nobia capital market day 2011-05-26

Agenda

2

Strategy for growth and efficiency, essentials for Nobia going forward Morten Falkenberg, CEO

Financial implications Mikael Norman, CFO

Short break

Streamlined range supporting brand differentiation Björn Block, Range and Grace Pardy, Marketing

Coffee break

Purchasing and production potentials Ingemar Tärnskär, Production and Logistics

Commercial initiatives Morten Falkenberg, CEO

Retail and Professional sales, Nordic Henrik Karup Jörgensen

B2B Retail in UK and Continental Europe Christian Rösler

Short break

Magnet Retail and Trade in UK Anjum Ahmed

Hygena in France Per Kaufmann

Short break

Summing up Morten Falkenberg, CEO and Mikael Norman, CFO

Q & A session

Morten Falkenberg, CEO Strategy for growth and efficiency

3

Our strategic framework Our direction and priorities Our mindset

4

Group Management

President and CEO Morten Falkenberg

CFO Mikael Norman

Nordic Retail and professional

Henrik Karup Jørgensen CE and UK Professional

Christian Rösler

Group Marketing Grace Pardy

CE Retail Per Kaufmann

Production and Logistics Ingemar Tärnskär

UK Retail Peter Kane

Change program & IT Jonas Hård

What does it take to be a winner?

A winner must excel across the value chain

Performance management

Consumer Journey

Marketing & Innovation Logistics

Assortment and production/

sourcing

all about strong brands

8

The drivers that will help us reach our financial target

10

Financial target

10% EBIT

Growth

Efficiency

Drivers

11

Brand differentiation through innovation Commercial excellence

Radically reduced break-‐even cost Optimised asset use

4 strategic themes

Growth

Efficiency

Drivers

Bringing our strategic themes to life

12

Brand differentiation through innovation

Radically reduced break-‐even costs

Commercial excellence

Optimised asset use

Visible differentiation in our range, service proposition and store experience Innovation across all key touch-‐points

Best-‐in-‐class sales metrics and tracking systems to measure performance in lead generation, conversion and customer satisfaction Consistent and high-‐quality execution across all critical consumer/customer touch-‐points Reduced product cost through coordination and complexity reduction Streamlined cost-‐to-‐serve through process simplification and cost focus

Exploring new business opportunities that improve capacity utilisation in factories without adding complexity Increasing footfall to get more mileage out of existing store network

Gro

wth

E

ffici

ency

Our strategic mindset

13

We will earn the right to grow outside our current core.

We will focus on our strongholds key brands, categories, channels/customers.

We will treat our people as our most important asset, recognising and rewarding high performance.

We will be a customer and innovation driven business with simultaneous, relentless focus on cost and operational excellence.

Strategy for growth and efficiency

14

Lead innovation throughout the consumer

journey

Drive front-‐end excellence

Grow B2B retail

Nordic UK CE Build strong brands with clear points of differen-‐tiation

Local

Growth Drivers Brand differentiation through innovation Commercial excellence Efficiency Drivers Radically reduced break-‐even costs Optimised asset use

Financial goal 10% EBIT margin

Vision Become the leading and most profitable kitchen specialist

that inspires and fulfils kitchen dreams through a world-‐class customer experience

Savings in operations through manufacturing optimisation, productivity gains and purchasing synergies

Streamlined range to reduce complexity Funda-‐ mentals

Priorities

Themes

Mikael Norman, CFO Financial implications

16

-‐5

-‐3

-‐1

1

3

5

7

9

11

-‐7500

-‐2500

2500

7500

12500

17500

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

reality

17

Kitchens Doors Windows Building products

Focus on kitchens IPO

Organic growth and acquisitions,

increasing profitability

Declining growth, decreasing profitability

EBIT margin

Net sales

Target EBIT margin

Apr 2010 Mar 2011

Run-‐rate EBIT impact SEK m

Run-‐rate EBIT margin

impact Timeframe to

run-‐rate One-‐time costs

SEK m Comment

Range/ Purchasing 150 250 1.0 1.6% ~ 3 years 100 Net purchasing benefit including expected

raw materials increases

Production restruct. 250 300 1.6 2% 3 4 years 500 700 Will extend into 2014

Hygena turnaround 200 300 1.3 2% 2 3 years Minor

Store refurbishment program largely complete by end of 2012. Investment ~SEK 250m

Front-‐end initiatives 250 350 1.6 2.2% 2 3 years Minor Store efficiency, pricing strategy, CRM etc

Cost-‐out program 100 125 0.6 0.8% < 1 year Taken SEK 244m EBIT charge taken in Q4 2010

Total 1,000 1,300 6 8%

EBIT margin improvement

600 800 Pay-‐back in less than one year

Our plan to reach the 10% EBIT margin target

18

Brand strategy Grace Pardy

4 key strategic themes

20



Strategic Themes

Growth

Efficiency

Drivers

Growth Drivers Efficiency Drivers

A brand is more than just a logo

A brand is a set of human experiences

Where they touch we have a connection or touchpoint

A BRAND A CONSUMER

There are many contact moments between a brand and a consumer

These contact moments form a loop from first contact to sharing experiences and advocate purchase

The touch points also form a loop and support the consumer through the journey

Our brands are our most valuable assets

Our goal: Increase the value of our brands profitably

We need to organize our brands to capitalize on opportunities more effectively

Consumer insight

Brands Phase one: Magnet, Hygena, HTH, Marbodal, Norema, Sigdal 500 respondents in 5 markets Screening criteria:

o Have bought a kitchen during the last 2 years

o Planning to buy a kitchen and have started the process

60 items tested with consumer

RESEARCH CONDUCTED STARTING POINT

Different levels of consumer and brand understanding

Group consistent approach

Key analysis Category perspective

Category dynamics

Trends

Key analysis Brand perspective

Drivers behind brand choice

Brand Funnel analysis

Price/equity equation

Brand perception analysis

Brand platform

Brand Heritage

Nobia is best equipped to capitalize on key opportunities and lead in changing the game in our industry

Differentiation in an undifferentiated category

Breaking the 15 year cycle

Every 8 years Every 4 years

Consumer journey: from emotional rollercoaster to a consistent positive experience

We are establishing strong and differentiating platforms for our brands

Group brand framework processes

Global positioning framework Nobia brand mapping Positioning routes


40



Strategic Themes

Growth

Efficiency

Drivers

Growth Drivers Efficiency Drivers

Innovation driven by brand positioning across key consumer touchpoints

Brand positioning

DIGITAL RANGE

RETAIL/ SALES SERVICE

Positions drive all our activities going forward

Brand positioning

Relevant and consistent Activation

Feedback support

Community networks

Blogs

Public Relations

Service

Retail

Traffic-‐driving Promotions

Word of mouth

Recommendation of experts

Events

Sales material

Brand web sites

Potential in production and purchasing Ingemar Tärnskär

44


45



Strategic Themes

Growth

Efficiency

Drivers


46


journey


Grow B2B retail


Local






Priorities

Themes


Nobia Production roadmap From local production to brand-‐independent best-‐in-‐class service

Harvesting on the existing production set-‐up

47


Harmonization enables further consolidation and brand independence

48

Nordic brands

CE brands

UK brands Best-‐in-‐class service

90% in-house manufactured

90% purchased

High variance


Best-‐in class service to the new range and brand positions

49

50

290,000 280,000 270,000 260,000

180,000 170,000 160,000 150,000 140,000 130,000

310,000

40%

Jan-‐11

Jul-‐10

Jan-‐10

-‐15%

Jan-‐09

Jul-‐08

Jan-‐08

300,000

Jul-‐09

Closure 1 Norway & 1 Finland

Closure 1 Denmark Closure 1 Sweden

Max. capacity Weekly volumes Capacity has been reduced by 15%,

Yet still 40% over-‐capacity Cabinets / week

More focused investments

51

Potentials in Purchasing

52

New Purchasing organisation enables category expertise

Sourcing & Procurement

Sourcing Local procurement

Business navigation

Appliances Carcass Chemicals & Packaging

Fronts, Profiles & Joinery

Glass, Plastic &

Lights

Indirect material &

Investments Metal EWE-FM Hygena Nobia UK Etc.

Streamlined range creates economy of scale in purchasing

54

Well-‐balanced product specifications from Commercial, Range, Purchase and Production perspectives already on the drawing-‐board

Fewer article numbers in higher volumes

Fewer suppliers means strategic relationships with key suppliers

Past

Future

Lower purchasing cost by increasing and improving LCC sourcing

55

Review alternatives for increased sourcing from Asia and other low cost countries e.g. in Eastern Europe Review agent set-‐up to increase proportion of direct LCC sourcing

2.6-‐3.6 % EBIT margin improvement

56


journey


Grow B2B retail


Local







Priorities

Themes

Morten Falkenberg, CEO Commercial initiatives

57


58


journey


Grow B2B retail


Local

Grow B2B retail

Nordic UK






Streamlined range to reduce complexity


Funda-‐ mentals

Priorities

Themes

59

1. Retail and Professional sales, Nordic

2. B2B Retail UK and Continental Europe

3. Magnet Retail and Trade in UK

4. Hygena in France

Commercial initiatives

Henrik Karup Jörgensen, Retail and Professional, Nordic region Market update and how we will further improve margins

60


61



Strategic Themes

Growth

Efficiency

Drivers

Strong market development primarily driven by the recovering professional segment

Positive new build development Renovation growing; partly driven by government subsidies (e.g. ROT) Strong market shares

Sweden 31% Norway 48% Finland 25% Denmark 35-‐40%

Positive trend which also reflects in the financials; in Q1 EBIT has grown to 5,9% (1,4%) with a organic growth of 14%

62

Source: Prognoscentret, IFKA, Nobia analysis.

Looking forward, the kitchen market is likely to continue developing positively in Sweden and Norway

Sweden Norway

63

0

500

1000

1500

2000

2500

3000

3500

2009 2010 2011 2012 2013

Number of kitchen cabinets (t)

New build Renovation

020040060080010001200140016001800

2009 2010 2011 2012 2013



Source: Prognoscentret

After a few tough years in Denmark the market is likely to slowly catch up. The Finnish market forecast to stabilise in 2012

Denmark Finland

64

0

500

1000

1500

2000

2500

2009 2010 2011 2012 2013



0

500

1000

1500

2000

2500

2009 2010 2011 2012 2013



Source: Prognoscentret

In the Nordic, Nobia has about 300 own and franchise stores in total

Number of O&C stores and size (Apr 2011)

Market Number of stores Size (m2)

Denmark 107 89 000

Finland 69 14 000

Norway 66 26 000

Sweden 47 32 000

Export 17 2 500

Total 306 167 000

65

Moving forward, the Nordic has two clear strategic priorities to increase profitability

1. Develop our offer towards the professional segment to become an even better partner

2. Enhance the customer experience in our stores we are the kitchen specialist

67

Conclusion

Leading brands Growth from a strong base Strong positions in all sales channels

68

Christian Rösler, B2B Retail in UK and Continental Europe

69


70



Strategic Themes

Growth

Efficiency

Drivers

Asset utilization

We have the knowledge We have the capability We have the capacity in manufacturing Exploring geographic virgin territory Align our approach to the market

71

New B2B retail opportunities for Nobia

72

Kitchen specialists;

35,0%

Kitchen specialists;

32,3%

Furniture retailers; 16,0%

Furniture retailers; 18,3%

Furniture chains; 19,0%

Furniture chains; 23,7%

Contract / Building Trade; 13,0%

Contract / Building Trade; 10,0%

2006

2009

+20% -‐8% -‐23%

New entrants Channel shift

Independent furniture outlets (often organized into buying groups)

Chains such as IKEA, Conforama, BUT

The B2B retail channels are increasing in importance, and furniture chains and retailers have increased their marketshare by 20% between

2006 and 2009

B2B Customer groups

Large Scale Retailers Purchasing Associations working cross border Independent kitchen dealers

Current position and key initiatives for ewe/FM

High market share Strong brands with a clear profile Private label as option 100% Professional sales via multiple channels Growth potential -‐ domestic and export Customized category management New show room/competence center in Linz

74

75

New showroom and competence center for Intuo, Ewe and FM brands in Linz Link to:

http://www.youtube.com/nobiagroup



Conclusion

Growth area, lean and existing business model Low risk High potential Share knowledge across the Group

76

Magnet Retail and Trade in UK Anjum Ahmed


78



Strategic Themes

Growth

Efficiency

Drivers

UK Kitchen Market Indexed 2007 = 100 (£3,066m)

60

65

70

75

80

85

90

95

100

2007 2008 2009 2010

Index

-‐8% -‐8% 0%

Housing Transactions

Housing transactions still 53% down on the 2007 market peak. Personal uncertainty and lack of mortgage availability hampers recovery

0

20

40

60

80

100

120

140

mar-06 jul-06 nov-06mar-07 jul-07 nov-07mar-08 jul-08 nov-08mar-09 jul-09 nov-09mar-10 jul-10 nov-10

Housing Transactions Rolling 12 Month IndexMar 2006=100 (1.44m transactions)

House Prices

House price recovery in H2 2009 and H1 2010 is being eroded as prices fall

2011 Prices Fall 5%

Oversupply

-25%-20%-15%-10%-5%0%5%

10%15%20%25%

jan

04m

aj 0

4se

p 04

jan

05m

aj 0

5se

p 05

jan

06m

aj 0

6se

p 06

jan

07m

aj 0

7se

p 07

jan

08m

aj 0

8se

p 08

jan

09m

aj 0

9se

p 09

jan

10m

aj 1

0se

p 10

jan

11

Annual Monthly

Consumer Confidence

Consumer confidence continues to fall in 2011, Index -‐31 is now lowest point since 2008

-50-40-30-20-10

0102030

jan

03

jul 0

3

jan

04

jul 0

4

jan

05

jul 0

5

jan

06

jul 0

6

jan

07

jul 0

7

jan

08

jul 0

8

jan

09

jul 0

9

jan

10

jul 1

0

jan

11

Overall Major Purchases

Savings Ratio and Consumer Credit Measures

Savings Ratio - % of Earnings Saved

-2-1012345678

2003Q1

2004Q1

2005Q1

2006Q1

2007Q1

2008Q1

2009Q1

2010Q1

UK Consumer is untypically saving more and reducing debt

Net Change in Consumer Credit (£m)

-£2,000-£1,500-£1,000

-£500£0

£500£1,000£1,500£2,000£2,500£3,000

Jan 0

3

Jul 0

3

Jan 0

4

Jul 0

4

Jan 0

5

Jul 0

5

Jan 0

6

Jul 0

6

Jan 0

7

Jul 0

7

Jan 0

8

Jul 0

8

Jan 0

9

Jul 0

9

Jan 1

0

Jul 1

0

Jan 1

1

Net Changes in Outstanding Credit Card BalancesNet Changes in Loans & Overdrafts

Responding to market downturn

Control Costs Closing unprofitable stores Rent Negotiations Managing Productivity Re-‐negotiating utility contracts Reducing subsidy on consumer finance Reducing bad debt

Increasing customer appeal to a wider market

Maintain Retail Discipline

Background

Magnet Group

Background

2010 sales breakdown

133 mixed sites

34 retail solus

46 trade solus

113 stores

Target Customer: Small Local Builder

Generalist tradesmen They are price sensitive and do not easily become loyal Demand is driven by customer recommendations

Easy to install, time saving products

Good Counter Service

Quality Product to help their reputation

Products Available in

Stock

Products Service

http://www.magnettrade.co.uk/trade/joinery/subcategory/windows/window_styles

KPIs

Account Base Growth

Average Spend per Account

New Account Openings

Account Conversion

Sales / Visit Frequency / Average Order Value

Average Account Spend by Age

Indexed to compare older accounts versus those under 1 year Under 1 year index = 100

Account Spend: average Account Spend by age -‐ 2010 Data

0

50

100

150

200

250

Under 1 year 1-‐2 years 2-‐3 years 3-‐4 years 4-‐5 years Over 5 years

Kitchens

Joinery

Introducing CRM

Structured Lead and Account Management

Integration of Local and Central Marketing

Effective Stock Management

Increased Frequency of Accounts Trading Increased Sales

Growth opportunities through Social Housing and Private Developers

Private Developers

Social Housing

Magnet Share = 1.7%

Utilising Existing Resources to Develop Contract Channel

Utilise Existing Store Network

Utilise Existing Product

Utilise Existing Logistics

Small dedicated sales team to win contracts to be serviced by the store network

Who are our retail customers?

Appeal to customers spending in the region of £5k to £15k Self Expressionists They demand quality product and service Like variation Like recognition Household income £50k to £75k+

http://creative.gettyimages.com/source/Search/50','50','1','

The Retail Proposition Best Showroom in Town

Full Circle Service (FCS)

Web Traffic Footfall Prospects

Leads Sales

Inspirational Products

Measurable KPIs

Widening the appeal of the Magnet brand

£5k £15k £3k £15k

Increase product differentiation between collections

Rigid Cabinets Differentiated

Soft close drawers & doors

Greater Differentiation

+ Enhanced cabinet options + Enhanced colour options

+ design innovations

+ Enhanced cabinet options + Enhanced colour options + Timber Drawer boxes

+ Built in Storage as standard

Value Conscious Ranges

Summary of Magnet Focus

Tough UK market Maintain core retail principles Control costs Widen brand appeal Provide a reason to buy Stronger service

Hygena in France Turnaround Per Kaufmann

102

The French Kitchen Retail Market

103

6,7% 5,0%

0%

3%

6%

9%

0

1

2

3

2005 2010 2011

1.9

Est.

The French kitchen market growing with potential

Built in appliances kitchen specialist (GFK source) : +4.2% Vs 2010 (Invoices, end of feb)

IPEA kitchen specialist panel : +10 % Vs 2010 (orders, end of Feb 2011) Only 60% of French kitchens are equipped compared to 80% in Germany and even higher in Scandinavia. Between 2005 and 2010, the market growth is +26% and the selling surface growth is +25%.

104

2.3 2.4

(billion)

140 stores covering all of France

105


106



Strategic Themes

Growth

Efficiency

Drivers

Growth Value-‐added kitchens

New product introductions New store concept Increase sales personnel competence Put content into the brand

107

Growth -‐ New product introductions A wider range

108

Growth -‐ New product introductions New best-‐sellers

109

The Nova door

Growth New product introductions -‐ New worktops

110

High gloss worktops

Growth -‐ A new store concept

111

Growth -‐ A new store concept

Circular layout Design Studio 19 kitchens 6 Vendor boxes

112

Growth -‐ A new store concept -‐ Design studio

113

Growth -‐ A new store concept More value added

114

Growth -‐ A new store concept More value added

115

116

Link to:

First step to a more modern Hygena -‐ A new store concept improving sales







Growth -‐ A new store concept Estimated roll-‐out plan

117

2010 Dec 2

2011 Apr May Nov -‐ Dec

3 20

2012 May-‐Dec 84

2013 Apr May 31

Growth -‐ A new Store concept Customer Research

118

118

Why does this store make you want to buy?

After

Before

Kitchen presentation/expo 87% 49%

The choice of kitchens/variety of models 52% 44%

The style 47% 30%

The quality of the kitchens 24% 19%

Sales person advice 20% 20%

Functionality of the kitchens 14% 19%

Easiness to compose oneself 13% 10%

The promotions 11% 27%

Proposed services 3% 4%

The prices 2% 13%

The Shopping windows 1% 4%

Does this store make you want to buy a kitchen? After Before

Yes, very much 66% 46%

Yes 30% 28%

A little 4 % 19%

Does not comment -‐ 7%

Growth -‐ Increase sales staff competence

119

More attractive remuneration for

performers

Test each new recruit after two months.

Training for all people in sales

Technical, functional and

emotional kitchens training programs

Recruitement Process

More attractive remuneration

Technical use of drawing system

Drawing better kitchens

-‐> Negotiations with unions

-‐> Starts in June -‐> 2011-‐12 -‐> June to September

Efficiency Diminish our costs

Closures of stores and Delivery platforms Redundancies Daily operations Costs of Failures

120

Efficiency -‐ Diminish our costs

121

109 -‐ HQ: 40 -‐ Store: 40 -‐ Central WH: 21 -‐ Deliv. agencies: 8

10 stores 2 delivery platforms

Energy Cleaning Supplies Etc.

Closures Redundancies Daily Operations

Efficiency -‐ Diminish our costs

122

Suppliers Prerequisites

Supply Chain Stores

Cost of failure

The drivers that will help us reach our financial target

123

Financial target

10% EBIT

Growth

Efficiency

Drivers

Morten Falkenberg, CEO Summing up

124

125



4 strategic themes

Growth

Efficiency

Drivers

126

Q and A

www.nobia.com

127

Highlighted features

www.nobia.com

128

Highlighted features Improved search function

www.nobia.com

129

Highlighted features Improved search function Investor portal

www.nobia.com

130


Current and historical share development

www.nobia.com

131


Current and historical share development Reports and presentations at one place

www.nobia.com

132


Current and historical share development Reports and presentations at one place View and compare financial data in HTML and Excel

www.nobia.com

133


Current and historical share development Reports and presentations at one place View and compare financial data in HTML and Excel Our ownership structure

www.nobia.com

134


Current and historical share development Reports and presentations at one place View and compare financial data in HTML and Excel Our ownership structure Add Nobia events to your calendar

www.nobia.com

135


Current and historical share development Reports and presentations at one place View and compare financial data in HTML and Excel Our ownership structure Add Nobia events to your calendar Follow us

www.nobia.com

136

www.twitter.com/nobiagroup #nobiacmd11

m.nobia.com Press releases, news, reports, calendar events, subscriptions and contact information

137

Thank you

nobia capital market day 2011-05-26

Investor Relations

innovation growth innovation

target ebit margin

ceo retail

cost focus

declining growth

organic growth

ebit charge

ebit efficiency10