Analyst presentation March 13, 2012
The Cloetta attendees Jacob Broberg, Bengt Baron, Danko Maras, SVP Corporate communications President and CEO CFO & Investor relations • Joined LEAF as SVP Corporate • Joined LEAF as CEO 2009 • Joined LEAF as CFO 2010 Communications 2010 • Previously held various senior • Previously held various senior • Previous held various senior management positions within management positions within management positions, FMCG sector, including CEO of Unilever, including CFO/COO V&S Unilever Nordic including VP Corporate Communications in TeliaSonera, • B.S. and MBA, University of • B.Sc. in Business Administration V&S and Electrolux California at Berkeley and Economics, University of • B.A. in Political Science and Uppsala Economics, University of Lund 2
Key facts • Net sales of approximately SEK 5.6 billion pro forma 2011 • Recurring EBITA pro forma of SEK 591 million 2011 equivalent to a recurring EBITA margin of 10.6% • Leading market positions in key markets and complete product offering • A strong portfolio of iconic local brands • Top 10 brands account for about 60% of pro forma net sales • Approximately 2,600 employees • Leading route to market capabilities 3
Today’s agenda 1. Key investment attractions 2. “New” Cloetta overview 3. Strategy and financial targets 4. Financial performance 5. The offering 6. Summary 4
1. Key investment attractions
Key investment attractions 1 Attractive non-cyclical market with stable growth 2 Strong market positions 3 Portfolio of iconic local brands 4 Leverage market position to outgrow the market 5 Ambitious synergy and restructuring program 6 Strong cash flow characteristics 6
Attractive non-cyclical market with stable growth Main markets of Cloetta Western Europe market size and growth Growth (1) 4% CAGR (2) Sweden 0.8% Refreshment SEK 34bn Finland 3.6% 2% 2% CAGR (2) CAGR (2) Norway 1.6% Sugar confectionery SEK 87bn Chocolate Denmark 3.2% SEK 204bn The Netherlands 2.5% Total size: SEK 325bn Italy 0.9% Source: Datamonitor, 2010 Source: Datamonitor, 2010 Cloetta’s core markets grew each year in the period 2000-2010 Note: 1) CAGR total confectionery market over the period 2000 to 2010. 2) 2000-2010. 7
Strong market positions Country Market leader in the following categories • Sugar confectionery, countlines, pastilles and chocolate bags SWEDEN • Pastilles, chewing gum and sugar confectionery FINLAND • Pastilles and sugar confectionery NORWAY • Pastilles and sugar confectionery DENMARK • Pastilles, sugar confectionery, and chewing gum NETHERLANDS • Seasonals, sweeteners and sugar confectionery ITALY 8
Portfolio of iconic local brands Brand Tarragona 1836-1902 1909-1928 1930-1959 1960-1980 1981- Sperlari Venco 9
Leverage market position to outgrow the market 1 Dedicated focus on local heritage brands, including brand extensions and cross boarder initiatives 2 Solid product development pipeline 3 Chocolate portfolio can be leveraged across geographies leveraging strong routes to market 4 Selective approach to M&A opportunities 10
Ambitious synergy and restructuring program Synergies from the merger Announced restructuring program • Restructuring in the commercial • Intention to close the factories in Aura, organisation Finland, Gävle and Alingsås, Sweden and move the majority of the production to • Efficiency measures within administration Levice, Slovakia and Ljungsbro, Sweden • In-sourcing of white label production • Streamlining of warehouse operations in Scandinavia • Finalise move of production from Slagelse, Denmark to Levice, Slovakia • Implementation costs of SEK 320-370m • Implementation costs of approx. • Gradual effect from synergies in 2013 and SEK 80m with full effect from sometime during the second half of 2014 • Gradual effect from synergies in 2012 with full effect within two years Annual savings of at least Annual savings of approx. SEK 110m on EBITDA-level SEK 100m on EBITDA-level 11
Attractive cash flow generation 84% 85% 800 724 74% 700 643 66% 574 600 503 500 -140 SEKm 400 300 200 100 0 Recurring Recurring Recurring Non-recurring EBITDA-CapEx EBITDA-CapEx EBITDA-CapEx EBITDA-CapEx CapEx (incl. non- 2009 2010 2011 2011 recurring) % 2011 Cash conversion (EBITDA- CapEx)/EBITDA Note: Combined figures. LEAF 2009-2010 exchanged at SEK/EUR 9.0, LEAF 2011 exchanged at SEK/EUR 9.0228. Cloetta 2009 refers to the period September 1, 2008 to August 31, 2009. 12
2. “New” Cloetta overview
48% Sugar confectionery % of net sales (2011PF) Overview • Strong local brand heritage and local taste preferences • Indulgence important category driver Candy • In Norway, Sweden, Denmark, Finland, the Netherlands and Belgium, Cloetta has harmonised its leading candy brands Malaco and Red Band • Additional strong brands include Ahlgrens bilar , Venco, Galatine and Chewits and Juleskum • With the Italian brand Dietorelle , Cloetta was the first company to introduce sugar free candy Sweeteners • Strong local positions in Italy with the Dietor brand 14
Chocolate 19% % of net sales (2011PF) Overview • Strong local brand heritage and local taste preferences • Indulgence important category driver Chocolate • Cloetta has a leading position in Sweden with Kexchoklad , Polly , Center, Bridge and Plopp brands • Strong local position in Finland with Polly , Tupla , and Center brands • In Norway, Popsy (Polly), Center, Sportlunch and Bridge are popular • Italy leading in seasonal chocolate with Sperlari 15
24% Refreshment % of net sales (2011PF) Overview • Functional benefits • High brand loyalty Pastilles • The company iconic brand Läkerol is more than 100 years old • Other leading brands are Mynthon , King and Saila Chewing gum • Cloetta has a dominant position in Finland with the Jenkki brand and a leading position in the Netherlands and Belgium with Sportlife and Xylifresh • Cloetta has pioneered the use of Xylitol with e.g. Jenkki 16
Core market overview % of net sales (1) Market (size EUR) Cloetta offering 1.5bn 28% • Sugar confectionery, countlines, pastilles and SWEDEN chocolate bags 1.0bn 5%_ • Pastilles and sugar confectionery DENMARK 0.8bn 7%_ • Sugar confectionery and pastilles NORWAY 0.9bn 16% • Pastilles, chewing gum and sugar confectionery FINLAND 1.5bn 12% • Sugar confectionery, chewing gum and pastilles NETHERLANDS 3.2bn 17% • Seasonals, sweeteners and sugar confectionery ITALY Leading positions and dedicated sales and distribution organisations in core markets Note: 1) 2011 pro forma 17
Leading route to market capabilities • Sales force - large and efficient sales organisation in place on the main markets • Category management - ensure that negotiated listing and distribution agreements are followed - ensure good visibility on shelves and checkout lines - implement campaigns efficiently • Distribution platform - presence in many categories and channels - complete product portfolio creates economies of scale Cloetta’s main markets 18
Strong market shares Sweden Finland Norway Denmark (1) Netherlands (2) Italy (1) Source: Datamonitor; Nielsen; Delfi; Management estimates. Note: 1) Sugar confectionary only; 2) Excluding chocolate 19
Cloetta’s presence in other markets Other markets Net sales split pro forma 2011 • Sales Rest of the World distributes Cloetta’s products in markets where Cloetta does not have is own route-to- market • Transitioned from an export organisation to a market-driven enabling organisation, • Key markets are: UK, Belgium*, Baltics and Germany Key brands in other markets (UK) (Baltics) (Baltics) (Germany) (RoW) (Belgium) Note: *) The distribution business in Belgium was divested in February, 2012. 20
Manufacturing footprint 2012 • 12 factories in 6 countries • 98,000 tonnes of confectionery annually 1 • Factory in Slagelse (Denmark) was closed Aura Gävle down in 2011 Ljungsbro Alingsås • Intention to close the factories in Aura, Finland, Gävle and Alingsås, Sweden Sneek Roosendaal Turnhout • Majority of the production will be moved to Levice Levice, Slovakia and Ljungsbro, Sweden Gordona Cremona San Pietro in Casale Silvi Marina Note: 1) Production refers to 2011 levels, in tonnes including production at Slagelse which was closed down in 2011. 21
3. Strategy and financial targets
Strategic pillars going forward 2 1 Focus on growth Focus on cost 3 Focus on employees and margin effectiveness • Strong local heritage • Cost synergies from the • Create a joint culture brands transaction • Attract, develop and • Strong route to market • ”All” technologies in- retain skilled house employees • Brand extensions and cross border initiatives • Manufacturing • Build a winning restructuring initiatives organisation • Strategic price management • Selective M&A 23
Develop local heroes 1.A Example of Ahlgrens bilar 2005 Permanent 2009 extensions 2009 2008 Limited Edition 2009 1953 2008 2003 Seasonal 2008 2010 24
Understanding of consumer needs 1.B Example of Läkerol Gum Arabic core stretched New need state New need state New need state within own family in Compressed in Hard boiled in Gum …in Price/Size …and bigger size 25
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