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Welcome to CMD 2008

Welcome to CMD 2008. Preben Bager, CEO. Capital Markets Day, Agenda. Company history in brief. Kitchens Doors Windows Building products. Focus on kitchens. IPO. Organic growth and acquisitions. 1995. 1996. 1997. 1998. 1999. 2000. 2001. 2002. 2003. 2004. 2005. 2006. 2007.

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Welcome to CMD 2008

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  1. Welcome to CMD 2008

  2. Preben Bager, CEO

  3. Capital Markets Day, Agenda 2008

  4. Company history in brief • Kitchens • Doors • Windows • Building products • Focus on • kitchens • IPO • Organic growth and acquisitions 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2008

  5. 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 2008 Ack Q3 2008

  6. Sales of a broad range of kitchen solutions A group of strong kitchen brands Operations in some 10 European countries Sales through multiple channels 9,000 employees Annual net sales SEK 16 billion Nobia today For everyone, everywhere, we make kitchen dreams come true 2008

  7. Why buy a new kitchen? • The heart of the home • Interest in interior design and cooking • Fashion • Men in kitchen 2008

  8. Accelerator and brakes • Our strategy to action is • to radically reduce our costs through coordination behind the scenes but also • to increase our market presence and develop our product offering. 2008

  9. Gun Nilsson, CFO

  10. Key figures for Q3 2008 July-September 2008 • Net sales were SEK 3,690 m (3,748) • Organic growth was 1% • Operating profit (EBIT) declined by 32% to SEK 186 m (272). Negative currency effects amounted to SEK 30 m • Operating margin was 5.1% (7.3) • EPS after dilution declined by 42% to SEK 0.63 (1.09) • Operating cash flow was SEK 142 m 2008

  11. Net sales analysis • Organic growth within each region • Acquiried HTH franchise stores in Denmark • C.P.Hart in UK region 2008 and Optifit DIY bathroom operations in Cont. Europe region 2008

  12. Sales flat Negative currency effects of SEK 30 m (Jul-Sep) Store expansion in Denmark and Spain Marketing initiatives in economy segment Profit development 2008

  13. Sales and operating profit development12 month rolling in fixed currency Not adjusted for acquisitions or divestments CMD 19 November 2008

  14. Current market situation Nordic declining demand mainly related to lower activity in the new build segment UK continued weakening of demand Continental Europe weaker demand in primary markets Nobia prepares for a weaker kitchen market 2008

  15. Experiences from severe market downturns • Case studies • Myresjökök in the early 90s • HTH – “Kartoffelkuren” 1986 • UK kitchen market vs housing transactions 1988- • Novart – Finnish market downturn in the early 90s 2008

  16. 1. The downturn in the Swedish market in the early 90s Sweden - no. of kitchen cabinets 3 000 000 2 500 000 2 000 000 ~ -50% 1 500 000 1 000 000 500 000 0 1996 1997 1998 2001 2002 2003 2007 1995 1999 2000 1990 1992 2005 1989 1991 1993 1994 2004 2006 During this period Myresjökök’s sales declined by 16% from the top source: Prognoscentret 2008

  17. 2. ”Kartoffelkuren” / ”The potato cure” in Denmark 1986 Denmark - no of new build starts 35 000 30 000 25 000 ~ -60% 20 000 15 000 10 000 5 000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1981 1982 1983 1984 1985 1986 1987 1988 1989 2005 2006 2007 During this period HTH’s sales declined by 40% from the top source: Prognoscentret 2008

  18. 3. UK kitchen market vs. housing transactions Kitchens sold (thousands) Housing transactions (thousands) Sources Kitchen market volumes: JKMR Housing transactions: HMRC 2008

  19. 3. UK housing transactions vs. Nobia UK organic growth 60% 45% 30% 15% 0% -15% -30% -45% -60% 2005:3 2005:4 2006:1 2006:2 2006:3 2006:4 2007:1 2007:2 2007:3 2007:4 2008:1 2004:1 2004:2 2004:3 2004:4 2005:1 2005:2 2008:2 2008:3 Housing transactions, YoY Organic growth, UK region Although correlated, Nobia has been resilient to lower activity on the UK housing market 2008

  20. 4. The downturn in the Finnish market in the early 90s Finland - no. of kitchen cabinets (000') 2 500 2 000 ~ -50% 1 500 1 000 500 0 1995 1996 1997 1998 2000 2002 1999 2001 2003 2004 1993 2005 2007 1989 1990 1991 1992 1994 2006 During this period Novart’s sales declined by 50% from the top source: Confederation of Finnish Construction Industries RT & Novart 2008

  21. 4. Experience from Finland • Actions taken to mitigate the downturn in the early 90s 2008

  22. Demand of cabinets (X1000) Operating margin 4. Development of demand & Novart’s operating margin Cabinets, thousands 10% EBIT margin NOTE: 1992 – 1993 Restructuring of operations 2008

  23. Risks Strategic risks Business development risks Corporate governance and policy risks Operating risks Market risk (Revenue and earnings risk) Political risk Property risk Supplier risk Human capital risk Financial risks Interest rate risk Currency risk Borrowing risk Credit risk 2008

  24. Weaker demand influences • Market risk • Interest risk • Currency risk • Borrowing risk 2008

  25. Nobia’s sales to the new-build segment differ by region 100% 80% 60% Renovation 40% New-build 20% 0% Nordic Cont. Eur. UK 2008

  26. Operating cost structure Main items Depreciation and lease costs Staff costs Traded Components for products processing Material cost Assembly components 2008

  27. Value of operational leasing contracts Nominal values falling due (MSEK) 68 72 85 95 100 Based as of year-end 2007 Re-let nominal values falling due (SEK m) 2008

  28. Variable interest rates • Market risk • Interest risk • Currency risk • Borrowing risk 2008

  29. Fixed interest rate term between 1 and 3 months A change in interest rates by 100 bp increases or decreases financial net with approximately SEK 25 million Interest rate risk Interest bearing debt split by currency USD NOK 0% 2% DKK 18% SEK 38% GBP 6% Euro 36% 2008

  30. Pound-Euro • Market risk • Interest risk • Currency risk • Borrowing risk 2008

  31. Transaction effects beforehedgingJanuary – September 2008 Operating profit(SEK m) Pound – Euro SEK – NOK Pound – USD Currency change % DKR – NOK Total transaction effect January-September SEK -55 m 2008

  32. Cash flow and covenants • Market risk • Interest risk • Currency risk • Borrowing risk 2008

  33. Historic cash flow generation by quarter SEK million 2008

  34. Focusing operating cash flow Development January – September 2007 vs. 2008 SEK million 2008

  35. Financial strengthLong term target: Net debt to equity ratio should not exceed 1.0 Net debt to equity ratio • Slightly increased debt to equity ratio last three quarters • Sufficient margin to long term target 2008

  36. LoansMost of Nobia’s loan amount is in the form of a syndicated loan with 10 banks Financing 30 September 2008 SEK million The syndicated loan expires during 2011 2008

  37. CovenantsNobia has customary covenants for the syndicated bank loan • Leverage: Net Debt to EBITDA • Interest Cover: EBITDA to Net Finance Charges • Gearing: Net Debt to Equity Nobia has sufficiently healthy headroom on all covenants 2008

  38. Main financial focus ahead • Strengthen & secure operating income • Strengthen & secure improved operating cash flow • Managing capacity and structure costs • Continue to manage net debt for healthy freedom of action 2008

  39. Preben Bager, CEO

  40. Sense of urgency • Sales and profits are down • Our cost base must decrease 2008

  41. Our formula Economies of scale through co-ordination behind the scenes Multi-brand- and multi-channel strategy A group of strong kitchen brands 2008

  42. Done/To do • Organisation • Harmonisation/coordination • Low-cost supply • Adapt production capacity 2008

  43. From 14 to 8 business units Nobia UK SE/NO No-vart Hygena Poggenpohl Pronorm/EWE/FM DK Optifit UK region Nordic region Continental Europe region 2008

  44. Kitchen design is increasingly international 2008

  45. …and the answer is: The trend enables increased co-ordination 2008

  46. Service contracts A scalable and brand/channel-independent supply chain Manufacturing & Sourcing Distribution and logistic Various channels Assortment Customer Store New-build DIY chain Supply Brand A Brand B Internal & External Supply Brand C 2008

  47. Exactly the same white slab door PARMA INVITA MYRESJÖKÖK EWE 2008

  48. Central supply of appliances Previously Current ~ 10,000 35 20 Core range approach reduces the number of active articles, brands and suppliers 2008

  49. Adapt production capacityPresent plants in Finland Nastola 19,800 + 3,500 m2 Forssa 14,400 m2 2008

  50. Demand of cabinets (X1000) Operating margin Demand & Novart’s operating margin Cabinets, thousands 10% EBIT margin NOTE: 1992 – 1993 Resructuring of operations 2008

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