Capital Markets Day 2019Cloetta positioned for profitable growth

Cloetta Capital Markets Day 2018Agenda

Welcome Jacob Broberg, SVP Corporate Communications & IR

Cloetta positioned for profitable growth Henri de Sauvage-Nolting, President and CEO

From volume focus to sustainable value creation Oskari Vidman, Chief Pick & Mix Officer

Building consumer centric growth Thomas Biesterfeldt, CMO

The Perfect factory Marcel Mensink, President Operations

Financial strategy and road to 14% Frans Rydén, CFO

Q&A

Summary Henri de Sauvage-Nolting

2

Henri de Sauvage-Nolting, President and CEO

Cloetta positioned for profitable growth

This is Cloetta

6.2

4

We bring a smile to your Munchy Moments

5

Category position

Strong leading local brands

Core markets in growing North Western Europe

Strong European leader in pick & mix

Scale benefits in North Western Europe vs local competition

Route to market scale in coremarkets

Locally tailored innovation

strengthsStrong brand/category positions and pick & mix scale in North Western Europe

1

1

2

1

Based on Cloetta market share in respective category in 2018.

Market

6

Candy Pastilles ChocolateChewing

gum

Pick &

mix

-

1

1

2

1

-

-

2

4

3

3

-

-

-

1

-

-

2

-

1

1

1

1

-

1

2

Strong heritage brands liked and trusted

by our consumers

Lo

ca

l Glo

ba

l Bala

nce

GlobalLocal

7

Growth in Branded Confectionery marketValue growth: Cloetta needs to step up in premiumization

SEKbn

Index

0

20

40

60

80

100

120

140

0

10

20

30

40

50

60

70

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Total market value* Index market value growth

CAGR 1,6%

*Source: Datamonitor/ Mintel

Markets: Sweden, Denmark, Norway, Finland and Netherlands

160 gr 140 gr

8

Focus on core markets and core categoriesFrom acquiring new munchy moment categories to organic growth

CORE INTERNATIONAL

9

Core strategy: Organic growth and 14% EBITFrom acquisition growth to organic growth

2012: New company

Merger Cloetta-LEAF

Listed on Stock market

HQ in Stockholm

2014: Harmonization

One ERP system

Factory rationalization & LEAN

Smaller acquisitions

2017: Structure change

Disposal of Italy

Acquisition Candyking

Overload moulded factory network

2018: Shift to organic growth

Consumer as boss

New management

ONE Cloetta

Organic growth

Sharpened strategy on the road to 14%

10

Cloetta Core Strategy

Strengthen the equity of our

core brands

Focus on core categories and

core markets, double international

Fewer and stronger innovations

to drive valorization

Create value concepts and

penetration in pick & mix

Selective acquisitions on core

categories and markets

Dri

ve

gro

wth

Zero tolerance for accidents

Strengthen brand and category

management competence

CSR to drive consumer agenda

Create a winning culture

Develop, attract and retain

skilled leaders and employeesFa

cil

itate

gro

wth

Drive cost saving activities

in the supply chain

Insource production

Improve profitability in pick & mix

Improve marketing efficiency and

internal systems and processes

Fu

nd

gro

wth

Target: Organic Sales growth in line with market and EBIT margin, adjusted at least 14%

11

Key Business PrioritiesCloetta to organic growth and 14% EBIT margin, adjusted

Branded growth

Pick & mix

to sustainable

value

Reduce costs

and

drive efficiency

Value Improvement Program+

Factory efficiency improvements

Branded business grew +1,5% at 14%+ EBIT in 2018

Four consecutive quarters of growth in 2018

Pick & mix delivers 1-2% EBIT margin

Solve profitability issues in Sweden ~ SEK -60m EBIT

in 2018

Synergy realization and insourcing

12

Cloetta Branded Business is growingBrands are 72% of total Cloetta sales

13

-2,7%

0,0%

-2,4%

0,1%

1,3%

-3,1%

-4,0%

-0,8%

2,4%

0,6%

1,6%1,4%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

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

2016 2017 2018

Unique position, fitting consumer trendsCompetitive position vs global and very local players

Leading Local

Brands

Platforms across brands

International Brands

Local Multiple markets

14

Responsible growth

Consumer as boss

NAF/NAC

Increased resource efficiency

Responsible sourcing of raw material (UTZ)

Employee development and health

Plastic reduction

Offering informed choice for consumer

15

Offering consumers the choice

IndulgenceFunctional &

conscious 23 % of Sales

16

Sustainable value creation in pick & mixShort term 2019 & 2020

Turn around EBIT in pick & mix in Sweden from ~SEK -60m in 2018 to average

pick & mix EBIT

Contract and price models being re-developed

Cut cost in warehousing and distribution set-up in Sweden

Continue to insource Candyking volumes

Drive merchandising efficiency

Harmonize assortment

17

Sustainable value creation in pick & mixMedium term

Drive penetration in Finland, Denmark, Norway and the UK

Develop pick & mix category and brand offering

Develop concepts to fit all markets

E-commerce:

Scale e-commerce

-

18

Well-stocked road-map to deliver targeted 14%

EBIT margin

EBIT

margin, %

10,9%

2018

14,0%

Mid-term

Branded growth

Scale and speed in

innovation

Marketing Return

on Investment

Pick & mix portfolio

Candyking synergies

Pick & mix margin

turn-around

From volume to value

creation

Perfect Factory

Cost efficiency through

Cloetta Leading

Performance Program

Continued insourcing

including Italian volumes

Reduce indirects

New program using

ZBB methodology

Other value enhancing

initiatives

New and shared best

practices, including on

revenue management,

net productivity, portfolio

and mix management

Value Improvement Program+

19

From volume focus to sustainable valuecreationOskari Vidman, Chief Pick & Mix Officer

Pick & mix this is how it works

Service concept not only selling individual products and brands

Assortment

Wide range of products

Consumer preferences

vary by market

Mainly products from

candy and chocolate

categories

Fixtures

Play an important role in

a successful pick & mix

concept:

Branding

perspective +

How products are

displayed

Merchandisers

Fill up products into

fixtures

Keep fixtures fresh and

clean

Selling services

21

Finland

17%

Denmark

10%

Norway

23%

Sweden

30%UK

1%

Pick & mix strengths

Geographical spread

Very strong position in the Nordic countries

High share of total confectionary consumption

Consumer trend: Individualization

Pick & mix concept catering to consumers

seeking to satisfy individual needs

Consumers choosing products and services

individually

Pick & mix share of confectionery market volume

22

Finland

18 %

The UK

17 %

Denmark

16 %

Norway

6 %

Sweden

38 %

5 %

Othermarkets

23

Four pick & mix business models

Full concept covers everything from branding,

assortment and fixtures to merchandising

Trade own concept is similar to full concept but with

a retailers own branding

In Hybrid models e.g. merchandising can be

handled by the customer themselves

Bulk

pick & mix solution

Full concept55%

Trade own14%

Hybrid7%

Bulk24%

Business

models

24

Candyking acquisitionSynergies from insourcing and commercial operations

Most of the synergies from commercial operations delivered during 2018

Insourcing in line with plan

ERP system integration in UK

Sweden pick & mix turn-around to profit

55

80

100

0

20

40

60

80

100

120

2018 2019* 2020*

Accumulated synergy realizationSEKm

25

*Planned

Sweden pick & mix turn-around to profit

26

Harmonize product portfolio and manage tail-end to cut

cost

Renegotiate or exit low margin contracts

Move campaigns from volume focus to profit as well

Re-develop contract and price models

Drive merchandizing efficiency through e.g. improved

route-planning

Optimize distribution model to cut cost

Need to address the ~ SEK 60m loss in 2018

Pick & mix StrategyFrom volume focus to sustainable value creation

Offer consumers the best experience in retail trade

Drive category development together with the customer

Deliver innovative products, packages and fixtures

Be the most effective supplier when it comes to

merchandising and the efficient supply of goods

27

Fix Sweden profitability

Unique know-how in the category

Competitive advantage by providing concept solutions to trade and

strengthening branding into USP

Channel strategy

Innovative fixture solutions

Efficiency from consolidated execution with branded business

28

Pick & mix StrategyFrom volume focus to sustainable value creation

Thomas Biesterfeldt, CMO

Confectionary: an attractive market with positive emotions

Marketing: leveraging capabilities to win

Building consumercentric growth

The power of true joy!

The consumer value

30

Positive & fun category92% of consumers have positive associations with candy

Tastycheer me up

celebrate

achievement

enjoyment

Hygge

togetherness,

family

Together-time

fun

all the colors

makes me

happier

forward

Sweet

brings happiness

enjoy life

Source: Insite Consulting, 2018.

Needs-relatedTaste-related Social-related Positive emotional

31

Conscious consumers

Individualization

Local relevancy

Best agers 50+

High tech high touch

Digitalization want it now

32

Pick & mix

Local brand heritage

#Socialization

#Fredagsmys

#Hygge

Catering to a wide

audience

E-com focus

Leading

33

Strong brands liked and trusted by consumers

Lo

ca

l Glo

ba

l Ba

lan

ce

GlobalLocal

34

Gaining share in stable market environmentFull year 2018

Cloetta

share of

market

15%

+0,4ppts

22%

+1,6ppts

33%

-0,4ppts

6%

+0,2ppts

41%

-0,1ppts

*In main markets, Nielsen/IRI data

**Approx. 65% of Cloettas business is covered

Total

market

growth

+0,4% +0,3% +0,2% +0,7% -3,4%

Total

branded

Candy Pastilles Chocolate Chewing Gum

35

Candy58%

Chocolate18%

Pastilles12%

Gum6%

Nuts4%

Other2%

Portfolio: enriching joyful consumer occasions

kicking off

dinner

mountain top

adventure

the

36

Attracting new consumers

Successfully recruiting new

consumers to the brand

and category

1/4 of shoppers new to

candy bag segment

Original -30% sugar Sugar free Veggie

Red Band Range

37

Accelerate Marketing Return On Investment

Step 1: make 70% of marketing

spend visible to consumer

* Ambition for 2019

40%

55%

60%60%

45%

40%

2017 2018 2019*

Working Media % Non-Working Media % Linear (Working Media %)

Step 2: Maximize effective pure media

70% (boost hard, measure fast)

*Nielsen 2018, Sweden

38

Venco Typical Dutch,

Netherlands

full media campaign

+16% Sell-out

Sisu, Finland

full media campaign

9% MS

Glo

bal

ren

ovati

on

& a

cti

vati

on

To come soon

Exa

mp

le:

Ven

co

Exam

ple

: S

isu

Accelerate Marketing ROIInvest 70% of pure media on largest brands

39

Building scale and speed to marketEnsure cross market growth

Navigate focus

Category Strategies

Identifying future growth drivers

(aggregated)

Re-shape Innovation

New structure & capabilities to

Deliver incremental growth opportunities

Be consumer driven & cross market relevant

Bring more speed to market

40

Recipe to winMarketing: be consumer obsessed

Do we really need to be younger and more digital? Be curious, observant & think

entrepreneurial

41

Marcel Mensink, President Operations

The Perfect Factory

The Cloetta Production network

A network of factories to deliver the highest

serves and delivering the highest value.

43

New installation in Ljungsbro, 2018

New line in Turnhout

44

Creating Centers of ExcellenceVolume and technologies in 2018, tonnes

Nuts

Moulding, Extrusion, Hard boiled pastilles

Moulding

Moulded Foam, Chocolate

Moulding & enrobing Moulding

Toffees, Fudge, Nougat

Gum, Lozenges & Hard boiled

The Jelly Bean Factory

45

Consolidated procurementContract coverage to handle volatility

100 % of raw material, packaging, energy and third party (including pick & mix) is covered

3rd party suppliers, including pick & mix managed centrally creates synergies and aiming

to develop limited strategic partners excluding branded products

Contract coverage differ by commodity and market

46

Insourcing progressing Significant Candyking and Italian volumes still to be insourced

Candyking insourcing progressing well

Estimated 4,8 ktons left to be insourced 2019-2020

Investing to be able to accelerate in 2020 and 2021

Opportunity to insource further Candyking volumes

Opportunity to insource part of 6,0 ktons of Italian

volumes

Estimated 1,3 ktons 2020-2021

Italian Insourcing expected to speed up in 2021

From 70 to 30

47

kTons Candyking insourcing

*Opportunity to insource further Candyking volumes to generate

synergies beyond SEK 100m. Not confirmed.

The Perfect FactoryFrom Lean 2020 to Cloetta Leading Performance Program

The Lean 2020 program launched in 2015

The Perfect Factory programme aims to build

Repeatable, Measurable and Capable lines and

competent Employees.

In 2019 Cloetta will change the way we operate

in Cloetta manufacturing with the start of

Leading Performance Program

48

Perfect FactoryCloetta Leading Performance Program

Result

Standardized

tools

Real time data

Statistical Process

Control

Maintenance

basics

1 2

53

4

Perfect factory

Sustainable

effectTRACC

Higher OEE

Capacity increase

Quality improvement

Reduction of LTIR

Predictability

Higher engagement

49

Invest to growCapacity investments needed

10% capacity increase in moulding technology

Additional capacity will support

Growth in branded packaged products

Realization of additional Candyking synergies (insourcing)

Insourcing of volumes produced in previously Cloetta-owned Italian plants

Investment approximately SEK 100m will debottleneck current lines in Turnhout and Levice

New capacity will gradually be available from 2020

50

Financial strategy and road to 14%Frans Rydén, CFO

51

Pivot to profitable organic growth and

targeted EBIT margin, adjusted

Background

Change

Outlook

Historic sales growth driven by acquisitions

Record of margin gains from synergy and factory restructuring

Solid cash flow and healthy leverage

Attractive dividend doubled in 3 years

Shift to organic growth with good fit acquisitions on top

Sustainable margin gains through cost control and addressing pick & mix

Organic growth in line with market

Purposeful climb to targeted 14% EBIT margin, adjusted

Continued strong cash flow, leverage and dividends

52

Leverage and dividend on targetGrowth and margin trailing

Organic Growth*

EBIT Margin, Adj

Net Debt /

EBITDA

Dividend Policy

(share of profit)

Targets

40-60%

-1.2%

10.4%

2.4

54%

-2.8%

10.9%

2.3

60%

2017 2018

*Growth at constant exchange rates

1-2%

(In line with

market)

53

Sales growth historically driven by acquisitionsShift to organic growth with selective acquisitions on top

0,20,1 0,3 1,1

0,5

Candyking

acquisition

6,2

Nutisal acquisition2012

4,9

Jelly Bean

acquisition

Lonka acquisition

-0,7

Italy Disposal Forex, Other 2018

2014 2014 2015 2017 2017 2012-2018

SEKbn

54

Good progress on branded growth in 2018Offset by lost contract for pick & mix

55

-2,7

0,0

-2,4

0,1 1,3

-3,1 -4,0-0,8

2,4 0,6 1,6 1,4

-15%

-10%

-5%

0%

5%

10%

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

2016 2017 2018

7,7

12,9

6,9 6,8

-18,1

10,5

1,5

7,8

-3,3

-19,4-15,6

-13,5

-20%

-10%

0%

10%

20%

72%

28%

Branded business, % of total sales

Pick & mix business, % of total sales

Growth,%

Scale

Core categories

Core markets

Sizeable targets that will generate scale and have impact on existing business

Turnover ~ 200m

Product portfolio in at least one or more of our core categories

Branded business with low level of private label sales

Footprint in existing core markets of Cloetta

Targets in adjacent markets is assessed based on relevance

Synergy realization and solid financial returns

Updated acquisition criterias set for good fit

structural growth

56

432

585632

690 695

604

677

8,9%

12,0% 11,9% 12,2%

13,6%

10,4%10,9%

5,0%

9,0%

13,0%

17,0%

0

100

200

300

400

500

600

700

800

2012 2013 2014 2015 2016 2017 2018

Operating profit, adjusted Operating profit margin, adjusted

Target

Track record of margin gains through

restructuring and synergies

57

SEKm

Margin

14,0%

Synergies and factory

restructuring from Cloetta

LEAF merger

Candyking margin

dilution, unfavorable

FX, production cost

*

*From 2016 and onwards, Italy is discontinued operations and excluded from result

Well-stocked road-map to deliver targeted 14%

EBIT margin, adjusted

EBIT margin,

adjusted, %

10,9%

2018

14,0%

Mid-term

Branded growth

Scale and speed in

innovation

Marketing Return

on Investment

Pick & mix portfolio

Candyking synergies

Pick & mix margin turn-

around

From volume to value

creation

Perfect Factory

Cost efficiency through

Cloetta Leading

Performance Program

Continued insourcing

including Italian volumes

Reduce indirects

New program using

ZBB methodology

Other value enhancing

initiatives

New and shared best

practices, including on

revenue management,

net productivity, portfolio

and mix management

Value Improvement Program+

58

Value Improvement Program Plus: New holistic and company-wide program to safeguard delivery of the roadmap

One program for value-creating initiatives, using industry-leading practices and

grounded in Zero Based Budgeting principles

Transparency to confirm effort and money is spent where it matters the most to deliver

profitable growth and targeted EBIT

Accountability for building blocks, with overlaps managed and no drill-sites missed

Rigor in tracking of actuals and fulfillment of commitments

To reduce indirect spend in SG&A and Operations, Cloetta has engaged Accenture for spend

analysis and value targeting including benchmarking and best practices

59

4,9

4,24,0

3,0

2,4 2,4 2,3

0

1

2

3

4

5

6

2012 2013 2014 2015 2016 2017 2018

Cash flow Net debt/EBITDA ratio, x

Target 2,5

SEKm

Solid cash flow and healthy leverage

157

408

492

697

813

532

792

330

131

500

927889

712

628

0

100

200

300

400

500

600

700

800

900

1 000

2012 2013 2014 2015 2016 2017 2018

Cashflow from Operating activities, before changes in WC Cashflow from Operating activities

60

Capital allocation principlesSupports growth and continues to prioritize dividends

Invest for growth

Targeted M&A

Dividends

Repayment of debt

Increased investments in working media to fuel branded growth

Investment in production capabilities for growth and future insourcing

Footprint in existing core geographies and categories of Cloetta

Clear objective of synergy realization and solid financial returns

Maintaining attractive dividend target of 40-60% of profit for the period

Keep stable debt ratio in line with target to maintain flexibility for M&A

DividendsMaintaining attractive dividend target of 40-60% of profit for the period

61

Cash Flow supports temporary step-up in CAPEX

in 2019-2020 including Candyking insourcing

269

211

186

161170

157

184

5,5%

4,3%

3,5%

2,8%

3,3%

2,7%3,0%

~5,0%

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

0

50

100

150

200

250

300

350

2012 2013 2014 2015 2016 2017 2018 2019

CAPEX CAPEX/Sales

CAPEX/

Deprecation ratio 1,6 1,2 0,9 0,7 0,8 0,7 0,8

2019-2020

3,5%

Temporary step-up, including

announced Candyking

integration CAPEX*

*Part of the previously announced Candyking integration cost of SEK 175m

62

Target

Dividend payout

of 40 60 per

cent of profit for

the period

* 2017 excluding special dividend

Attractive dividend doubled in 3 years

0 0 0

37%

53% 54%

60%

0%

10%

20%

30%

40%

50%

60%

70%

2012 2013 2014 2015 2016 2017* 2018

Dividend

per share, SEK

0,0 0,0 0,0 0,50 0,75 0,75 1,00

63

Pivot to profitable organic growth and

targeted EBIT margin

Background

Change

Outlook

Historic sales growth driven by acquisitions

Record of margin gains from synergy and factory restructuring

Solid cash flow and healthy leverage

Attractive dividend doubled in 3 years

Shift to organic growth with good fit acquisitions on top

Sustainable margin gains through cost control and addressing pick & mix

Organic growth in line with market

Purposeful climb to targeted 14% EBIT margin, adjusted

Continued strong cash flow, leverage and dividends

64

Q&A