Roadshow London, Paris and Stockholm2012 2013 2014 47 51 124 201 91 109 160 231 77 110 178 0 50 100...

Roadshow

London, Paris and Stockholm

17-21 November 2014

2

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 11 factories in 6 countries – 96,500 tonnes

produced in 2013 (excl. Nutisal and The Jelly Bean Factory)

Complete offering

CANDY & LIQUORICE

CHEWING GUM PASTILLES

CHOCOLATE

Net Sales split 2013 Sales and underlying EBIT margin1)

By region By product area

NUTS

4 859 4 893

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

)

1) Underlying EBIT based on constant exchange rates and the current company structure (excluding

acquisitions, distribution business in Belgium and third-party distribution agreement in Italy) and excluding

items affecting comparability

3

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 per country 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

Title

Arial, Bold, 40 pt, red

Text/Bullets, Level 1-5

Arial, Regular, 20 pt, grey

Subtitle

Arial, Bold, 40 pt, grey

Strong local brands

4

1836

1878

1909

1913

1927

1928

1934

1937

1938

1941

1949

1951

1953

1960

1965

1970

1976

1979

1981

1998

2007

Sweden Norway

Denmark

Finland

Netherlands Italy

5

Solid positions in key markets

6

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

7

Clear strategy to deliver profitable growth

• 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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Subtitle



8

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9

10


Examples

Plopp

Pride

Limited edition during the Pride festival

Ahlgrens bilar

Glassbilar

Limited edition during the summer

Juleskum

Pepparkaka

Taste of 2014

11

Strategic initiatives

Examples

Viva Licorice

Launch of Dutch products

under Malaco brand

Sportlife Mint

Chewing gum brand

stretches into pastilles

AKO

Re-launch of AKO toffee

Cloetta

Launch of Cloetta

chocolate in Finland

Polly

Co-branding - Polly bilar

Dietorelle

Re-launch of Dietorelle –

new products and new

packaging

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

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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

12

13

Growing revenues and earnings

LTM net sales Q4 2011 – Q3 2014 LTM EBIT Q4 2011 – Q3 2014

4 658 4 699 4 791 4 826 4 859 4 902 4 821 4 856 4 893 4 959 5 066 5 175

0

1 000

2 000

3 000

4 000

5 000

6 000

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

Net

sale

s (

SE

Km

)

Convergence between underlying

EBIT and operating profit in Q3, 2014

522 499

444 416 423

466

524 560

591 577 578 596

364

293

170

131 125

177

284

325

418 412 443

490 11%

11%

9% 9% 9%

10%

11% 12%

12% 12% 12% 12%

8%

6%

3%

3% 3%

4%

6%

7%

9% 8% 9%

9%

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

2014Q2

2014Q3

SE

Km

Underlying EBIT LTM Operating profit LTM

Underlying EBIT % LTM Operating profit % LTM

14

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. 1-2% 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

• Target: Payout ratio 40-60% of net

income over time when financial

target is reached

x Net debt/ Underlying EBITDA LTM

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

1 2

38

1303

0

200

400

600

800

1 000

1 200

1 400

1 600

Q1 Q2 Q3 Q4

Net

sale

s (

SE

Km

)

2012 2013 2014

47

51

124

201

91

109

160

231

77 1

10

178

0

50

100

150

200

250

Q1 Q2 Q3 Q4

Un

derl

yin

g E

BIT

(S

EK

m)

2012 2013 2014

4.6x 5.1x 4.4x 4.7x 4.2x 4.4x 4.6x 4.5x

3 0

56

3 0

19

3 2

44

3 2

48

3 2

30

3 3

04

3 4

93

3 4

61

0

1 000

2 000

3 000

4 000

5 000

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

Net

deb

t (S

EK

m)

1) Underlying EBIT based on constant exchange rates and the current company structure (excluding acquisitions, distribution business in

Belgium and third-party distribution agreement in Italy) and excluding items affecting comparability

15

Attractive cash conversion

Cash conversion development1)

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

54%

48%

64%

53%

60% 63%

80% 78%

71% 72%

80%

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 2014 Q2 2014 Q3

Raw material

and Packaging;

58% Distribution and ware-housing;

5%

Con-version

cost; 37%

16

Cost structure

Raw material split 2013 Total cost split 2013 COGS split 2013

Admin-strative

expenses 12%

Selling expenses

19%

COGS 69%

Sugar; 17%

Clucose syrup; 7%

Cocoa; 7%

Polyols; 6% Milk

powder/ products;

6%

Other; 37%

Packaging 20%

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Large fluctuations of raw material prices

17

• Important raw materials for Cloetta with substantial changes:

– Cocoa prices record-high

– Steep increase in prices on hazelnuts

– Almond prices have increased

– Sugar prices have decreased

• Price changes will be necessary

18

Cloetta towards the future

PURPOSE / MISSION

To bring a smile to your

19

Munchy Moments is our territory!

Title




Subtitle


20

• The acquisition of Nutisal is a significant step into a new category with an

established brand in Cloetta´s home markets

– Dry roasted nuts which gives a unique ‘crisp’ to the products

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

– Nutisal is expected to be EPS accretive in 2015

• The Jelly Bean Factory brand is a premium “gourmet” product that fits

Cloetta’s core offering within sugar confectionery

– Solid growth over the recent years with an attractive EBIT-margin

– Significantly strengthens Cloetta’s position in the UK

Acquisition of Nutisal and The Jelly Bean Factory

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Pick-and-mix concept in Coop

21

• Cloetta will launch a pick-and-mix concept in Coop Sweden early 2015

– Handling of product range, racks and merchandising

– Also a concept for natural snacking, e.g. nuts

• Cloetta can utilize a wide range of products and technologies from several markets

and factories

• Cloetta has experience from the entire value chain; production, logistics,

planogram and promotional activites to drive growth

• Pick-and-mix accounts for 30% of total market volume in Sweden

• Cloetta has experience from a similar concept in Finland (Karkkikatu)

22

Questions

To bring a smile to your

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Arial, Bold, 80 pt, white

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Q3 highlights

24

Significant improvement of operating profit

• Net sales for the quarter increased by 9.1 per cent to SEK 1,303m (1,194)

• Operating profit was SEK 178m (131)

• Underlying EBIT was SEK 178m (160)

• Cash flow from operating activities was SEK 75m (54)

• Net debt/underlying EBITDA was 4.5x (4.4). In the quarter, loans of SEK 34m were repaid.

• On 5 November Cloetta signed an agreement with Coop Sverige AB to provide them with a new

pick-and-mix concept starting in 2015.

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Subtitle


Overall market and sales development

Sales growth of 9.1 per cent

• Slightly positive markets, except Finland

• Organic growth -0.6 per cent for the quarter, +0,7 for the first nine months

• Sales grew or remained flat in all markets, except Sweden and Norway

• Warm summer contributed to lower sales in Sweden and termination of a pick-and-mix contract contributed to lower sales in Norway

• Customer conflict in the Netherlands impacted sales somewhat, but has been resolved

• Market shares grew in most markets

25

Cloetta´s main markets

SEKm Jul-Sep

2014

Margin

%

Change

%

Jul-Sep

2013

Margin

%

Net sales 1,303 9.12) 1,194

Underlying EBIT 1) 178 14.9 11.3 160 13.3

Operating profit (EBIT) 178 13.7 35.9 131 11.0

Profit for the period 87 1.2 86

1) Based on constant exchange rates and current Group structure, excluding acquisitions and items affecting comparability related to restructurings.

2) Organic growth at constant exchange rates and comparable units was -0.6 per cent for the quarter.

Changes in net sales, % Jul-Sep 2014

Total 9.1%

Changes in exchange rates 3.9%

Structural changes 5.8%

Organic growth -0.6%

Q3 Net sales and EBIT

26

Title




Subtitle


Net Sales, Underlying EBIT and Cash Flow

27

1 127 1 131 1 194

1 441

1 193 1 238

1 303

0

200

400

600

800

1 000

1 200

1 400

1 600

Q1 Q2 Q3 Q4

SE

Km

2013 2014

91

109

160

231

77

110

178

0

50

100

150

200

250

Q1 Q2 Q3 Q4

SE

Km

2013 2014

-16 -23

54

116

91

44

75

-40

-20

0

20

40

60

80

100

120

140

Q1 Q2 Q3 Q4

SE

Km

2013 2014

Net sales Underlying EBIT Cash flow from operating activities

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Subtitle


Convergence between underlying EBIT

and operating profit

28

423

591

77

110

178

125

418

52

85

178

8,7%

12,0%

6,7%

9,4%

14,9%

2,6%

8,5%

4,4%

6,9%

13,7%

2012 2013 2014 Q1 2014 Q2 2014 Q3

SE

Km

Underlying EBIT Operating profit Underlying EBIT % Operating profit %

Title




Subtitle


Q3 Cash Flow

29

SEKm Jul-Sep 2014

Jul-Sep 2013

Cash flow from operating activities before changes in working capital 152 132

Cash flow from changes in working capital -77 -78

Cash flow from operating activities 75 54

Cash flows from investments in property, plant and equipment and

intangible assets

-38 -42

Other cash flow from investing activities -13 3

Cash flow from investing activities -51 -39

Cash flow from operating and investing activities 24 15

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Factory restructuring program completed

30

• Production of Tupla chocolate has been fully insourced in Ljungsbro.

• All pieces of the factory restructuring puzzle have fallen into place and the restructuring program initiated in 2012 is completed.

• Savings will be fully realised towards the end of 2014.

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Subtitle


New pick-and-mix concept to Coop

31

• The contract with Coop Sweden to provide them with a new pick-and-mix concept

was signed on 5 November

• The concept will be implemented in all Coop’s approximately 700 stores during the

first quarter of 2015

– Product range, racks and merchandising

– Incremental yearly sales of approximately SEK 200m – somewhat lower in 2015

• Svensk Rikstäckande Butiksservice (one of Sweden´s largest merchandising

companies) to handle merchandising

• The name of the concept will be “Godisfavoriter” (Candy favorites) and

“Natursnacks” (Natural snacks)

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Subtitle


Large fluctuations of raw material prices

32

• Important raw materials for Cloetta with substantial changes:

– Cocoa prices record-high

– Steep increase in prices on hazelnuts

– Almond prices have increased

– Sugar prices have decreased

• Price changes will be necessary

http://www.google.se/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.fool.com.au/2014/04/01/house-prices-to-double-by-mid-october/&ei=z6hhVKrdF8PsO56ggZAO&bvm=bv.79189006,d.ZWU&psig=AFQjCNGx-T4G4bwanRUcgpaA5GulEDnJ-A&ust=1415772632266343

http://www.google.se/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRw&url=http://www.fool.com.au/2014/04/01/house-prices-to-double-by-mid-october/&ei=z6hhVKrdF8PsO56ggZAO&bvm=bv.79189006,d.ZWU&psig=AFQjCNGx-T4G4bwanRUcgpaA5GulEDnJ-A&ust=1415772632266343

Title




Subtitle


In focus

33

Profitable growth

Integration and

acceleration of

Nutisal and The

Jelly Bean Factory

Implementation of

Coop-agreement

Pricing based on

raw material

changes

Q3 selection of product launches 34

RedBand

PretMix

Magische Festmix

Launched in the Netherlands.

Läkerol

XTREME Apple Mint

Launched in Norway.

AKO

Mint, Cream and Chok

Launched in Sweden.

Mynthon

ZipMint

Launched in Finland.

Venco

Droprondo´s

Dropuitdeelmix

Launched in the Netherlands.

Cloetta

Sprinkle Mint & Crispy rain

Sprinkle Salted icecream waffel


Jenkki

Professional Clean Feel


Fünf Kräuter

Relaunched in

Sweden.

Malaco

Gott&Blandat Familiy bag x 3

Launched in Sweden.

Läkerol

HALS Ginger Lemon

Launched in Sweden.

Läkerol

Licorice Mint

Launched in Norway

and Denmark.

35

• 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

Roadshow London, Paris and Stockholm2012 2013 2014 47 51 124 201 91 109 160 231 77 110 178 0 50 100...

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Transcript of Roadshow London, Paris and Stockholm2012 2013 2014 47 51 124 201 91 109 160 231 77 110 178 0 50 100...