Roadshow presentation 16 November, 2012
Cloetta attendees Jacob Broberg Bengt Baron Danko Maras SVP Corporate President and CEO CFO Communications & Investor relations • Joined LEAF as SVP Corporate • Joined LEAF as CEO in 2009 • Joined LEAF as CFO in 2010 Communications in 2010 • Previously held various senior • Previously held various senior • Previously held various senior management positions within management positions within FMCG sector, including CEO of V&S Unilever, including CFO/COO management positions, including Unilever Nordic VP Corporate Communications in • B.S. and MBA, University of TeliaSonera, V&S and Electrolux California at Berkeley • B.Sc. in Business Administration and • B.A. in Political Science and Economics, University of Uppsala Economics, University of Lund 16 November, 2012 2
Highly complementary merger “Old” Cloetta LEAF Net sales split by region Net sales split by product segment Net sales split by region Net sales split by product segment Pastilles Others Others Denmark Finland 2% 2% Others 11% 2% 2% Italy 16% Sugar Norway 21% Chewing gum confectionery 7% 10% 16% Denmark 5% Chocolate Norway 7% 7% Finland 19% Netherlands Sugar Pastilles 14% Sweden confectionery 19% Chocolate 89% Sweden 54% 80% 18% 16 November, 2012 3
Creating the leading Nordic confectionery player • Leading market positions in key markets and complete Complete offering product offering CHOCOLATE • Leading route to market capabilities • A strong portfolio of iconic local brands • Top 10 brands account for about 60% of proforma net sales • 80% of total sales generated from own sales force PASTILLES CHEWING GUM • Approx. 2,600 employees CANDY & LIQUORICE Combined financials 1) Net Sales split 2011PF 7,000 14% Sales split per region Sales split per product area 5,835 5,798 5,596 6,000 12% 12% Others 1,184 1,056 11% 9% 10% 938 5,000 10% Chewing gum Net Sales (SEKm) 9% 8% 3,697 3,597 4,000 8% Margin 6% 3,000 6% Sugar Pastilles confectionery 16% 4,651 4,742 4,658 2,000 4% 48% 1,000 2% Chocolate 0 0% 19% 2009 2010 2011 Jan-Sep 2011 Jan-Sep 2012 2) 2) Sweden 27% Norway 7% Italy 17% Others 16% LEAF Cloetta New Cloetta EBITA margin proforma underlying Finland 16% Denmark 5% Netherlands 12% Note: 1) LEAF 2009-2010 exchanged at SEK/EUR 9.0, LEAF 2011 exchanged at SEK/EUR 9.0228, LEAF Jan-Sep 2011 exchanged at SEK/EUR 9.0088., Cloetta 2009 refers to the period September 1, 2008 to August 31, 2009. 2) Underlying net sales 16 November, 2012 4
1. Key investment attractions
Key investment attractions Strong iconic brands 1 Solid market position 2 Attractive non-cyclical market with stable growth 3 Clear strategy to deliver growth 4 Focus on margin expansion 5 Best in class route to market 6 Attractive cash flow generation 7 16 November, 2012 6
Strong iconic brands 1 16 November, 2012 7
Solid market positions 2 Sweden 1) Finland 1) Cloetta Cloetta Population (million) 9.4 Population (million) 5.4 Others 24% 24% Others Market size (EUR million) 1,500 Market size (EUR million) 900 30% 34% Market position #2 Market position #2 Mondelez Panda 6% (fka Kraft) Wrigley Fazer 31% 11% 40% Norway 1) Netherlands 3) Others Cloetta Cloetta Population (million) 4.9 Population (million) 16.6 18% 11% 18% Market size (EUR million) 800 Market size (EUR million) 1,500 Galleberg Market position #3 Market position #1 7% Mondelez Perfetti Others (fka Kraft) 18% 56% 34% Nidar Haribo 30% 8% Denmark 2) Italy 2) Population (million) 5.5 Population (million) 60.7 Others Cloetta Cloetta Market size (EUR million) 1,000 18% 16% Market size (EUR million) 3,200 14% Market position #3 Market position #2 Others Valora Toms 46% Perfetti 14% 20% 29% Cloetta’s main markets Haribo Haribo 32% 11% Source: Datamonitor, Nielsen, Delfi, Management estimates. Note: 1) Confectionary market, 2) Sugar confectionary only, 3) Confectionary excluding chocolate. All numbers for market sizes represent entire confectionary market 16 November, 2012 8
Attractive non-cyclical market with stable growth 3 Market development in Cloetta’s main markets 1) Market development Western Europe Key trends • Market driven by increase in population, higher prices 6,000 CAGR 2000 – 2011: 1.3% and to some extent also increased per capita 5,000 consumption 4,000 CAGR 2000 – 2011: 2.0% EURm • Demand for differentiated and innovative products 3,000 2,000 • Strong brands gain market share CAGR 2000 – 2011: 2.6% 1,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Chocolate Sugar confectionery Chewing gum Market size by region 2011 Consumer behavior 4,000 • Purchases highly impulse driven 3,500 • High brand loyalty 3,000 2,500 • Availability is an important factor for impulse driven EURm 2,000 purchases 1,500 • Appreciation of innovation - taste, quality and novelties is 1,000 500 important 0 SE FI NO DK IT NE Chocolate Sugar confectionery Chewing gum Source: Datamonitor. Note: 1) Includes Sweden, Finland, Norway, Denmark, Italy and Netherlands 16 November, 2012 9
Clear strategy to deliver growth 4 Brand extension and seasonal variation Enter adjacent and new categories 2009 2005 Permanent extensions 2009 2008 Limited Edition 2009 1953 2008 2003 Seasonal 2008 2010 • Strong local heritage brands • Strong route to market • Drive category development • Brand extensions and cross border initiatives • Fill white spots • Strategic price management • Selective M&A 16 November, 2012 10
Focus on margin expansion 5 Cost effectiveness focus areas Cost synergies Knowledge and revenue transfer • • Supply chain restructuring Consumer understanding • • Cost synergies from merger Customer management • • Procurement Geographic transfer of concepts/ideas • • Process R&D • All technologies in-house 16 November, 2012 11
Best in class route to market 6 • Sales force - Large and efficient sales organisation in place on the main markets - 80% of total sales generated from own sales force • Category management CONVENIENCE STORES / GAS SUPERMARKETS OTHER STATIONS - 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 Consumers 12
Attractive cash flow generation 7 84% 800 85% 725 700 74% 643 66% 600 575 503 500 -140 SEKm 400 300 200 100 0 Underlying EBITDA- Underlying EBITDA- Underlying EBITDA- Non-underlying CapEx EBITDA-CapEx (incl. CapEx 2009 CapEx 2010 CapEx 2011 2011 Non-underlying) 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. 16 November, 2012 13
2. Update on the ongoing restructuring and synergy program
Progress – synergy and restructuring program Synergies from the merger Communicated • Synergies from the merger totals at least SEK 110m on EBITDA- Restructuring in the commercial organisation (including level and comprises: reduction of ~50 employees) – Merger effects in excess of SEK 65m annually to be Distribution agreements in Finland, Denmark and Norway achieved within two years of closing of the Transaction cancelled. Norway implemented – Supply chain restructuring program within LEAF that is expected to yield another SEK 45m in annual cost savings In-sourcing of third party production – Chocolate plate as of Q1 2012 Royal insourced – Total implementation cost of approx. SEK 80m Efficiency measures within administration Status Procurement synergies – joint contracts signed SEK 45m restructuring program (Slagelse) COMPLETED Update corporate processes IT-integration and systems Synergy program of SEK 65m annually Finalise move of production from Slagelse, Denmark to Levice, Slovakia Timing of implementation Completed Ongoing (on plan) Behind plan Cost of implementation 16 November, 2012 15
Progress – synergy and restructuring program Restructuring program Communicated • The restructuring program is expected to result in annual savings of approx. SEK 100m on EBITDA-level Products transferred from Gävle, completed early 2014 – The savings from the production relocations will have a gradual effect in 2013 and full effect from sometime Products transferred from Aura, completed early 2013 during the second half of 2014 – Implementation began June 2012 – Total implementation cost of approx. SEK 320-370m Alingsås: Production terminated, products transferred and equipment sold Levice: Matching/equipment installation/ ramp-up/full production, full production 2014 Status Ljungsbro: Matching/equipment installation/ ramp- up/full production, full production 2014 Synergy restructuring program of SEK 100m New Scandinavian warehouse structure in place, first half 2013 Timing of implementation Cost of implementation Completed Ongoing (on plan) Behind plan 16 November, 2012 16
3. Financials
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