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Q4 2014 presentation

Scandinavian market leader in chicken products

25 February 2015

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• Market leading supplier of chicken products in Scandinavia

• Chicken consumption growing for reasons of health and affordability,

but still behind other developed countries

• Strong brands and product innovation

• Well-invested production infrastructure, more efficiency to come

from sharing best-practice

• Scandinavian chicken has among the best health and animal

welfare standards in the world

What is Scandi Standard?

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• Lower net sales due to loss of ICA Norway contract as of April 1-Higher sales in Sweden and Denmark-Increase of 3% excl. ICA Norway in local FX

• Higher adjusted EBIT and margin -Better sales mix

-Cost savings

-More favourable inventory position

• Significantly lower finance costs-Refinancing of bank loans

• Higher net income and EPS-Lower interest expense and tax

• Better cash flow -Favourable working capital compared to last year

Financial highlights of Q4 2014

MSEK

Q4

2014

Q4

2013 Change

Net sales 1,252.0 1,306.8 -4%

-at constant FX - - -6%

EBIT* 79.6 77.0 +3%

Margin* 6.4% 5.9% -

Net income* 48.1 16.5 +192%

EPS*, SEK 0.80 0.33 +143%

Op. Cash

flow 64.5 -53.2 N.A.

*Adjusted for non-comparable items of -6.1 (-19.8) MSEK in EBIT.

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Financial highlights of full year 2014

• Net sales up in SEK, flat at constant

FX –increase in Sweden and Denmark-Increase of 7% excl. ICA Norway in local FX

• Adjusted EBIT and margin down due

to ICA Norway contract

• Lower finance costs -Average interest rate in Q4 2014 was 2.6% vs

6.5% in 2013

• Adjusted net income increased by 63%

and EPS by 48%

• Strong cash flow, better inventory

position

MSEK 2014

Pro

forma

2013

Change

Net sales 5,267.2 5,192.4 1%

-at constant FX - - 0%

EBIT* 301.0 317.2 -5%

Margin* 5.7% 6.1% -

Net income* 145.1 89.2 63%

EPS*, SEK 2.63 1.78 48%

Op. Cash

flow438.1 176.1 149%

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*Adjusted for non-comparable items of -62.5 (-154.3) MSEK in

EBIT. Page 4

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• Net sales up 3% in the fourth quarter, and 9% for full year

• Adjusted EBIT and margin improved for both periods-Higher operational efficiency and improved mix

-Weak fourth quarter 2013 with high inventory levels

• Retail market for chicken products increased by ≈3% in value for full year

• Integration of Bosarpskyckling completed, creates new platform for

growth in premium organic segment-Distribution expanded and two more organic farmers added

• Kronfågel position strengthened through product innovation -Minutfilé remained strong through the year

Sweden – strong growth in sales and earnings

ProformaMSEK Q42014 Q42013 Change 2014 2013 Change

Netsales 488.0 473.5 3% 2,055.2 1,883.4 9%

Adj.EBIT 33.9 16.9 101% 113.8 74.9 52%

Adj.EBITmargin,% 6.9% 3.6% - 5.5% 4.0% -4

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• Net sales up 3% in quarter, and 2% for full year in constant FX

• Sales of chilled products up, partly offset by lower export sales

• Adjusted EBIT improved, stable margin for the full year

• Retail market for chicken products in 2014 flat in value vs 2013

• Operational efficiency gains partly offset by continued price pressure

Denmark – slight uplift in sales and margins

Change Pro forma Change

MSEK Q4 2014 Q4 2013 Change constant FX 2014 2013 Change constant FX

Net sales 554.3 513.5 8% 3% 2,209.2 2,066.5 7% 2%

Adj. EBIT 32.3 23.4 38% 32% 104.3 95.3 9% 4%

Adj. EBIT margin, % 5.8% 4.6% - - 4.7% 4.6% - -

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• Net sales down 29% in quarter and 16% for full year in constant FX-Increase of 11% excl. ICA contract for full year (terminated 1 April 2014)

• Lost sales to ICA partly offset by new product listings and sales, but at

slower rate than anticipated

• Decline in EBIT and margin because of the ICA contract, partly offset by

replacement sales and operational savings

• Retail market for chicken products grew overall by ≈4% in value for full year,

but was down in Q4.

Norway – sales down with reduced margins

MSEK Q4 2014 Q4 2013 ChangeChange,

constant FX 2014Pro forma

2013 ChangeChange,

constant FX

Net sales 278.8 389.3 -28% -29% 1,270.0 1,538.6 -18% -16%

Adj. EBIT 25.0 36.1 -31% -32% 119.8 162.7 -26% -25%

Adj. EBIT margin, % 9.0% 9.3% - 9.4% 10.6%

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Norway – market drop

• Intensive media coverage

regarding bacteria in chicken

impacting sales in Q4 and

continuing into 2015

• We believe Scandinavian chicken

is of the highest quality due to

the strict standards for animal

health

• Actions: Communication plan,

cost cutting, industry/authorities

response

• History suggests that food scares

pass away. However, timing is

uncertain.

*) Source: Nielsen Research

14%

10%

14%

12%

4%

13%12%

4%

2%

-2%-3%

-2%

-21%

-15%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Norway retail, chilled chicken. Monthly growth rates (Y/Y)

-9% since October

Jan’14 Sep’14 Jan’15

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Good cash flow

• Strong increase in 2014, inventory reduction vs inventory build-up in 2013.

• In Q4, inventory increase mostly in Norway, offset by better receivables and

payables.

• Capex for year in line with plan, approx. half was development and half

maintenance.

Adjusted operating cash flow

MSEK Q4 2014 Q4 2013 2014

Pro forma

2013

Adjusted EBITDA*) 118.8 117.0 470.2 479.0

Capital expenditure -63.2 -46.5 -141.3 -164.0

Change in inventories -35.6 -84.9 91.6 -155.3

Change in other working capital 44.5 -38.8 17.6 14.4

Adjusted operating cash flow 64.5 -53.2 438.1 176.1

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Reduced debt and working capital

• Working capital down to 6.6% of net sales from 9.4% at year-end 2013

• New credit facility established as of July 2014 reducing interest costs

• Leverage down to 3.0x from 3.3x at year-end 2013.

• Increase in equity to 886.2 (432.4) MSEK mainly due to the conversion of shareholder loans to shares on IPO.

MSEK 31-dec-14 31-dec-13

Inventory 546.6 624.4

Receivables 417.4 496.2

Payables -614.1 -635.0

Net working capital 349.9 485.6

- as % of net sales 6.6% 9.4%

Net debt 1,405.5 1,598.1

Net debt / EBITDA 3.0 3.3

Equity 886.2 432.4

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• Scandi Standard progressed in many fields in 2014

• Centralised operations clearly generating efficiency gains across the group

• Stronger innovation plans and sharing of ideas

• Initiatives in commercial optimisation and category development

• Chicken consumption continues to grow in all countries

• Strong capital structure following IPO, to support future growth

• Group organisation strengthened

Summary of 2014

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Our medium-term financial targets set at the time of the IPO

are unchanged:

• Annual average organic growth in net sales in line with or above

growth in the market

• An EBITDA margin exceeding 10%

• Net debt/EBITDA within the range of 2.0 to 2.5 times EBITDA

• Dividend of 60% of income for the period, on average over time

• Proposed dividend for 2014 is 1.30 SEK per share, corresponding to

approx. 54% of adjusted income for the year

Financial targets

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Q & A

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Non-comparable items

• Lower non-comparable costs in Q4

• All categories above now completed

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Disclaimer

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. 14