SEB 7 January, 2020 Frans Rydn, CFO 2 This is Cloetta 6.2 6.2 3 - PowerPoint PPT Presentation

SEB 7 January, 2020 Frans Rydén, CFO

2 This is Cloetta 6.2 6.2

3 Cloetta’s strengths Strong brand/category positions and scale in North Western Europe Cloetta’s strategic strengths Market Category position Chewing Pick & Pastilles Chocolate Candy gum mix • Strong leading local brands 2 1 1 1 - • Locally tailored innovation 4 2 1 1 1 • Core markets in growing North Western Europe 3 1 1 2 - • Own manufacturing network 3 1 1 2 - • Route to market with own sales force • Scale benefits in North Western - 1 - 2 - Europe vs local competition - 1 - - - Based on Cloetta market share in respective category in 2018.

4 Strong heritage brands liked and trusted by our consumers Local Global Local Global Balance

5 Stable growth in branded confectionery market Value growth aided by premiumization 160 gr Index CAGR 1,6% 70 140 60 120 50 100 SEKbn 40 80 30 60 140 gr 20 40 10 20 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Total market value* Index market value growth *Source: Datamonitor/ Mintel Markets: Sweden, Denmark, Norway, Finland and Netherlands

6 Responsible growth Cloetta offering informed choice for consumer • Consumer as boss • NAF/NAC • Increased resource efficiency • Responsible sourcing of raw material (UTZ) • Employee development and health • Plastic reduction • “Choice for you” strategy

7 Focus on core markets and core categories From acquiring new munchy moment categories to organic growth

8 Cloetta’s Financial Goals: Organic growth positive YTD, VIP+ plan to deliver EBIT 2017 2018 Targets 1-2% Organic Growth* -1.2% -2.8% (In line with market) ≥ 14% EBIT Margin, Adj 10.4% 10.9% Net Debt / ≤ 2.5 2.4 2.3 EBITDA Dividend Policy 54% 60% 40-60% (share of profit) *Growth at constant exchange rates

9 Continue attractive dividend – doubled in 3 years 0,0 0,0 0,0 0,50 0,75 0,75 1,00 Dividend per share, SEK 70% Target 60% 60% Dividend payout 54% 53% of 40 – 60 per 50% cent of profit for 40% 37% the period 30% 20% 10% 0 0 0 0% 2012 2013 2014 2015 2016 2017* 2018 * 2017 excluding special dividend

10 Key Business Priorities Cloetta to organic growth and 14% operating profit margin, adjusted • Packaged sales back to organic growth, EBIT >14% Branded • Absolute higher media investments on top of efficiency growth • Pricing needed to offset raw materials and FX • Price increases implemented on 50% of the contracts in Pick & mix Sweden: goal is to get to black from – 60 m SEK 2018 to sustainable value • Assortment optimization to reduce complexity & costs Reduce costs • “Value Improvement Program+” and “Perfect Factory” • and Five-year capacity investment plan to improve service levels and fund further growth drive efficiency

11 Branded Growth: Organic growth now a trend Seventh consecutive quarter of growth in branded packaged products Branded, % of Q3 '19 sales 3,6% 2,4% 1,6% 1,4% 1,3% 1,4% 0,6% 0,6% -0,8% -3,1% 73% -4,0% 2017 2018 2019 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Pick & mix, % of Q3 '19 sales 18,1% 10,5% 7,8% 6,4% 27% 1,5% -3,3% -11,4% -13,5% -15,6% -18,1% -19,4%

12 12 Pick & Mix to Sustainable Value Short term plan (by year-end 2020) • Turn around EBIT in pick & mix in Sweden from ~SEK -60m in 2018 to average pick & mix EBIT • Contract and price models being re-developed • Reduce distribution cost in Sweden • Continue to insource Candyking volumes • Drive merchandising efficiency • Optimize assortment

13 Pick & Mix to Sustainable Value Medium term plan • Drive penetration in Finland, Denmark, Norway and the UK • Develop pick & mix category and brand offering • Develop concepts to fit all markets • Create “Shop in Shop” concept to increase value • E-commerce: – Scale e-commerce – ‘In - store theatre’ needs

14 Reduce Cost and Drive Efficiency Cloetta Leading Performance Program launched in 2019 The Perfect Factory programme creates - Repeatable lines - Measurable lines - Capable lines - Competent employees .

15 Reduce Cost and Drive Efficiency Invest to Grow: Capacity investments ongoing • 10% capacity increase in moulding technology • Additional capacity will support – Growth in branded packaged products – Realization of additional Candyking synergies (insourcing) – Insourcing of volumes produced in previously Cloetta-owned Italian plants • Investment approximately SEK 100m will debottleneck current lines in Turnhout and Levice • New capacity will be available from mid-2020

16 Reduce Cost and Drive Efficiency: Well-stocked road-map to deliver targeted 14% EBIT margin, adjusted EBIT margin, adjusted, % ONE Cloetta and other Reduce programs indirects ≥ 14,0% Perfect using ZBB Factory Pick & mix portfolio Branded growth 10,9% Value Improvement Program+ 2018 Mid-term

17 “Navigating a Peak in the Business Cycle” Cloetta in stable category/market, yet we keep reinventing ourselves Point of Departure Working with Uncertainty • Non-cyclical • Professional approach to 2008 category white-space markets • North Western • Capital deployment and Europe acquisition strategy • Choice that puts • Strong consumers first heritage • Opportunities in consumer brands changing retail • Agile manufacturing • Cost concious culture

Core Strategy: Organic growth and 14% EBIT Commercial focus on our brands whilst increasing cost consciousness To Healthy From Topline Acquisition growth Organic growth 1-2% Margins through Bottom Organic margin line 14% synergies and expansion restructuring

19 Q&A

20 Appendix

21 Group Management: New Team, relevant experience Unilever Mondelez L’Oreal Cloetta Perfetti van Melle Cloetta Kraft Heinz Mars Mars Cloetta Unilever

22 22 Cloetta’s Core Strategy “To bring a smile to your Munchy Moments” • Strengthen the equity of our core • Drive cost saving activities – Facilitate growth • Zero tolerance for accidents ”VIP+” brands Drive growth Fund growth • Create “One Cloetta” • Focus on core categories and • Embed ”Perfect Factory” and core markets, double international Lean in the supply chain • Strengthen brand and category management competence • Fewer and stronger innovations to • Insource production drive valorization • CSR to drive consumer agenda • Improve profitability in pick & • Create value concepts and mix • Create a winning culture penetration in pick & mix • Improve marketing efficiency • Develop, attract and retain • Selective acquisitions on core and internal systems and skilled leaders and employees categories and markets processes Target: Organic Sales growth in line with market and EBIT margin, adjusted – at least 14%

23 Sales growth historically driven by acquisitions Shift to organic growth with selective acquisitions on top 6,2 0,5 SEKbn 0,3 0,1 1,1 0,2 -0,7 4,9 2012 2018 Nutisal acquisition Jelly Bean Lonka acquisition Italy Disposal Candyking Forex, Other acquisition acquisition 2014 2014 2015 2017 2017 2012-2018

24 Track record of margin gains through restructuring and synergies Candyking margin Synergies and factory dilution, unfavorable restructuring from Cloetta FX, production cost LEAF merger SEKm 800 695 Margin 690 677 700 632 604 17,0% 585 600 432 500 Target 14,0% 13,0% 13,6% 400 12,2% 12,0% 11,9% 300 10,9% 10,4% 9,0% 200 8,9% 100 * 0 5,0% 2012 2013 2014 2015 2016 2017 2018 Operating profit, adjusted Operating profit margin, adjusted *From 2016 and onwards, Italy is discontinued operations and excluded from result

25 Core Strategy: Organic growth and 14% EBIT From acquisition growth to organic growth 2018: Shift to organic growth • Consumer as boss • New management 2017: Structure change • ONE Cloetta • Disposal of Italy • Organic growth • Acquisition Candyking • Sharpened strategy on the • Overload moulded factory 2014: Harmonization road to 14% network • One ERP system • Factory rationalization & LEAN 2012: New company • Smaller acquisitions • Merger Cloetta-LEAF • Listed on Stock market • HQ in Stockholm

26 Value Improvement Program Plus: Holistic and company-wide program to safeguard delivery of the road to 14% One program for value-creating initiatives, using industry-leading practices and grounded in Zero Based Budgeting principles, launched in Q1 2019. • Transparency to confirm effort and money is spent where it matters the most to deliver profitable growth and targeted EBIT • Accountability for building blocks, with overlaps managed and no drill-sites missed • Rigor in tracking of actuals and fulfillment of commitments To help kick-start reduction of indirect spend in SG&A and Operations, Cloetta engaged Accenture for spend analysis and value targeting including benchmarking and best practices