Cloetta - Roadshow presentation May 2014

Roadshow

Chicago, New York, London and Stockholm 12-16 May 2014

2

Cloetta attendees

• Joined LEAF as CEO in 2009

• Previously held various senior

management positions within

FMCG sector, including CEO of

V&S

• B.Sc. and MBA, University of

California at Berkeley

Bengt Baron President and CEO

• Joined LEAF as CFO in 2010


management positions within

Unilever, including CFO/COO

Unilever Nordic and VP Finance

Supply Chain North America

• B.Sc. in Business Administration

and Economics, University of

Uppsala

Danko Maras CFO

• Joined LEAF as SVP Corporate

Communications in 2010


management positions, including

VP Corporate Communications

in TeliaSonera, V&S and

Electrolux

• B.A. in Political Science and

Economics, University of Lund

Jacob Broberg SVP Corporate

Communications &

Investor relations

3

Cloetta – the leading Nordic confectionery player

• Leading market positions in key markets and complete

product offering

• 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. 2,500 employees in 13 countries

• Production at 10 factories in 5 countries – 96,500 tonnes

produced in 2013 (excl. Nutisal)

Complete offering

CANDY & LIQUORICE

CHEWING GUM PASTILLES

CHOCOLATE

Net Sales split 2013 Sales and underlying EBIT margin1)

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

By region By product area

NUTS

4 859 4893

9%

12%

0%

2%

4%

6%

8%

10%

12%

14%

0

1 000

2 000

3 000

4 000

5 000

6 000

2012 2013

Underlyi

ng E

BIT

marg

in

Net

sale

s (

SE

Km

)

4

Iconic brands

1836

1878

1909

1913

1927

1928

1934

1937

1938

1941

1949

1951

1953

1960

1965

1970

1976

1979

1981

2007

Population (million): 9.5

Market size (EUR million): 1,500

Market position: #2

Top-selling brands:

Malaco, Kexchoklad, Läkerol,

Ahlgrens bilar, Polly, Center,

Juleskum, Plopp, Sportlunch

Sw

ed

en

1)


Market size (EUR million): 900

Market position: #1

Top-selling brands:

Malaco, Läkerol, Pops,

Ahlgrens bilar

No

rwa

y2)



Market position : #3

Top-selling brands:

Malaco, Lakrisal, Läkerol,

Center, Juleskum

Den

ma

rk2)


Market size (EUR million): 900

Market position: #2

Top-selling brands:

Malaco, Jenkki, Mynthon,

Läkerol, Sisu, Tupla

Fin

lan

d1)


Market size (EUR million) : 1,500

Market position: #2

Top-selling brands:

Sportlife, XyliFresh, King,

Red Band, Venco Neth

erla

nds

3)



Market position : #2

Top-selling brands:

Sperlari, Dietor, Saila,

Dietorelle

Ita

ly2)

5

Solid positions in key markets

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)

6

Best in class route-to-market

Supermarkets Convenience stores /

gas stations Other

• Customer relations

– Large and efficient sales

organisation in place on 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

7

Attractive non-cyclical market

Market development in Cloetta’s main markets1) Key trends

• 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

Market size by region Consumer behaviour

• 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

Clear strategy to deliver profitable growth

Asset-light growth with low risk combined with potential upside from acquisitions

• Acquisitions

• New geographies

New territory

• Broaden distribution

• Promotion planning and

execution

• Advertising campaigns

• Seasonal products

• Packaging updates and

upgrades

Every day great execution

• Sizing and pricing

• Brand extensions

• Fill white spots

• Enter new categories with

existing brands

• Geographical roll-out

• Brand re-launch

• Innovations

Strategic initiatives

Examples of initiatives

9

Clear strategy to deliver profitable growth cont’d

Launch of Viva Licorice – Dutch

products in Malaco bags

Launch of Polly bilar

Sisu chewing gum – pastille stretches

into gum in a unique packaging format

Sportlife Mint – Chewing gum brand

stretches into pastilles

Re-launch of Dietorelle – new

products, new packaging and heavy

marketing investment

Launch of Chewits in Italy – Cloetta’s

UK candy

Hopea Toffee – Old brand is re-

launched

Tupla minibites – Tupla chocolate bar

stretches into minibites and biscuits

Acquisition of Goody Good Stuff

10

Stable revenues and visible earnings recovery

LTM net sales Q4 2011 – Q1 2014 LTM EBIT Q4 2011 – Q1 2014

4 658 4 699 4 791 4 826 4 859 4 902 4 821 4 856 4 893 4 959

0

1 000

2 000

3 000

4 000

5 000

6 000

2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1

Net

sale

s (

SE

Km

)

522 499

444 416 423

467

525 561

591 577

364

293

166

127 125

177

284

325

418 412

11%

11%

9%

9% 9%

10%

11% 12% 12%

12%

8%

6%

3%

3% 3%

4%

6%

7%

9% 8%

0%

2%

4%

6%

8%

10%

12%

14%

0

100

200

300

400

500

600

700

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

SE

Km

Underlying EBIT LTM Reported EBIT LTM

Underlying EBIT % LTM Reported EBIT % LTM

3 0

56

3 0

19

3 2

44

3 2

48

3 2

30

3 3

04

0

1 000

2 000

3 000

4 000

5 000

2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1

Net

debt

(SE

Km

) 11

Financial development and targets

Quarterly net sales Quarterly underlying EBIT1) Financial leverage

• Target organic sales growth: At least

in line with market growth long term

– Historical aggregate value growth of

approx. 2% in Cloetta’s markets

• Target EBIT margin: At least 14%

• Cost synergies, growth and focus on

profitability

• Target long-term net debt/EBITDA of

around 2.5x

• Objective to reach target in three

years

• Payout ratio 40-60% of net income

over time when financial target is

reached

x Net debt / Underlying EBITDA LTM

4.7x 5.1x

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

4.4x 4.7x 4.2x

1 0

84

1 2

12

1 1

59

1 4

04

1 1

27

1 1

31

1 1

94

1 4

41

1 1

93

0

200

400

600

800

1 000

1 200

1 400

1 600

Q1 Q2 Q3 Q4

Net

sale

s (

SE

Km

)

2012 2013 201447

51

124

201

91

109

160

231

77

0

50

100

150

200

250

Q1 Q2 Q3 Q4

Underlyi

ng E

BIT

(S

EK

m)

2012 2013 2014

4.4x

12

Attractive cash conversion

• Historically strong cash flow generation from the

underlying business

• Cash flow generation temporarily decreased during

2011 and 2012 due to increased CapEx in

connection with the restructuring program

Cash conversion1) development Temporarily decreased levels

1) Cash conversion defined as (Underlying EBITDA less 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

74%

84%

66%

55%

73%

30%

40%

50%

60%

70%

80%

90%

2009 2010 2011 2012 2013

54%

48%

64%

52%

61% 63%

80% 78%

71%

30%

40%

50%

60%

70%

80%

90%

2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 Q3 2013 Q4 2014 Q1

400

500

600

700

800

July 2006 July 2007 July 2008 July 2009 July 2010 July 2011 July 2012 July 2013

EU

R/t

Sugar price development

13

Cost structure

Raw material split 2013 Total cost split 2013 COGS split 2013

• The company purchases sugar in relation to the EU sugar

price 6–9 months in advance

Source: European Commission

476

€/t

719

€/t

Adminstrative expenses

12%

Selling expenses

19%

COGS 69%

Sugar; 17%

Clucose syrup; 7%

Cocoa; 7%

Polyols; 6%

Milk powder/ milk products;

6%

Other; 37%

Packaging; 20%

Raw material and Packaging;

58%

Distribution and warehousing;

5%

Conversion cost; 37%

14

Cloetta towards the future

PURPOSE / MISSION

To bring a smile to your

15

Munchy Moments is our territory!

Title

Arial, Bold, 40 pt, red

Text/Bullets, Level 1-5

Arial, Regular, 20 pt, grey

Subtitle

Arial, Bold, 40 pt, grey

16

• A significant step in to a new category in Cloetta home markets

• Cloetta will satisfy consumers in a new Munchy Moment with an established

brand in the growing nuts segment

• The growth can be further fuelled in Cloetta’s core geographies

• Nutisal will contribute with approximately 1 percentage point of growth per

year in the next 3-5 years

• The Nutisal acquisition is expected to be EPS accretive in 2015.

Acquisition of Nutisal

Title




Subtitle


17

• The nuts category is growing in Western Europe by 5-8% depending

on market

• The total market value, including private label, is approximately SEK 5

billion in the Nordic markets with Sweden and Norway as the largest

markets

• Private label accounts for approximately 1/3 of the total market.

The nuts market

Title




Subtitle


Unique dry roasting competence

18

OOH Range

Retail Range

• Unique knowledge and technology developed over decades

• No nuts supplier in Northern/Western Europe owns the technology at this scale

• Preserves the ‘real’ taste of nuts

• All ingredients dry roasted which gives a unique ‘crisp’ to the products

• Variety of mixes and flavours – all without taste enhancers

Dry roasting

19

Cloetta towards the future

PURPOSE / MISSION

To bring a smile to your

Title

Arial, Bold, 80 pt, white

Title




Subtitle


Q1 highlights

21

Continued sales growth

• Net sales of SEK 1,193m (1,127)

• Underlying EBIT of SEK 77m (91)

• Items affecting comparability of SEK -21m (-33)

• Operating profit (EBIT) of SEK 52m (58)

• Cash flow from operating activities was SEK 91m (-16)

• Factory restructurings nearing completion

• Acquisition of Alrifai Nutisal AB completed on 8 January

• Net debt/underlying EBITDA 4.4x (4.7)

Title




Subtitle


Overall market and sales development

Sales growth of 5.9 per cent

• Overall marginally positive markets

• Third consecutive quarter with organic growth

• Growth in 6 of 9 markets

• Strong growth in Denmark and Germany

• Sales decline in Italy driven by market decline

• Decline of contract manufacturing

22

Cloetta´s main markets

SEKm Jan-Mar

2014

Margin

%

Change

%

Jan-Mar

2013

Margin

%

Net sales 1,193 5.9 1,127

Underlying EBIT 1) 77 6.7 -15.4 91 8.1

Operating profit (EBIT) 52 4.4 -10.3 58 5.2

Profit for the period -12 n/a 36

1) Based on constant exchange rates, the current Group structure, excluding acquisition of Nutisal and items affecting comparability related to

restructurings.

Changes in net sales, % Jan-Mar 2014

Total 5.9%

Changes in exchange rates 2.3%

Structural changes 3.0%

Organic growth 0.6%

Q1 Net sales and EBIT

23

Title




Subtitle


Net Sales, Underlying EBIT and Cash Flow

24

Title




Subtitle


Q1 cash flow

25

SEKm Jan-Mar 2014

Jan-Mar 2013

Cash flow from operating activities before changes in working capital

-1

20

Cash flow from changes in working capital 92 -36

Cash flow from operating activities 91 -16

Cash flows from investments in property, plant and equipment and

intangible assets

-36

-54

Other cash flow from investing activities -107 31

Cash flow from investing activities -143 -23

Cash flow from operating and investing activities -52 -39

Title




Subtitle


26

• Nutisal was acquired on 8 January 2014

• A significant step into a new Munchy Moment in Cloetta home markets

• 1 April Cloetta’s Swedish sales organisation took over sales responsibility

• Nutisal was launched in Finland through Cloetta’s sales organisation

• Integration of processes and systems according to plan

Integration of Nutisal

Title




Subtitle


Factory restructuring program

Progress

27

• Factory restructurings nearing completion

• Production was terminated in the factory in Gävle at year end 2013

• Relocation of equipment during Q1 2014

• Ramp-up of production in Levice and Ljungsbro towards full capacity ongoing

• Savings will be fully realised towards the end of 2014

• Tupla insourcing to Ljungsbro proceeding according to plan

• Expected to be finalised Q3 2014

28

• 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

presentation does not constitute an invitation or offer to acquire, purchase or subscribe for securities. By attending the meeting

where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations.

• 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

Investor Relations

Cloetta - Roadshow presentation May 2014