President and CEO David Nuutinen comments on the results for the second quarter of 2016

Good sales growth and improved operating profit.
Cloetta’s sales were up in the quarter, both organically and through
acquisitions. Operating profit (EBIT) for the quarter improved and amounted to
SEK 142m (130). Operating profit, adjusted for items affecting comparability,
also strengthened to SEK 150m (133). Profit after tax increased to SEK 77m (66).
Both operating profit margin and operating profit margin adjusted, improved to
10.4 per cent (10.2) and 11.0 per cent (10.4) respectively. The improvement in
profit and margins was mainly driven by higher efficiency in supply chain but
also growth in sales.

Strong cash flow
Cash flow from operating activities before changes in working capital improved
to SEK 149m (100). Cash flow from changes in working capital was negatively
impacted by the increase of inventories mainly related to build up of seasonals
and changes in production planning. Cash flow from operating activities
therefore amounted to SEK 114m (163). Cloetta’s cash-generating ability has thus
been further demonstrated. The ambition is to use future cash flows for
repayment of debt and distributions of dividends, while at the same time
providing financial flexibility for complementary acquisitions.

Stable net debt/EBITDA ratio despite dividend payments
The net debt/EBITDA ratio has decreased compared to the same quarter of last
year, but was stable compared to the first quarter of 2016. During the quarter,
dividend of SEK 144m (–) was paid. The net debt/EBITDA ratio at the end of the
quarter was 2.82x (3.30). The long-term target is a net debt/EBITDA ratio of
2.5x. Loans of SEK 90m (34) were repaid during the quarter.

Confectionery market
The confectionery market was predominantly negative in Finland, the Netherlands,
Norway and Denmark. In Sweden and Italy, market development remained unchanged.

Good sales growth
Cloetta’s sales for the quarter increased by 6.4 per cent, of which organic
growth accounted for 2.0 per cent, the acquisition of Lonka for 4.9 per cent and
exchange rate differences for –0.5 per cent.

Sales in the quarter were up in Sweden, Finland, Norway and Denmark. In Germany,
sales were flat. The positive trend in Sweden was driven by both improved
distribution among certain customers and higher sales in pick-and-mix, while
Finland was fuelled by pick-and-mix sales and pastilles.

Sales were down in the UK, the Netherlands, Italy and the export markets. The
reported drop in sales in the UK is partly attributable to a weaker British
pound following the Brexit referendum. Less than 5 per cent of the Group’s sales
come from the UK and the possible future impact of Brexit is therefore not
expected to be material for Cloetta. The decrease in sales in the Netherlands is
explained by weak market development. In Italy Cloetta’s sales were slightly
down, although the total market there stabilised during the quarter.

Closure of factory in Dieren according to plan
The planned closure of the factory in Dieren, the Netherlands, as part of the
integration of Lonka following the acquisition one year ago, is proceeding
according to plan and production there is expected to cease at the end of 2016.
Expansion of the factory in Levice, Slovakia, to which production from Dieren
will be transferred at the beginning of 2017, is under construction. As
previously communicated, the acquisition of Lonka is expected to generate annual
cost savings of approximately SEK 35m.

Continued gradual improvement
Cloetta is returning to organic growth, which is highly satisfying.

In the past quarter Cloetta continued its gradual improvement in both operating
profit and operating margin. The net debt/EBITDA ratio has decreased in relation
to the same quarter of 2015 and was largely unchanged compared to the first
quarter of 2016, despite the payment of dividend during the quarter. We have
thus taken further steps towards meeting our long-term financial targets.

This information is information that Cloetta AB is obliged to make public
pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The
information was submitted for publication, through the agency of the contact
person set out below, at 08.00 a.m. CET on 15 July 2016.
Media contact
Jacob Broberg, SVP Corporate Communications & Investor Relations, +46 70 190 00
33.
About Cloetta
Cloetta, founded in 1862, is a leading confectionary company in the Nordic
region, the Netherlands, and Italy. In total, Cloetta products are sold in more
than 50 countries worldwide. Cloetta owns some of the strongest brands on the
market, such as Läkerol, Cloetta, Jenkki, Kexchoklad, Malaco, Sportlife, Saila,
Red Band and Sperlari. Cloetta has 13 production units in six countries.
Cloetta’s class B-shares are traded on Nasdaq Stockholm. More information about
Cloetta is available on www.cloetta.com