AAK factory fire will delay production of confectionery fats

By Laura Crowley

- Last updated on GMT

Related tags Fat Aak

AarhusKarlsmann (AKK) will face a difficult start to 2008 with
two months of delayed deliveries of it specialty fats after this
week's fire, though no raw materials were destroyed.

The Danish vegetable fats manufacturer is still assessing the damage to production in the wake of Wednesday's tragic explosion, which resulted in an intense fire in a facility in Aarhus where oils are processed for use in chocolate and confectionery fats.

One employee lost his life in the incident.

The company said it is working at full speed to create an overview of the incident, and has agreed on a process for identifying the cause of the incident before restarting the production.

"So far, we have stocks available of many of our products, but it becomes more evident that the damages will result in delivery delays and the inability to deliver certain product categories," said Jorgen Balle, managing director or AAK Denmark and president of chocolate and confectionery fats.

The products that will be mainly affected are oils for use in chocolate and confectionery.

This sector makes up about 35 per cent of its overall business, with net sales from the financial year of 2006 amounting to SEK 3,777m (€401m) compared to overall net sales of SEK 10,929m (€1,161m).

Balle continued: "With this information we have so far, January and February seem to become difficult months."

AAK currently has enough stocks available of its main specialty fat products for these next two months.

Bo Svensson, CIO of corporate communications, told FoodNavigator.com that the company hopes that production may resume to normal in that time.

"The damage is limited, so we think the problems will be short-lived," he said.

The company has other manufacturing plants in Sweden, the Netherlands and the UK.

The Swedish site has the same facilities as those that were destroyed in the fire, and so production will be stepped up here.

Many production areas have not been affected, including the new fractionation plant, which is currently in the testing phase.

Some production areas next to the affected building are still closed down for security reasons, but are expected to start up as soon as possible once approval has been given by the authorities.

More information on the damages and the situation surrounding production will be released after further assessment.

AAK is a public company listed on the Swedish stock exchange.

On the day of the fire, shares went down by 5.3 per cent, from SEK 150 to 142, but has risen again since to SEK 147.

Its fats are used by the food, chocolate, confectionary and cosmetics industries, and as vegetable lubricants for machinery and ingredients in animal feeds.

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