Roadshow presentation May, 2013
Cloetta attendees Bengt Baron Danko Maras Jacob Broberg President and CEO CFO SVP Corporate Communications & Investor relations • Joined LEAF as CEO in 2009 • Joined LEAF as CFO in 2010 • Joined LEAF as SVP Corporate 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 Unilever, including CFO/COO management positions, including V&S Unilever Nordic and VP Finance VP Corporate Communications Supply Chain North America in TeliaSonera, V&S and • B.Sc. and MBA, University of Electrolux • B.Sc. in Business Administration California at Berkeley • B.A. in Political Science and and Economics, University of Uppsala Economics, University of Lund 2
Cloetta – the leading Nordic confectionery player • Leading market positions in key markets and complete product Complete offering offering CHOCOLATE • A portfolio of iconic local brands – top 10 brands account for about 60% of net sales • Sales in 50 countries – 80% of total sales generated from markets with own sales force • Approx. 2,600 employees in 12 countries • Production at 10 factories in 5 countries – 97,000 tonnes produced PASTILLES CHEWING GUM 2012 CANDY & LIQUORICE Net Sales split 2012 Sales and underlying EBIT margin 1) Sales split per region Sales split per product area 7,000 14% Others 6,000 12% 10.3% 8% Chewing gum 8% 5,000 8.7% 10% Net Sales (SEKm) EBIT margin 4,000 8% Pastilles 3,000 6% Sugar 17% confectionery 4,658 49% 2,000 4% 4,859 1,000 2% Chocolate 0 0% 18% 2011 2012 Sweden 32% Norway 6% Italy 15% Others 12% Finland 18% Denmark 4% Netherlands 13% Net sales Underlying EBIT margin 1) Underlying EBIT based on constant exchange rates and the current company structure (excluding distribution business in Belgium and third-party distribution agreement in Italy) and excluding items affecting comparability 3
Iconic brands 1 1909 1927 1934 1938 1949 1953 1965 1976 1981 1836 1878 1913 1928 1937 1941 1951 1960 1970 1979 4
Solid positions in key markets 2 Sweden 1) Finland 1) Others Cloetta Cloetta Population (million) 9.4 Population (million) 5.4 Other 21% 24% 25% 28% Market size (EUR million) 1,400 Market size (EUR million) 900 Mondelez (fka Kraft) Market position #2 Market position #2 5% Fazer Top-selling brands: Malaco, Kex- Top-selling brands: Malaco, Jenki, 6% Panda choklad, Läkerol, Mynthon, Läkerol; 5% Mars/ Mondelez Ahlgrens bilar, Sisu, Tupla Wrigley (fka Kraft) Fazer Polly, Center, 12% 30% 44% Juleskum, Plopp, Sportlunch Norway 2) Netherlands 3) Cloetta Others Population (million) 4.9 Population (million) 16.6 Cloetta 17% 24% Others 27% Market size (EUR million) 900 Market size (EUR million) 1,500 51% Market position #1 Market position #1 Perfetti 17% Top-selling brands: Malaco, Läkerol, Top-selling brands: Sportlife, Brynhild Pops, Ahlgrens XyliFresh, King, 13% Haribo Mondelez Nidar bilar Red Band, Venco 9% Galleberg (fka Kraft) 20% 16% 6% Denmark 2) Italy 2) Cloetta Cloetta Others Population (million) 5.5 Population (million) 60.7 15% 15% 21% Market size (EUR million) 1,000 Market size (EUR million) 3,600 Others Market position #3 Market position #2 44% Perfetti Valora Top-selling brands: Malaco, Lakrisal, 22% Top-selling brands: Sperlari, Dietor 13% Haribo Läkerol, Center, Saila, Dietorelle 32% Juleskum Toms Haribo Ferrero 19% 9% 10% Source: Datamonitor, Nielsen Note: 1) Confectionary market, 2) Sugar confectionary and pastilles market, 3) Sugar confectionery market. All numbers for market sizes represent entire confectionary market (to consumer) 5
Attractive non-cyclical market 3 Market development in Cloetta’s main markets 1) Key trends • Market driven by increase in population, higher prices 6,000 CAGR 2000 – 2011: 1.3% 5,000 and to some extent also increased per capita consumption 4,000 CAGR 2000 – 2011: 2.0% EURm 3,000 • Demand for differentiated and innovative products 2,000 CAGR 2000 – 2011: 2.6% • Strong brands gain market share 1,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Chocolate Sugar confectionery Chewing gum Market size by region 2012 Consumer behavior • Purchases highly impulse driven 4,000 3,500 • High brand loyalty 3,000 • Availability is an important factor for impulse driven 2,500 EURm 2,000 purchases 1,500 • Appreciation of innovation - taste, quality and novelties is 1,000 500 important 0 IT NE SE DK FI NO Chocolate Sugar confectionery Chewing gum Source: Datamonitor. Note: 1) Includes Sweden, Finland, Norway, Denmark, Italy and Netherlands 6
Best in class route to market 4 • Customer relations – Large and efficient sales organisation in place on all main markets – 80% of total sales generated from markets with own sales force CONVENIENCE STORES / • Execution SUPERMARKETS OTHER GAS STATIONS – Ensure that negotiated listing and distribution agreements are followed – Ensure good visibility on shelves and checkout lines – Implement campaigns efficiently • Distribution – Presence in many categories and channels – Complete product portfolio creates economies of scale C o n s u m e r s C o n s u m e r s 7
Focus on margin expansion 5a Cost effectiveness focus areas Cost synergies and restructuring Knowledge and revenue transfer • • Supply chain restructuring – expected savings of approx. SEK Consumer understanding 100m on EBITDA-level p.a. • Gradual effect in 2013 and full effect from H2 2014 • Customer management • Implementation began June 2012 • Total implementation cost of approx. SEK 320-370m • Geographic transfer of concepts/ideas • Cost synergies from merger – at least SEK 110m on EBITDA- level p.a. • R&D • Merger effects in excess of SEK 65m p.a. to be achieved within 2 years of closing of the transaction • IT support • Supply chain restructuring program within LEAF expected to yield another SEK 45m in annual cost savings as of Q1 2012 • Total implementation cost of approx. SEK 80m • Procurement • Process – improve internal processes and systems • Insourcing / all technologies in-house 8
Progress – synergy and restructuring program 5b Synergies from the merger Restructuring program Restructuring in the commercial organisation (including reduction of Gävle: Products transferred from Gävle, completed early 2014. ~50 employees) Agreement on conditions IT-integration and systems Aura: Production terminated, products transferred, property and equipment sold Distribution agreements in Finland, Denmark and Norway cancelled and fully taken over Alingsås: Production terminated, products transferred and equipment sold In-sourcing of third party production Levice: Matching/equipment installation/ ramp-up/full production, full production 2014 Efficiency measures within administration Ljungsbro: Matching/equipment installation/ ramp-up/full production, Procurement synergies – joint contracts signed full production 2014 Update corporate processes New centralised Scandinavian warehouse structure in place Finalise move of production from Slagelse, Denmark to Levice, Completed Ongoing (on plan) Behind plan Slovakia Integration process essentially completed and factory restructurings proceed according to plan 9
Clear strategy to deliver growth 6 Brand extension and seasonal variation Enter adjacent and new categories 2009 2005 Permanent extensions 2008 2009 2009 Limited Edition 2003 1953 2008 2010 Seasonal 2008 2013 Fill white spots Role out products geographically 10
Attractive cash conversion 7 Cash conversion development Temporarily decreased levels • Historically strong cash flow generation from the 90% 84% underlying business 80% 74% 70% • Cash flow generation temporarily decreased during 68% 60% 2011 and 2012 due to increased CapEx in connection 55% with the restructuring program 50% 40% 30% 20% 10% 0% 2009 2010 2011 2012 Cash conversion: (Underlying EBITDA-Capex) / Underlying EBITDA Note: 2009 and 2010 represent combined figures for Cloetta and Leaf. LEAF 2009-2010 exchanged at SEK/EUR 9.0. Cloetta 2009 refers to the period September 1, 2008 to August 31, 2009. For 2011 the combined figures for Cloetta and Leaf have been adjusted in order to be comparable with the numbers for Cloetta in 2012 11
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