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Capital Markets Day Stockholm, 28 November 2007

Capital Markets Day Stockholm, 28 November 2007. Agenda CMD 28 November 2007. Agenda CMD 28 November 2007. Five-fold increase in Nobia’s net sales in 10 years. Net sales, SEK m. 18000. 16000. 14000. 12000. Bath. 10000. 8000. Acquired growth. 6000. 4000. Other sales.

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Capital Markets Day Stockholm, 28 November 2007

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  1. Capital Markets DayStockholm, 28 November 2007

  2. Agenda CMD 28 November 2007 28 November 2007

  3. Agenda CMD 28 November 2007 28 November 2007

  4. Five-fold increase in Nobia’s net sales in 10 years Net sales, SEK m 18000 16000 14000 12000 Bath 10000 8000 Acquired growth 6000 4000 Other sales Övrig försäljning 2000 Organic growth 0 1995/96 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 28 November 2007

  5. Operating profit (EBIT) from negative to plus SEK 1.3 bn SEK m 1,327 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 28 November 2007

  6. Nobia is the leading kitchen company in Europe IKEA not included due to lack of official statistics. We estimate their retail sales to be approx. EUR 2 billion. 28 November 2007

  7. Mature market with steady growth Annual volume growth in the European kitchen market Source: CSIL 28 November 2007

  8. Driving forces in the market • Economic factors • Consumer confidence • New-build and renovation • Interest rates • Needs and desires • Kitchens don’t break – you want a new one 28 November 2007

  9. Housing completions – UK region source: Prognoscentret 28 November 2007

  10. Housing completions – Nordic region source: Prognoscentret 28 November 2007

  11. Housing completions – Continental European region source: Prognoscentret 28 November 2007

  12. Housing completions per capita source: Prognoscentret 28 November 2007

  13. Driving forces in the market • Economic factors • Consumer confidence • New-build and renovation • Interest rates • Needs and desires • Kitchens don’t break – you want a new one 28 November 2007

  14. Strong interest in interior decorating Kitchens largely a consumer product Fashion and design influence choice of materials and rate of replacement Trends in the European kitchen market 28 November 2007

  15. Kitchen design increasingly international 28 November 2007

  16. Larger, more individualised kitchens with designed white goods and accessories Larger portion of disposable income spent on the kitchen, resulting in rising average order values Consumers more demanding – store location, store environment – want a shopping experience! Consumer trends 28 November 2007

  17. Consumer trends 28 November 2007

  18. Growth in demand for complete kitchens expected to continue Cabinets & fronts Worktops White goods Accessories Installation and services Customer offer package 28 November 2007

  19. Agenda CMD 28 November 2007 28 November 2007

  20. Market situation November 2007 • Nordic region • The favourable market trend continues, although with a slight weakening in the new-build segment (excluding Sweden) • UK region • Market remains stable • Continental European region • Mixed picture with a decline in Germany and Netherlands 28 November 2007

  21. Performance by region January-September * Hygena joined the Group Mid February 2006 28 November 2007

  22. Earnings per share SEK Nobia’s goal for profit growth: Earnings per share shall increase over a business cycle by an average of 12 per cent annually. Average increase 2001-2007 is 15% 5.18 * +5% + 34% *) Earnings per share were SEK 4.72 in 2006 for comparable units. 28 November 2007

  23. Financial position 28 November 2007

  24. Agenda CMD 28 November 2007 28 November 2007

  25. Presentation topics • Market indicators • Risk management • Nobia’s exposure to the new-build segment • Structure of product costs • Financial position 28 November 2007

  26. Consumer confidence in the UK source: Prognoscentret 28 November 2007

  27. Housing transactions in the UK (rolling 4q) source: Prognoscentret, BoE 28 November 2007

  28. UK housing transactions vs. Nobia’s organic growth 28 November 2007

  29. Consumer confidence in the Nordics source: Prognoscentret 28 November 2007

  30. Housing transactions in the Nordics (rolling 4q) source: Prognoscentret 28 November 2007

  31. Consumer confidence in Continental Europe source: Prognoscentret 28 November 2007

  32. Nobia’s risk management focus • Operating risks • Raw material prices • Market development • Competitor activity • Currency effects • Financial risks • Commercial exposure • Financial exposure • Pensions • Funding risks 28 November 2007

  33. Operational leverage – cost allocation Examples 100% Depreciation Rent & rates Insurance 90% 80% Salaries/wages Marketing Maintenance 70% 60% 50% 40% Material Freight Bonuses 30% 20% 10% 0% Nordics Cont. Eur UK Variable Semi-variable Fixed 28 November 2007

  34. Nobia’s sales to the new-build segment differ by region 100% 80% 60% 40% 20% 0% Nordic Cont. Eur. UK New build Renovation 28 November 2007

  35. Structure of purchasing costs divided into thirds Components forprocessing Tradedproducts Assembly components 28 November 2007

  36. Directly operated stores as of 30 September Sales through directly operated stores amount to roughly 40% of Nobia’s sales 28 November 2007

  37. Strong financial position 28 November 2007

  38. Solid platform for further growth • Decentralised organisation in close proximity to local markets • Strong presence in the main channels in most markets • Healthy spread of geographical risk • Favourable visibility in the new-build segment • Continuous coordination of supply to support competitiveness 28 November 2007

  39. Agenda CMD 28 November 2007 28 November 2007

  40. Nobia’s business direction 2008-2012Continuation of set strategy • A. Organic growth through increased market focus and new and better stores. Nobia will achieve organic growth within existing operations and by opening new stores with focused and scalable concepts. • Internal efficiency will increase throughcoordinated supply and simplified structures. • Nobia will also continue to grow through acquisitions. 28 November 2007

  41. A. Structuring customer offers to improve EBIT margins • Main principles: • Continue to develop selected competitive concepts and strong market positions in Europe • Prioritise customer-friendly and attractive concepts with strong influence on the offer • Wholly owned stores and strong franchise concepts • Scalable • Direct concepts and brands towards distinct price and style segments, as well as sales channels • This approach aims to support the reduction of assortment, improve market communication and reduce costs. 28 November 2007

  42. Nobia’s main principles for kitchen offers Under development HIGH LOCAL BRAND MIDDLE LOCAL BRAND ECONOMY Scalable complete kitchen offers Local/regional complementary brands or channels 28 November 2007

  43. The range matrix – a tool to optimise the brand portfolio Under development • Style • Price 28 November 2007

  44. Nobia’s business direction 2008-2012Continuation of set strategy • A. Organic growth through increased market focus and new and better stores. Nobia will achieve organic growth within existing operations and by opening new stores with focused and scalable concepts. • Internal efficiency will increase throughcoordinated supply and simplified structures. • Nobia will also continue to grow through acquisitions. 28 November 2007

  45. B. Reduced product costs a key issue • Continue to coordinate supply • Target supply and production towards more co-ordinated assortments • Rationalise production • The supply chain aims to become less dependent of channels and brands. 28 November 2007

  46. C. Acquired growth is part of our strategy • This applies to both Nobia and Culinoma. 28 November 2007

  47. Agenda CMD 28 November 2007 28 November 2007

  48. Presentation topics • From purchasing to efficient supply chain – measures taken 2005-2007 • Strategic direction 2008-2012 28 November 2007

  49. Example: fronts (cabinet doors) Nobia sources and manufactures more than 13 million fronts per year Nobia has a total of 1,049 types Top 10 in volume represent 15% of the total volume Past acquisitions have led to a large assortment 28 November 2007

  50. Product cost is 65* per cent of Nobia’s total sales • The single largest cost within Nobia • Products becoming more pan-European due to harmonisation of consumer preferences * Direct materials and production costs 28 November 2007

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