The next question comes from Priya Patel from UBS.

I've got 2. So firstly, just on Food Ingredients again. I was wondering how much Bakery grew within this and how this compares to the end market? And then just on specialty oils, which also drive the volume growth that kind of drove the weaker mix that you saw in Food Ingredients. Can you help me understand -- I know you don't guide, but can you help me understand how you expect the mix to develop in a more challenging end market and what could drive the demand for some of the more specialty products?

The execution or the business model in AAK is that everywhere where we operate, quite a lot of what we sell and deliver is local, right? So we have global customer accounts. However, we deliver locally to local production, be that in China, India or the U.S. or Brazil. So what we are focusing on is always driving our mix and our engagement with our customers where we make a difference. And that is with more advanced products and ingredients. At the same time, we run big refineries. So we also need to load our factories and make sure we utilize those assets. And it is in that mix, we always try to focus on achieving an absolute EBIT growth. So what we should expect or what we are driving towards in our strategy is a higher degree of specialized solutions overall. But while doing that, we will always also target an absolute EBIT growth. So that's as far as we guide, if you will.

This will be our last question for today. The next question comes from Matthew Yates from Bank of America.

Just a couple of questions to finish off. Apologies if I should know this, but your long-term target of SEK 3 per kilo. When that was given, was it -- said that, that was at constant currency. I'm just wondering that you've probably accumulated what a SEK 0.30, SEK 0.40 headwind since that was given. Does that mean the target needs to be rebased at some point to reflect the currency environment? Or do you think there's other levers you can pull to offset that headwind? The second question really for Tomas around the CapEx strategy, and I appreciate what you're saying about discipline. And I guess the reality is SEK 1.5 billion is a record amount of spend for the company. Nevertheless, the balance sheet is incredibly strong. So when you're looking at project reviews and scrutiny around that, is it that the organization is presenting you with returns that aren't that attractive? Or do you simply not have the human resource capability to do, to manage more projects at this point? I'm just wondering whether you are leaving some growth on the table because you're clearly not capital constrained.

If we take the first question on the SEK 3 per kilo was not communicated, not decided in a kind of a fixed FX environment. And -- but at the same time, in a year-on-year comparison, given the -- that we reported in Swedish krona, I think it's very relevant because what we do is, obviously, as I mentioned before, we operate and sell locally, and we earn our money in dollars and euros and so forth. So I think it's very relevant to look at that. But we remain at our target 3 sector. it was not given with an assumption on currency and from where we are today at roughly 2.5% and years to go, we see potential absolutely committed to deliver on that, and that's where we are, right? So I wouldn't call -- bring FX into that conversation is more relevant in a year-on-year comparison. And then Tomas, maybe a bit on CapEx.

Yes. So thank you for the CapEx question. Good one. I think we estimate about SEK 1.5 billion, as we mentioned, 40% of that is related to sort of maintenance or sort of upkeep activities. 60% is the remainder. I'd say most of that for 2026, the majority would be towards capability. When we look at what we can actually -- in your question and what can we actually do, how much can we manage? I think there are possibilities to from a resource point of view to do a bit more. especially if it's sort of in different locations. If a lot of it ends up in 1 location, then it becomes more difficult as is easily understood, I think, right? The problem, I think, with having to prioritize a bit is that when we look at some of these cases, the softest input into the case is the volume assumptions, and those are the ones that we struggle the most with. So a lot of the capability we like. Sometimes it's even connected to a particular customer, launch and so forth. So that looks good. When we look at pure capacity increases in markets that are sort of mature, that has shown limited growth over the past 3, 4 years. We are very stringent, and it's probably the other way around that the organization is pitching a bit more optimistic business cases than maybe what we can see. So it's through a joint, very constructive discussion that we make these choices. It's not Johan and myself to sit there and say, yes and no. But we challenge the cases, and we have a good constructive process with several people involved throughout to make those decisions. So I would say it's capability much more, sort of, more of that capacity in mature markets, we're much more careful. And if it ends up in 1 plant, all of it then resources constraint. Otherwise, I would say that's something that we can manage. But we want to see good returns on these things, right? Even if we have a good balance sheet, the returns are extremely important to us to continue our return on capital employed at the levels that we are today.

I hand the conference back to the speakers for any closing comments.

Thank you so much. Once again, thank you for the interest in AAK and for your questions. We have started the year well with organic volume growth, strong cash flow and in fixed currency, a strong earnings growth and a good margin. Thank you for listening.