cloetta - investor road show april 2016

Roadshow April 2016

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Cloetta – the leading Nordic

confectionery player

• Founded by the three Cloetta brothers in 1862

• Annual sales of SEK 5,674m in 2015

• Adjusted EBIT of SEK 690m

• 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.

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Cloetta is all about

Munchy Moments

To bring a smile to your

Nuts NEW TERRITORY

Which markets do we wish to serve?

Candy & Liquorice

Chewing Gum Pastilles

Chocolate

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Photo: Joakim Folke and

www.fotoakuten.se

Munchy Moments is our territory!

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Cloetta’s key strategies

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• Strong brands with local

traditions.

• Strong position in the

Nordic market.

• Widen and expand the

product portfolio

geographically.

• Launch and acquire new

products and brands.

• Strategic pricing.

• Improve internal processes and

systems.

• Improve cost-efficiency through

the closure of factories.

• Implement a programme for

operational excellence

improvement (”Lean 2020”) in

the supply chain.

• Increase breadth in production

technology to create flexibility in

product development.

• Develop Cloetta´s culture

based on the results of

the employee survey

”Great Place to work”.

• Attract, develop and

retain competent

employees.

• Develop teamwork with

the help of the leadership

tool “Management

Drives”.

Focus on

margin expansion and

volume growth

Focus on

cost-efficiency

Focus on

employee development

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Long-term financial targets

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• Organic sales growth The long-term target is to increase organic sales at least in line with market growth.

• Net debt The long-term target is a net debt /EBITDA ratio of around 2.5x.

• Adjusted EBIT margin The target is an operating profit margin, adjusted of at least 14 per cent.

• Dividend policy The intention is a dividend payout

of 40-60 per cent of profit after tax.

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Attractive non-cyclical market

Market development in Cloetta’s main markets1) 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

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Strong local brands

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1836 1909 1920 1928 1937 1941 1951 1956 1665 1976 1981 2007

1878 1913 1922 1934 1938 1949 1953 1960 1975 1977 1998

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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.

Cloetta has its 6 main markets in

Western Europe

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Best in class route-to-market

Supermarkets Convenience stores /

gas stations Other

• Customer relations

– Large and efficient sales

organisation in place in

all main markets

– 80% of total sales

generated from markets

with own sales force

• Execution

– Ensure that negotiated

listing and distribution

agreements are

followed

– Ensure good visibility on

shelves and checkout

lines

– Implement campaigns

efficiently C o n s u m e r s C o n s u m e r s

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Profitable growth drivers

• Acquisitions

• New geographies

New territory

• Broaden distribution

• Promotion planning and

execution

• Advertising campaigns

• Seasonal products

• Packaging updates and

upgrades

• Line extensions

Every day great execution

• Sizing and pricing

• Brand extensions

• Fill white spots

• Geographical roll-out

• Brand re-launch

• Innovations

Strategic initiatives

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Strategic initiatives Examples

Viva Licorice

Launch of Dutch products

under Malaco brand

Cloetta Crispy Bite

Launch of “better for you” countlines

AKO

Re-launch of AKO toffee

Cloetta

Launch of Cloetta

chocolate in Finland

Läkerol DentaFresh

Launch of xylitol pastilles in

Sweden, Norway and Denmark

Tupla + Energy

Tupla + Protein

Launch of energy- and

protein countlines in

Finland

http://www.cloetta.com/sv/files/Cloetta-Toffelnut1.jpeg

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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

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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

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• 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

Acquisition of Nutisal, The Jelly Bean Factory

and Lonka

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Pick-and-mix concept

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• 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

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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

M3

Standard Business Process

Master

Data

QlikView

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Increased sales

• Organic sales growth at least in line with

long term market growth

– Historical aggregated value growth of approx.

1-2% in Cloetta’s markets

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Target Changes in net sales,

%

Jan-Mar

2016

Jan-Mar

2015

Full year

2015

Full year

2014

Organic growth -0.7% 4.0% 1.5% 1.0%

Structural changes 4.9% 2.7% 3.9% 4.3%

Changes in exchange

rates

-0.8% 3.4% 1.4% 3.3%

Total 3.4% 10.1% 6.8% 8.6%

Sales trend

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-4,1%

1,4% 1,6%

0,6%

2,2%

-0,6%

1,7%

4,0%

0,8%

4,2%

-2,3%

-0,7%

3,0%

3,6%

5,8%

4,8%

2,7%

1,2%

6,6%

4,8% 4,9%

4 200

4 400

4 600

4 800

5 000

5 200

5 400

5 600

5 800

-6,0%

-4,0%

-2,0%

0,0%

2,0%

4,0%

6,0%

8,0%

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

SEKm

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Improved operating profit and margin

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Operating profit

52

85

178

262

90

130

212

239

108

0

50

100

150

200

250

300

Q1 Q2 Q3 Q4

SE

Km

2014 2015 2016

• Operating profit margin, adjusted:

at least 14%

Sales and

Operating profit margin, adjusted, %

Target

4 859

4 893 5 313

5 674

8,9%

12,0% 11,9%

12,2%

7,0%

8,0%

9,0%

10,0%

11,0%

12,0%

13,0%

1 000

2 000

3 000

4 000

5 000

6 000

2012 2013 2014 2015

Opera

tin

g p

rofit

marg

in, adju

ste

d, %

Net

sal

es (

SEK

m)

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Attractive cash conversion

Cash conversion: Operating profit, adjusted before depreciation and amortization less capital

expenditures as a percentage of operating profit, adjusted before depreciation and amortization.

88%

67%

55%

72%

78%

83%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014 2015

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Strong cash flow from operating

activities

-35

125 93

147

-16 -23

54

116

91 44

75

290 223

163 174

367

253 330

131

500

927 957

-200

-

200

400

600

800

1 000

1 200

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

SE

Km

Cash flow from operating activities Cash flow from operating activities (rolling 12 months)

2012 2013 2014 2015 2016

2,0

2,5

3,0

3,5

4,0

4,5

5,0

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

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Financial leverage

Continued decrease in Net debt/EBITDA, x

Target

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Arial, Bold, 80 pt, white Q1 Report

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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).

Q1 highlights

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Overall market and sales development

Total sales growth of 3.4 per cent

• Positive to flat total market developments, except in Italy

• Sales grew or was unchanged in all markets except Italy, Denmark and Norway

• Organic growth -0.7 per cent facing a strong comparator

• Positive sales trend in Sweden and Finland driven by pick-and-mix

• In Denmark and Norway sales of pastilles declined and in Italy sales declined in sugar confectionery and pastilles

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Cloetta´s main markets

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1) Organic growth at constant exchange rates and comparable units -0.7 per cent for the quarter.

SEKm Jan-Mar 2016 Margin

%

Change

%

Jan-Mar

2015

Margin

% Rolling 12

Full year

2015

Net sales 1,358 3.41 1,313 5,719 5,674

Gross profit 506 37.3 3.1 491 37.4 2,226 2,211

Operating profit, adjusted 126 9.3 16.7 108 8.2 708 690

Operating profit (EBIT) 108 8.0 20.0 90 6.9 689 671

Net financial items -46 -48 -176 -178

Profit before tax 62 47.6 42 513 493

Profit for the period 44 33.3 33 397 386

Increased net sales and improved EBIT

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Changes in net sales, % Jan-Mar

2016

Jan-Mar

2015

Full year

2015

Organic growth -0.7% 4.0% 1.5%

Structural changes 4.9% 2.7% 3.9%

Changes in exchange rates -0.8% 3.4% 1.4%

Total 3.4% 10.1% 6.8%

Changes in net sales

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Net sales, Operating profit (EBIT) and

Operating profit, adjusted

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Net sales Operating profit (EBIT) Operating profit, adjusted

1193 1 238

1 303

1 579

1 313 1280

1459

1622

1358

1 000

1 100

1 200

1 300

1 400

1 500

1 600

1 700

1 800

Q1 Q2 Q3 Q4

SE

Km

2014 2015 2016

52

85

178

262

90

130

212

239

108

0

50

100

150

200

250

300

Q1 Q2 Q3 Q4

SE

Km

2014 2015 2016

74

108

193

257

108

133

194

255

126

0

50

100

150

200

250

300

Q1 Q2 Q3 Q4

SE

Km

2014 2015 2016

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Strong cash flow from operating

activities

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-35

125 93

147

-16 -23

54

116

91 44

75

290 223

163 174

367

253 330

131

500

927 957

-200

-

200

400

600

800

1 000

1 200

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

SE

Km

Cash flow from operating activities Cash flow from operating activities (rolling 12 months)

2012 2013 2014 2015 2016

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SEKm Jan-Mar

2016

Jan-Mar

2015

Rolling 12 Full year

2015

Cash flow from operating activities before changes in working

capital

121 66 752 697

Cash flow from changes in working capital 132 157 205 230

Cash flow from operating activities 253 223 957 927

Cash flows from investments in property, plant and equipment and

intangible assets

-38 -55 -144 -161

Cash flow from other investing activities - - -206 -206

Cash flow from investing activities -38 -55 -350 -367

Cash flow from operating and investing activities 215 168 607 560

Cash flow from financing activities -90 -245 -363 -518

Cash flow for the period 125 -77 244 42

Continued strong cash flow

2,0

2,5

3,0

3,5

4,0

4,5

5,0

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

2015Q1

2015Q2

2015Q3

2015Q4

2016Q1

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Continued decrease in Net debt/EBITDA, x

Target

Financial leverage

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Will in 2017 support Cloetta’s margin target of 14%

• Lonka’s sales, marketing and purchasing activities now integrated into Cloetta.

• Integration of the Roosendaal factory into Cloetta’s ERP-system has started.

• The planned closure of the factory in Dieren, the Netherlands, is progressing

according to plan.

– One-off costs and capital investments of approximately SEK 120m

– Savings from the closure of the factory, insourcing of production and synergies will

generate annual savings of at least SEK 35m

Integration of Lonka according to plan

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Profitable growth

Integration of Lonka

and closure of factory

in Dieren

Implement and drive

initiatives within pick-

and-mix

Operational

excellence in supply

chain through

Lean2020 initiative

In focus

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Italy Finland

Sweden Norway

Sweden and Denmark

Sweden and Norway

Denmark

The Netherlands

Q1 selection of product launches

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Cost structure

Raw material split 2015 Total cost split 2015 COGS split 2015

Raw material and

Packaging 62% Distribution

and warehousing

5%

Conversion cost 33%

Packaging 23%

Sugar 12%

Cocoa 9% Milk powder/

milk products 6%

Clucose syrup 6%

Polyols 5%

Other 39%

Adminstrative expenses

12%

COGS 69%

Selling expenses

19%

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Capex

-269

-211

-186

-161

-300

-250

-200

-150

-100

-50

0

2012 2013 2014 2015

SEKm

• Capex should be around 3 per cent

of net sales

Target

43

Maturity existing debt

• Handelsbanken Loan SEK 1 985m – matures Q2 2017

• Senior secured notes SEK 1 000m – matures Q3 2018

4 277

3 196 3 127 3 056

3 019

3 244 3 248 3 230 3 304

3 493 3 461

3 308

3 118

2 960

3 170

2 818

2 615

-

1

2

3

4

5

6

2 000

2 500

3 000

3 500

4 000

4 500

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Q22014

Q32014

Q42014

Q12015

Q22015

Q32015

Q42015

Q12016

Net

Deb

t / E

BIT

DA

, x

Net

Deb

t in

SE

Km

Net Debt Net Debt/EBITDA, x

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• This presentation has been prepared by Cloetta AB (publ) (the “Company”) solely for use at this presentation and is furnished to

you solely for your information and may not be reproduced or redistributed, in whole or in part, to any other person. The

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• This presentation is not for presentation or transmission into the United States or to any U.S. person, as that term is defined

under Regulation S promulgated under the Securities Act of 1933, as amended.

• This presentation contains various forward-looking statements that reflect management’s current views with respect to future

events and financial and operational performance. The words “believe,” “expect,” “anticipate,” “intend,” “may,” “plan,” “estimate,”

“should,” “could,” “aim,” “target,” “might,” or, in each case, their negative, or similar expressions identify certain of these forward-

looking statements. Others can be identified from the context in which the statements are made. These forward-looking

statements involve known and unknown risks, uncertainties and other factors, which are in some cases beyond the Company’s

control and may cause actual results or performance to differ materially from those expressed or implied from such forward-

looking statements. These risks include but are not limited to the Company’s ability to operate profitably, maintain its competitive

position, to promote and improve its reputation and the awareness of the brands in its portfolio, to successfully operate its

growth strategy and the impact of changes in pricing policies, political and regulatory developments in the markets in which the

Company operates, and other risks.

• The information and opinions contained in this document are provided as at the date of this presentation and are subject to

change without notice.

• No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness, accuracy

or completeness of the information contained herein. Accordingly, none of the Company, or any of its principal shareholders or

subsidiary undertakings or any of such person’s officers or employees accepts any liability whatsoever arising directly or

indirectly from the use of this document.

Disclaimer

cloetta - investor road show april 2016

Investor Relations