SEB Nordic Seminar

Copenhagen, 8 January 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

•  Previously held various senior 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

•  Previously held various senior 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. 2,600 employees in 12 countries

•  Production at 10 factories in 5 countries – 97,000 tonnes produced in 2012

Complete offering

CANDY & LIQUORICE CHEWING GUM

PASTILLES

CHOCOLATE

Net Sales split 2012 Sales and underlying EBIT margin1)

Finland  18%   Denmark  4%   Netherlands  13%  

Sweden  32%   Norway  6%   Italy  15%   Others  12%  

1)  Underlying  EBIT  based  on  constant  exchange  rates  and  the  current  company  structure  (excluding  distribu=on  business  in  Belgium  and  third-­‐party  distribu=on  agreement  in  Italy)  and  excluding  items  affec=ng  comparability  

By region By product area

Sugar confectionery

49%

Chocolate 18%

Pastilles 17%

Chewing gum 8%

Others 8%

4 859

3 455

3 452

9%

6%

10%

0%

2%

4%

6%

8%

10%

12%

14%

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

2012 Jan–Sep 2012 Jan-Sep 2013

Underlying E

BIT m

argin

Net

Sal

es (S

EK

m)

Net sales Underlying EBIT margin

4  

Iconic brands

1836  

1878  

1909  

1913  

1927  

1928  

1934  

1937  

1938  

1941  

1949  

1951  

1953  

1960  

1965  

1970  

1976  

1979  

1981  

Population (million): 9.4 Market size (EUR million): 1,400 Market position: #2 Top-selling brands: Malaco, Kexchoklad, Läkerol, Ahlgrens bilar, Polly, Center, Juleskum, Plopp, Sportlunch

Sw

eden

1)

Population (million): 4.9 Market size (EUR million): 900 Market position: #1 Top-selling brands: Malaco, Läkerol, Pops, Ahlgrens bilar

Nor

way

2)

Population (million): 5.5 Market size (EUR million): 1,000 Market position : #3 Top-selling brands: Malaco, Lakrisal, Läkerol, Center, Juleskum D

enm

ark2

)

Population (million): 5.4 Market size (EUR million): 900 Market position: #2 Top-selling brands: Malaco, Jenkki, Mynthon, Läkerol, Sisu, Tupla

Finl

and1

)

Population (million): 16.6 Market size (EUR million) : 1,500 Market position: #1 Top-selling brands: Sportlife, XyliFresh, King, Red Band, Venco N

ethe

rland

s3)

Population (million): 60.7 Market size (EUR million): 3,600 Market position : #2 Top-selling brands: Sperlari, Dietor, Saila, Dietorelle

Italy

2)

5

Solid positions in key markets

Cloetta 24%

Mondelez (fka Kraft)

30%

Mars/ Wrigley

12%

Fazer 6%

Other 28%

Cloetta 27%

Nidar 20% Galleberg

16%

Brynhild 13%

Others 24%

Cloetta 15%

Haribo 32%

Toms 19%

Valora 13%

Others 21%

Cloetta 25%

Fazer 44%

Panda 5%

Mondelez (fka Kraft)

5%

Others 21%

Cloetta 17%

Perfetti 17%

Haribo 9%

Mondelez (fka Kraft)

6%

Others 51%

Cloetta 15%

Perfetti 22%

Ferrero 10%

Haribo 9%

Others 44%

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)

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

0

1 000

2 000

3 000

4 000

5 000

6 000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

EU

Rm

Chocolate Sugar confectionery Chewing gum

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

CAGR 2000–2012: 2.0%

CAGR 2000–2012: 1.2%

CAGR 2000–2012: 2.6%

Market size by region 2012 Consumer behavior

•  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

Source: Datamonitor. Note: 1) Includes Sweden, Finland, Norway, Denmark, Italy and Netherlands

0 500

1 000 1 500 2 000 2 500 3 000 3 500 4 000

IT NE SE DK FI NO

EU

Rm

Chocolate Sugar confectionery Chewing gum

Status

8

2012 – 2013: Focus on margin expansion

Integration process completed

•  Only finalising of Tupla insourcing remains

Factory restructurings proceeding according to plan

•  Matching of products from the factory in Gävle essentially completed in Levice and Ljungsbro

•  Test run of matched products ongoing •  Factory in Gävle to be closed during Q1, 2014 •  Savings will be fully realised towards the end of 2014

GÄVLE

LJUNGSBRO

SNEEK

ROOSENDAAL

TURNHOUT

LEVICE

GORDONA

CREMONA

SAN PIETRO IN CASALE

SILVI MARINA

9  

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

10

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

11

Stable revenues and visible earnings recovery

LTM net sales Q4 2011 – Q3 2013 LTM EBIT Q4 2011 – Q3 2013

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

0

1 000

2 000

3 000

4 000

5 000

6 000

2013 Q3

2013 Q2

2013 Q1

2012 Q4

2012 Q3

2012 Q2

2012 Q1

2011 Q4

SE

Km

522 499

444 416 423

467

525 561

364

293

166 127 125

177

284

325

11% 11%

9% 9% 9%

10%

11% 12%

8%

6%

3% 3% 3%

4%

6% 7%

0%

2%

4%

6%

8%

10%

12%

14%

0

100

200

300

400

500

600

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

SE

Km

Underlying EBIT LTM Reported EBIT LTM

Underlying EBIT % LTM Reported EBIT % LTM

12  

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  

47

51

124

201

91 109

160

0

50

100

150

200

250

Q1 Q2 Q3 Q4

Und

erly

ing

EB

IT (S

EK

m)

2012 2013

3 05

6

3 01

9

3 24

4

3 24

8

0

1 000

2 000

3 000

4 000

5 000

2012 Q4 2013 Q1 2013 Q2 2013 Q3

Net

deb

t (S

EK

m)

1 08

4

1 21

2

1 15

9 1 40

4

1 12

7

1 13

1

1 19

4

0

200

400

600

800

1 000

1 200

1 400

1 600

Q1 Q2 Q3 Q4

Net

sal

es (S

EK

m)

2012 2013

13

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%

69%

55%

0%

20%

40%

60%

80%

100%

2009 2010 2011 2012

Cash conversion

54% 48%

64% 52%

61% 63%

80%

0%

20%

40%

60%

80%

100%

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

Cash conversion

Raw material and

Packaging 57%

Conversion cost 37%

Distribution and

Warehousing 6%

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

14  

Cost structure

Raw material split 2012 Total cost split 2012 COGS split 2012

COGS 66%

Selling expenses

19%

Administrative expenses

15% Packaging

23%

Sugar 20%

Glucose/ fructose

8%

Cocoa 7%

Polyoles 6%

Dairy 6%

Other 30%

•  The company purchases sugar in relation to the EU sugar price 6–9 months in advance

Source:  European  Commission  

476 €/t

719 €/t

15

Cloetta towards the future

PURPOSE  /  MISSION  

To bring a smile to your

16

We do not serve the main meals

17

Munchy Moments is our territory!

Title Arial, Bold, 40 pt, red

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Subtitle Arial, Bold, 40 pt, grey

18  

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

•  Cloetta will be able to satisfy consumers in a new Munchy Moment with an established brand in the growing nuts segment

•  The growth can be further fuelled utilising Cloetta’s strong route to markets in 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

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Nuts is a new territory for Cloetta

19  

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Subtitle Arial, Bold, 40 pt, grey

20  

•  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

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Unique dry roasting competence

21  

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  whichs  gives    a  unique  ‘crisp’  to  the  products      

•  Variety  of  mixes  and  flavours  –  all  without  taste  enhancers  

 

Dry roasting

22

Cloetta towards the future

PURPOSE  /  MISSION  

To bring a smile to your

Title Arial, Bold, 80 pt, white

24

•  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