KARLSHAMN, SWEDEN — The effects of the coronavirus (COVID-19) pandemic began affecting AAK negatively at the end of the first quarter, particularly in foodservice within its Food Ingredients business and in its Chocolate & Confectionery Fats business.

Within Food Ingredients, lower sales to restaurants, hotels and airline catering in the latter part of the quarter offset volume growth in bakery and plant-based foods. Johan Westman, president and chief executive officer of AAK, said he expects the drop in demand for foodservice to continue until governments lift restrictions on restaurants.

“It is clear that we will see a return of demand,” he said in an April 24 earnings call. “It will, however, be gradually.”

Karlshamn-based AAK directly supplies restaurants with such items as sauces and mayonnaise in bottles. The company also supplies bakery customers and confectionery customers who then sell their finished products to the foodservice sector. Mr. Westman said the production lines set up for AAK’s products like barbecue sauce sold directly to foodservice could not shift to being used in other categories besides foodservice.

“These production lines are set up for bottling and mixing and blending ingredients into the finished products,” he said.

In the Food Ingredients business, first-quarter operating profit of SEK325 million ($32.4 million) was up 6%. Volume dropped 2% to 369,000 tonnes, and net sales rose 6% to SEK4,924 million ($490.5 million).

Volatility within Chocolate & Confectionery Fats has increased, Mr. Westman said. Government lockdowns have taken place in Latin America and in Asia, and some markets are seeing a switch to low-end options from high-end options that AAK mostly supplies. AAK expects the issues to have a negative impact on earnings in the coming quarters, “but we are still optimistic, prudently optimistic, about the long-term trends for the CCF sector,” Mr. Westman said.

In Chocolate & Confectionery Fats in the first quarter, operating profit reached SEK222 million, up 8%. Volume held steady at 115,000 tonnes, the same volume as the previous year’s first quarter. Net sales of SEK2,116 million were up 6%.

Companywide, AAK’s total volumes decreased by 1% to  569,000 tonnes in the first quarter. Operating profit of SEK542 million was up 8%, and net sales of SEK7,455 million were up 6%.

Government lockdowns have affected AAK results negatively, Mr. Westman said. Operations closed for a while in China in February. Disruptions came in India at the end of March and continued to impact the business negatively as the second quarter began. Fredrik Nilsson, chief financial officer, said AAK has a strong balance sheet. On March 31, net debt/EBITDA amounted to 1.13, and AAK had total credited facilities of SEK8,828 million ($879.4 million).