Cloetta - Roadshow presentation November 2013

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Roadshow presentation November 2013 (18-22 November) in New, York, London and Stockholm.

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Cloetta - Roadshow presentation November 2013

  1. 1. Roadshow presentation November 2013
  2. 2. Cloetta attendees Bengt Baron Danko Maras Jacob Broberg President and CEO CFO SVP Corporate Communications & Investor relations • Joined LEAF as CEO in 2009 • Joined LEAF as CFO in 2010 • Previously held various senior • Previously held various senior management positions within FMCG sector, including CEO of V&S • B.Sc. and MBA, University of California at Berkeley 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 2 • 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
  3. 3. The new Cloetta was formed in 2012 • The merger of Cloetta and LEAF was highly complementary in combination creating a Nordic leader with full range of confectionery products – Cloetta’s strength in the chocolate segment – LEAF’s leading operations within the sugar confectionery segments • The integration process is completed • The restructuring program proceeds according to plan • New Cloetta has a strong portfolio of iconic, local and long-established brands and has grown to become significantly larger (5x) than old Cloetta – Leading position and strong route to market in all Nordic countries, The Netherlands and Italy • New financing structure in place – Renegotiated bank facilities in August 2013 – Five year SEK 1,000m bond issue in September 2013 • Solid platform to capitalise on growth opportunities ahead – Acquisitions are a part of the Company’s growth strategy 3
  4. 4. Cloetta – the leading Nordic confectionery player • Leading market positions in key markets and complete Complete offering product offering • A portfolio of iconic local brands – top 10 brands account for CHOCOLATE 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 PASTILLES CHEWING GUM CANDY & LIQUORICE produced in 2012 Sales and underlying EBIT margin1) Net Sales split 2012 By region 7 000 By product area 14% 6 000 Sugar confectionery 49% Net Sales (SEKm) Pastilles 17% 5 000 10% 9% 4 000 Sweden 32% Norway 6% Italy 15% Finland 18% Denmark 4% 8% 6% 3 000 6% 4 859 2 000 3 452 1 000 Chocolate 18% 0% 2012 Jan–Sep 2012 Jan-Sep 2013 Others 12% Net sales Underlying EBIT margin 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 4% 2% 3 455 0 Netherlands 13% 12% Underlying EBIT margin Chewing gum 8% 10% Others 8%
  5. 5. Iconic brands 1909 1836 1878 1927 1913 1934 1928 1938 1937 1949 1941 1953 1951 5 1965 1960 1976 1970 1981 1979
  6. 6. Solid positions in key markets Top-selling brands: Market size (EUR million): Norway2) Fazer 6% Malaco, Kexchoklad, Läkerol, Ahlgrens bilar, Polly, Center, Juleskum, Plopp, Sportlunch Population (million): Market position: Mars/ Wrigley 12% Mondelez (fka Kraft) 30% Others 24% Cloetta 27% 4.9 900 #1 Brynhild 13% Malaco, Läkerol, Pops, Ahlgrens bilar Market size (EUR million): Market position : Top-selling brands: Malaco, Lakrisal, Läkerol, Center, Juleskum Galleberg 16% 5.5 1,000 900 Market position: Others 21% Nidar 20% Market position: Haribo 32% Toms 19% 16.6 Cloetta 17% 1,500 #1 Top-selling brands: Sperlari, Dietor, Saila, Dietorelle Perfetti 17% Others 51% Haribo 9% Sportlife, XyliFresh, King, Red Band, Venco Market position : Cloetta 25% Mondelez (fka Kraft) 5% Fazer 44% Top-selling brands: Market size (EUR million): #3 Valora 13% Market size (EUR million) : Others 21% Panda 5% Malaco, Jenkki, Mynthon, Läkerol, Sisu, Tupla Population (million): Cloetta 15% #2 Top-selling brands: Population (million): Top-selling brands: Population (million): Denmark2) #2 5.4 Market size (EUR million): Cloetta 24% Finland1) Market position: 1,400 Population (million): Other 28% Netherlands3) Market size (EUR million): 9.4 Italy2) Sweden1) Population (million): Mondelez (fka Kraft) 6% 60.7 Cloetta 15% 3,600 #2 Others 44% Perfetti 22% Haribo 9% Ferrero 10% 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
  7. 7. Attractive non-cyclical market Market development in Cloetta’s main markets1) 6 000 Key trends • Market driven by increase in population, higher prices and to CAGR 2000–2012: 1.2% some extent also increased per capita consumption 5 000 EURm 4 000 • Demand for differentiated and innovative products CAGR 2000–2012: 2.0% 3 000 • Strong brands gain market share 2 000 CAGR 2000–2012: 2.6% 1 000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Chocolate Sugar confectionery Chewing gum Market size by region 2012 Consumer behavior • Purchases highly impulse driven 4 000 3 500 • High brand loyalty 3 000 EURm 2 500 • Availability is an important factor for impulse driven purchases 2 000 • Appreciation of innovation – taste, quality and novelties is 1 500 1 000 important 500 0 IT NE Chocolate SE Sugar confectionery DK FI NO Chewing gum Source: Datamonitor. Note: 1) Includes Sweden, Finland, Norway, Denmark, Italy and Netherlands 7
  8. 8. Best in class route to market • Customer relations – Large and efficient sales organisation in place on all main markets – 80% of total sales generated from markets with own sales force Convenience stores / gas stations Supermarkets Other • Execution – Ensure that negotiated listing and distribution agreements are followed – Ensure good visibility on shelves and checkout lines – Implement campaigns efficiently Consumers 8 Consumers
  9. 9. 2012–2013: Focus on margin expansion Cost effectiveness focus areas • Supply chain restructuring – expected savings of approx. SEK 100m on EBITDA-level p.a. – – Implementation began June 2012 – • Gradual effect in 2013 and full effect from towards the end of 2014 Total implementation cost of approx. SEK 320–370m Cost synergies from merger – at least SEK 110m on EBITDA-level p.a. – Majority of merger effects and supply chain restructuring program within LEAF achieved as of today – Total implementation cost of approx. SEK 80m • Procurement • Process – improve internal processes and systems • Insourcing / all technologies in-house 9
  10. 10. Synergy and restructuring program Status Integration process completed • Only finalising of Tupla insourcing remains GÄVLE LJUNGSBRO Factory restructurings proceeding according to plan SNEEK ROOSENDAAL • Matching of products from the factory in Gävle TURNHOUT essentially completed in Levice and Ljungsbro LEVICE • 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 GORDONA CREMONA SAN PIETRO IN CASALE SILVI MARINA 10
  11. 11. Clear strategy to deliver profitable growth Every day great execution Strategic initiatives New territory • Broaden distribution • Sizing and pricing • Acquisitions • Promotion planning and execution • Brand extensions • New geographies • Advertising campaigns • Fill white spots • Seasonal products • Enter new categories with existing brands • Packaging updates and upgrades • Geographical roll-out • Brand re-launch • Innovations Asset-light growth with low risk combined with potential upside from acquisitions 11
  12. 12. Clear strategy to deliver profitable growth cont’d Examples of initiatives Launch of Viva Licorice – Dutch products in Malaco bags Sportlife Mint – Chewing gum brand stretches into pastilles Re-launch of Dietorelle – new products, new packaging and heavy marketing investment Launch of Polly bilar Launch of Chewits in Italy – Cloetta’s UK candy Acquisition of Goody Good Stuff Tupla minibites – Tupla chocolate bar stretches into minibites and biscuits Sisu chewing gum – pastille stretches into gum in a unique packaging format Hopea Toffee – Old brand is relaunched 12
  13. 13. Attractive cash conversion Cash conversion1) development 100% Temporarily decreased levels • Historically strong cash flow generation from the underlying business 84% 74% 80% 69% 55% 60% • Cash flow generation temporarily decreased during 2011 and 2012 due to increased CapEx in connection with the restructuring program 40% 20% 0% 2009 2010 2011 2012 Cash conversion 100% 80% 80% 60% 64% 54% 61% 63% Q1 2013 Q2 2013 52% 48% 40% 20% 0% Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q3 2013 Cash conversion 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 13
  14. 14. Cost structure Total cost split 2012 Distribution and Warehousing 6% Administrative expenses 15% Raw material and Packaging 57% Selling expenses 19% COGS 66% Raw material split 2012 COGS split 2012 Conversion cost 37% Packaging 23% Other 30% Dairy 6% Sugar 20% Polyoles 6% Cocoa 7% Glucose/ fructose 8% Sugar price development • The company purchases sugar in relation to the EU sugar price 6–9 months in advance 800 EUR/t 700 719 €/t 600 476 €/t 500 400 July 2006 July 2007 July 2008 July 2009 July 2010 July 2011 July 2012 July 2013 Source: European Commission 14
  15. 15. Financial development and targets Quarterly underlying EBIT1) Quarterly net sales 1 600 Financial leverage 250 5 000 200 4 000 1 400 Q4 2012 Q4 2013 Q1 Q2 2012 Q3 Q4 approx. 2% in Cloetta’s markets 2013 Q3 2013 x in line with market growth long term – Historical aggregate value growth of 2013 Q2 0 Q1 2013 • Target organic sales growth: At least 3 248 Q3 3 244 Q2 2012 2 000 1 000 0 Q1 4.4x 3 000 3 019 Net debt (SEKm) 201 47 0 4.7x 51 91 50 200 160 100 4.7x 3 056 400 150 124 1 194 1 159 1 131 1 212 1 084 600 1 127 800 1 404 1 000 5.1x 109 Underlying EBIT (SEKm) Net sales (SEKm) 1 200 • Target EBIT margin: At least 14% • Cost synergies, growth and focus on profitability Net debt / Underlying EBITDA LTM • 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 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 15
  16. 16. Stable revenues and visible earnings recovery LTM net sales Q4 2011 – Q3 2013 LTM EBIT Q4 2011 – Q3 2013 6 000 600 522 5 000 4 658 4 699 4 791 4 826 4 859 4 902 4 821 499 4 856 500 4 000 400 444 SEKm 3 000 300 325 7% 6% 127 3% 125 4% 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2% 0% 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4 2013 Q3 2013 Q1 2013 Q2 2013 Q3 Underlying EBIT LTM Reported EBIT LTM Underlying EBIT % LTM 16 4% 3% 0 2011 Q4 6% 177 166 100 0 8% 284 3% 1 000 9% 293 6% 200 2 000 10% 10% 9% 12% 11% 423 416 9% 364 8% 12% 467 11% 11% SEKm 14% 561 525 Reported EBIT % LTM
  17. 17. Cloetta towards the future PURPOSE / MISSION To bring a smile to your Munchy Moments 17
  18. 18. We do not serve the main meals 18
  19. 19. Munchy Moments is our territory! 19
  20. 20. Disclaimer • 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 forwardlooking 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 forwardlooking 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. 20

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