Roadshow April 2016 Cloetta the leading Nordic confectionery player - PowerPoint PPT Presentation

Roadshow April 2016

Cloetta – the leading Nordic confectionery player • Founded by the three Cloetta brothers in 1862 • Annual sales of SEK 5,674 m in 2015 • Adjusted EBIT of SEK 690 m • Leading local brands in 6 countries • Leading market positions in Sweden, Finland, Norway, Denmark, the Netherlands and Italy • 2,600 employees in 14 countries • Production at 13 factories in 6 countries • Listed on Nasdaq Stockholm. The largest shareholders are Malfors Promotor, Columbia Threadneedle and Artisan Partners. 2

Cloetta is all about Munchy Moments To bring a smile to your

Which markets do we wish to serve? Chocolate Nuts NEW TERRITORY Pastilles Chewing Gum Candy & Liquorice

Munchy Moments is our territory! Photo: Joakim Folke and www.fotoakuten.se

Cloetta’s key strategies Focus on Focus on Focus on margin expansion and cost-efficiency employee development volume growth • • • Strong brands with local Improve internal processes and Develop Cloetta´s culture traditions. systems. based on the results of • • Strong position in the Improve cost-efficiency through the employee survey ”Great Place to work”. Nordic market. the closure of factories. • • • Widen and expand the Implement a programme for Attract, develop and product portfolio operational excellence retain competent improvement (”Lean 2020”) in geographically. employees. • • Launch and acquire new the supply chain. Develop teamwork with • products and brands. Increase breadth in production the help of the leadership • tool “Management Strategic pricing. technology to create flexibility in Drives”. product development. 6

Long-term financial targets • Organic sales growth The long-term target is to increase organic sales at least in line with market growth. • Adjusted EBIT margin The target is an operating profit margin, adjusted of at least 14 per cent. • Net debt The long-term target is a net debt /EBITDA ratio of around 2.5x. • Dividend policy The intention is a dividend payout of 40-60 per cent of profit after tax. 7

Attractive non-cyclical market Market development in Cloetta’s main markets 1) Key trends and Consumer behaviour • Market driven by increase in population, higher prices and to some extent also increased per capita consumption • Demand for differentiated and innovative products • Strong brands gain market share • Purchases highly impulse driven • High brand loyalty • Availability is an important factor for impulse driven purchases • Appreciation of innovation – taste, quality and novelties is important 8

Strong local brands 1836 1909 1920 1928 1937 1941 1951 1956 1665 1976 1981 2007 1878 1913 1922 1934 1938 1949 1953 1960 1975 1977 1998 9

Cloetta has its 6 main markets in Western Europe Exports to more than 50 countries worldwide Main markets – countries where Cloetta has a national sales organization. Countries where Cloetta´s products are sold primarily through distribution agreements. Share of Cloetta´s sales. 10 10

Best in class route-to-market • Customer relations – Large and efficient sales organisation in place in all main markets – 80% of total sales Convenience stores / Supermarkets Other generated from markets gas stations with own sales force • Execution – Ensure that negotiated listing and distribution agreements are followed – Ensure good visibility on shelves and checkout lines – Implement campaigns C o n s u m e r s C o n s u m e r s efficiently 11

Profitable growth drivers Every day great execution Strategic initiatives New territory • Broaden distribution • Sizing and pricing • Acquisitions • Promotion planning and • Brand extensions • New geographies execution • Fill white spots • Advertising campaigns • Geographical roll-out • Seasonal products • Brand re-launch • Packaging updates and • Innovations upgrades • Line extensions 12

Every day great execution 13

Every day great execution 14

Strategic initiatives Examples Cloetta Crispy Bite AKO Viva Licorice Launch of “better for you” countlines Re-launch of AKO toffee Launch of Dutch products under Malaco brand Cloetta Tupla + Energy Läkerol DentaFresh Launch of Cloetta Tupla + Protein Launch of xylitol pastilles in chocolate in Finland Launch of energy- and Sweden, Norway and Denmark protein countlines in Finland 15

Enablers for improved profitability • Supply Chain moves from restructuring to operational excellence (Lean 2020-program) • Accelerated growth and synergy realization of acquisitions • Drive growth with new initiatives such as pick-and-mix • Improve internal processes including a common ERP system 16

Lean 2020: From restructuring to operational excellence in Supply Chain • Major manufacturing restructuring completed • There is potential to improve operations after a very disruptive period • Cloetta Lean program provides a good base for continuous improvement 17

Acquisition of Nutisal, The Jelly Bean Factory and Lonka • Nutisal is a step into a new category with an established brand – Dry roasting adds a unique ‘crisp’ to the nuts – The nuts category is growing in Western Europe by 5-8% • The Jelly Bean Factory is a premium “gourmet” brand – Solid growth over recent years with an attractive EBIT-margin – Significantly strengthens Cloetta’s position in the UK • Lonka significantly strengthens Cloetta’s position in the Netherlands – Strengthens Cloetta’s product offering, including pick-and-mix, and position in the Nordics and the UK – Diversifies the product range into new categories and offers an entry into the Dutch chocolate market – Synergies, including a factory closure, will take Lonka to 14% EBIT-margin in 2017 18

Pick-and-mix concept • Cloetta launched a pick-and-mix concept in Coop Sweden early 2015 – Handling of product range, racks and merchandising – Also a concept for natural snacks, e.g. nuts • Cloetta has since many years its own pick-and-mix concept in Finland (Karkkikatu) • Cloetta can utilize a wide range of products from several markets and factories • Cloetta has experience from the entire value chain; production, logistics, planogram and promotional activites • Pick-and-mix accounts for 30% of total market volume in Sweden • Pick-and-mix can contribute to drive growth - some small new Pick & Mix contracts signed for 2016 19

Common Global ERP System Enables increased efficiency over time • Implemented in Sweden, Norway, Denmark, Finland, Slovakia, Holland and Belgium • Roll out will continue across geographies QlikView Master Data M3 Standard Business Process 21

Increased sales Changes in net sales, Jan-Mar Jan-Mar Full year Full year Target % 2016 2015 2015 2014 Organic growth -0.7% 4.0% 1.5% 1.0% • Organic sales growth at least in line with Structural changes 4.9% 2.7% 3.9% 4.3% long term market growth Changes in exchange -0.8% 3.4% 1.4% 3.3% – Historical aggregated value growth of approx. 1-2 % in Cloetta’s markets rates Total 3.4% 10.1% 6.8% 8.6% 22

Sales trend SEKm 8,0% 5 800 6,6% 5,8% 5 600 6,0% 4,9% 4,8% 4,8% 4,2% 5 400 4,0% 4,0% 3,6% 3,0% 2,7% 5 200 2,2% 1,7% 1,6% 2,0% 1,4% 1,2% 0,8% 0,6% 5 000 0,0% 4 800 -0,6% -0,7% -2,0% 4 600 -2,3% -4,0% 4 400 -4,1% -6,0% 4 200 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Organic growth, % Structural changes, % Net Sales LTM 23

Improved operating profit and margin Sales and Operating profit Operating profit margin, adjusted, % 6 000 13,0% 5 674 300 5 313 262 4 893 12,0% Operating profit margin, adjusted, % 4 859 239 250 5 000 12,2% 12,0% 11,9% 212 Net sales (SEKm) 11,0% 200 4 000 178 SEKm 10,0% 150 130 3 000 108 9,0% 90 100 85 8,9% 2 000 8,0% 52 50 1 000 7,0% 2012 2013 2014 2015 0 Q1 Q2 Q3 Q4 Target 2014 2015 2016 • Operating profit margin, adjusted: at least 14% 24

Attractive cash conversion 100% 88% 90% 83% 78% 80% 72% 67% 70% 60% 55% 50% 2010 2011 2012 2013 2014 2015 Cash conversion : Operating profit, adjusted before depreciation and amortization less capital expenditures as a percentage of operating profit, adjusted before depreciation and amortization. 25

Strong cash flow from operating activities 1 200 957 1 000 927 800 600 500 SEKm 367 400 330 290 253 223 131 147 163 174 200 125 93 91 75 54 44 - 116 -16 -23 -35 -200 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2012 2013 2014 2015 2016 Cash flow from operating activities Cash flow from operating activities (rolling 12 months) 26

Financial leverage Continued decrease in Net debt/EBITDA, x 5,0 4,5 4,0 3,5 3,0 Target 2,5 2,0 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 27

Q1 Report

29 Q1 highlights Improved operating profit, stronger cash flow and lower net debt • Net sales for the quarter increased by 3.4 per cent to SEK 1,358m (1,313). • Operating profit increased to SEK 108m (90). • Operating profit, adjusted increased to SEK 126m (108). • Cash flow from operating activities increased to SEK 253m (223). • Net debt/EBITDA was 2.78x (3.60).