Klöckner & Co - Q2 2013 Results
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Klöckner & Co - Q2 2013 Results

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Analysts' and Investors' Conference Call

Analysts' and Investors' Conference Call
August 7, 2013

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    Klöckner & Co - Q2 2013 Results Klöckner & Co - Q2 2013 Results Presentation Transcript

    • Klöckner & Co SE A Leading Multi Metal Distributor Q2 2013 Results Analysts’ and Investors’ Conference CEO Gisbert Rühl August 7, 2013 CFO Marcus A. Ketter
    • Disclaimer This presentation contains forward-looking statements which reflect the current views of the management of Klöckner & Co SE with respect to future events. They generally are designated by the words “expect”, “assume”, “presume”, “intend”, “estimate”, “strive for”, “aim for”, “plan”, “will”, “strive”, “outlook” and comparable expressions and generally contain information that relates to expectations or goals for economic conditions, sales proceeds or other yardsticks for the success of the enterprise. Forward-looking statements are based on currently valid plans, estimates and expectations. You therefore should view them with caution. Such statements are subject to risks and factors of uncertainty, most of which are difficult to assess and which generally are outside of the control of Klöckner & Co SE. The relevant factors include the effects of significant strategic and operational initiatives, including the acquisition or disposition of companies. If these or other risks and factors of uncertainty occur or if the assumptions on which the statements are based turn out to be incorrect, the actual results of Klöckner & Co SE can deviate significantly from those that are expressed or implied in these statements. Klöckner & Co SE cannot give any guarantee that the expectations or goals will be attained. Klöckner & Co SE – notwithstanding existing obligations under laws pertaining to capital markets – rejects any responsibility for updating the forward-looking statements through taking into consideration new information or future events or other things. In addition to the key data prepared in accordance with International Financial Reporting Standards, Klöckner & Co SE is presenting non-GAAP key data such as EBITDA, EBIT, Net Working Capital and net financial liabilities that are not a component of the accounting regulations. These key data are to be viewed as supplementary to, but not as a substitute for data prepared in accordance with International Financial Reporting Standards. Non-GAAP key data are not subject to IFRS or any other generally applicable accounting regulations. Other companies may base these concepts upon other definitions. 2
    • Klöckner & Co SE A Leading Multi Metal Distributor Highlights and update on strategy CEO Gisbert Rühl
    • Highlights and update on strategy01 Financials Q2 2013 Outlook Appendix 02 03 04 Agenda 4
    • Negative market impact increasingly compensated by far advanced restructuring measures 01 5 EBITDA-margin improved, net loss reduced • Market especially in Europe (-6.1% yoy)* but also in the US (-2.5% yoy)** in Q2 further under pressure • Turnover of Klöckner & Co declined by 9.3% yoy also due to closure and divestment of sites and exit of low margin business (-5.0%p), decline without restructuring effect 4.3% yoy, turnover went up sequentially by 2.7% • Sales -13.5% yoy additionally burdened by lower price level (excluding restructuring: -8.7%) • Gross profit of €305m under proportionally by 11.4% below prior year (€344m, before restructuring), gross margin improved from 17.5% to 18.0% • EBITDA of €43m due to cost cuts of €24m despite strong declining turnover above prior year of reported €33m but slightly below EBITDA before restructuring of €50m; EBITDA met guidance of €35-45m also without included €7m one-off from the release of pension accruals, EBITDA increased sequentially by €14m • EBIT as rep. increased by €41m to €17m, prior year €-24m was impacted by extraordinary effects, net loss similarly reduced from €-39m to €-4m • Restructuring measures far advanced: 60 out of 70 sites closed and 1.800 out of more than 2.000 HC reduced; extended measures to be implemented by the end of 2013, EBITDA contribution of €17m in Q2 and €29m in H1 realized • Operating EBITDA of between €30m-€40m expected for Q3 2013 • Full year operating EBITDA target at last year`s level of €140m (before restructuring) despite weaker H1 2013. Restructuring costs of €18m (w/o compensating effects) expected against €77m in 2012. • European ABS and Syndicated Loan each amounting to €360m prolonged until May 2016 * Source: Eurometal; turnover of distribution in Q2 in Europe yoy; contains data until May. ** Source: MSCI; turnover of distribution/ SSC in Q2 in the US yoy.
    • Against the background of continuing muted outlook for the European steel market we further extended our comprehensive restructuring program (KCO 6.0) in May 01 6 Measures • Program extension in France • Realization of further synergy potential in the US • Reduction of overall > 2,000 employees (= 17%) and ~70 sites • Total cost reduction increased to €190m • Total annual EBITDA-impact increased to ~€160m (before: €150m) • Reduction of NWC by >€170m • Additional cost of approximately €18m mainly offset by NWC release 2013 2014 €51m already realized €65m €45m Total annual EBITDA-impact of ~€160m 2011-2012 €29m
    • 01 Restructuring far advanced 7 Employees Sites • 1,800 out of more than 2,000 HC reductions completed • 60 out of 70 targeted branches closed or sold since start of program in Q3 2011 • Only extended measures concerning France and the US outstanding which are according to plan to be implemented in H2 Comments UK ESP F EEC 9,995 11,577 GER Holding US BR Q3 2011 Europe -1,200 Americas Q2 2013 -359 Reduced by ~ 1,600, including temps ~1,800 ~9,700 F, US 220 290 UK ESP EEC GER BR Q3 2011 Q2 2013 230 F, US F US Q4 2013 Q4 2013 -23
    • KCO 6.0 measures having strong impact on the P&L01 1) Restructuring costs. Total GP effect: €34m 44* -4 Price Effect -14 Volume Effect -23 EBITDA Q2 2012 OPEX 2) 29 EBITDA Q2 2013 10 KCO 6.0 Fix-cost effect 16 KCO 6.0 GP effect KCO 6.0 EBITDA expenses €17m 269274280288 -9% Q2 13Q1 13Q4 123)Q3 12 3)Q2 12 3) 294 -2.2% -2.6% -2.3% in €m KCO 6.0 EBITDA impact OPEX 8 43 7 24 20 21 6 33 -1.8% 2) Includes one-off gain of €7m due to release of pension accruals. • In Q2 measures contributed an additional €17m to EBITDA against prior year, ytd €29m • Cost cuts achieved trough KCO 6.0 amounted to €24m in Q2, ytd €40m • Gross profit despite higher margin €-34m due to lower turnover • OPEX declined by 9% compared to Q2 2012 Comments 171) 50 3) Incl. expenses due to initial application of IAS19 revised 2011 and excl. restructuring expenses.
    • KCO WIN measures to support “Klöckner & Co 2020“ strategy01 9 Enabling activities Differentiation Operations External & internal growth Service model Business model innovations • Profitable growth strategy with focus on value added products and services • Optimized net working capital • Optimized pricing and sales force management • Global sourcing to leverage price potential and global material flows • Advanced logistics • Extended e-commerce solutions • Specific value streams for servicing customers • Opportunities for disruptive innovations through fundamental business model changes Management & personnel development Controlling & IT systems • Optimized and extended management reviews and development programs • Advanced systems for Accounting, Controlling, Audit, Tax & Treasury • Extended Corporate IT • Advanced global collaboration KCO WIN Growth and optimization
    • Klöckner & Co SE A Leading Multi Metal Distributor Financials Q2 2013 CFO Marcus A. Ketter
    • Highlights and update on strategy01 Financials Q2 2013 Outlook Appendix 02 03 04 Agenda 11
    • Financials Q2 201302 12 EBITDA Sales Gross profit Turnover * Excluding restructuring costs but restated for the initial application of IAS19 revised 2011. €1,964m €1,698m -13.5% Q2 2013Q2 2012 1,863 Tto -9.3% Q2 2012 Q2 2013 1,690 Tto -13.5% Q2 2012 €43m €50m* €340m** €305m -11.4% Q2 2013Q2 2012 Q2 2013 €33m** Restructuring costs ** Including restructuring costs and restated for the initial application of IAS19 revised 2011. +31.7% €344m* -10.2%
    • Financials H1 201302 13 EBITDA Sales Gross profit Turnover €3,909m €3,322m -15.0% H1 2013H1 2012 3,720 Tto -10.3% H1 2012 H1 2013 3,336 Tto -26.1% H1 2012 €72m €683m** €608m -11.6% H1 2013H1 2012 H1 2013 €97m* €77m** Restructuring costs ** Including restructuring costs and restated for the initial application of IAS19 revised 2011. -6.5% * Excluding restructuring costs but restated for the initial application of IAS19 revised 2011. €687m* -11.1%
    • 1,690 1,763 1,765 1,636 1,857 1,863 1,764 1,585 1,646 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 1,885 1,885 1,739 1,945 1,964 1,847 1,633 1,625 1,698 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 +30.5% Turnover and sales02 Sales (€m) & Americas shareTurnover (Tto) & Americas share • Turnover down 9.3% yoy due to weak steel markets and restructuring impact of -5.0%p but sequentially up by 2.7% driven by seasonal effects • Turnover share of Americas segment continuously increasing from 32% in Q2 2011 to over 44% in Q2 2013 • Sales -13.5% yoy additionally impacted by lower price level • Average price per ton down yoy (Q2 2013: €1,004 vs. Q2 2012: €1,054) 14 -13.5% +4.5% 27.6 33.6 34.6 37.1 37.0 37.8 36.3 37.4 +2.7% -9.3% 32.4 39.5 39.5 40.5 41.1 42.3 42.7 43.5 37.5 44.3
    • EBITDA (€m) / EBITDA-margin (%) Gross profit and EBITDA02 Gross profit (€m) / Gross-margin (%) • Despite further declining prices, gross profit margin improved compared to Q2 2012 (+0.5%p) mainly due to exit of low margin business * Before restructuring costs. 15 • Strong cost reduction with positive effect on EBITDA-margin, generating significantly higher EBITDA qoq out of only slightly improved gross profit ** As restated for the initial application of IAS19 revised 2011. 62 37 24* 47* 50* 18 21* 29 43* 3.3 1.9 1.3* 2.4* 2.5* 1.0 1.3* 1.8 2.5* Q2 2011 Q3 2011 Q4 2011 Q1 2012** Q2 2012** Q3 2012** Q4 2012** Q1 2013 Q2 2013 337 318 307 344 344* 306 302* 303 305 17.9 16.8 17.6 17.7 17.5* 16.6 18.5* 18.6 18.0 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 * Incl. €7m pension release; without release 2.1% EBITDA-margin
    • 571 698 646 752 766 746 677 716 749 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 520 634 602 722 727 698 592 608 637 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 1,365 1,251 1,137 1,223 1,237 1,149 1,041 1,017 1,061 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 1,192 1,067 990 1,105 1,097 1,018 908 930 941 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Key figures by segment02 Turnover (Tto) Sales (€m) EBITDA (€m) * Restructuring costs: Europe: €3m in Q1, €17m in Q2, €-1m in Q3 and €57m in Q4; Q4 2011: €10m; Americas: €1m in Q4. Turnover (Tto) Sales (€m) EBITDA (€m) EuropeAmericas -14.3% -14.2% -2.1% -12.3% 16 ** As restated for the initial application of IAS19 revised 2011. 50 24 22* 22* 35* 12* 16* 14 28*** Q2 2011 Q3 2011 Q4 2011 Q1 2012** Q2 2012** Q3 2012** Q4 2012** Q1 2013 Q2 2013 23 15 13 29 22 12 16* 21 20 Q2 2011 Q3 2011 Q4 2011 Q1 2012** Q2 2012** Q3 2012** Q4 2012** Q1 2013 Q2 2013 *** Includes €7m release of pensions.
    • Cash flow and net debt development02 Cash flow reconciliation in Q2 2013 (€m) • NWC reduced qoq due to weak demand • Capex (net) of €-8m Comments -8 -20 -29 -12 -35 -9 18 43 EBITDA reported Change in NWC Taxes Other CF from operating activities Capex net Free CFInterest 17 Development of net financial debt in Q2 2013 (€m) Q1 2013 CF from operating activities Capex (net) Other* Q2 2013 -48913 -482 -8 -12 * exchange rate effects, interest.
    • • Equity ratio still solid at 39% • Net debt of €489m • Gearing* at 33% • NWC increased seasonally by €49m to €1,456m ** As restated for the initial application of IAS 19 rev. 2011. Strong balance sheet02 * Gearing = Net debt/Equity attributable to shareholders of Klöckner & Co SE less goodwill from business combinations subsequent to May 23, 2013. Comments 18 Assets 610 570 787 960 Liquidity Other current assets Trade receivables Inventories Non-current assets Q2 2013 3,897 100 1,198 1,069 FY 2012** 3,880 122 1,254 1,107 994 1,384 1,502 Q2 2013 Equity Non-current liabilities Current liabilities 3,897 1,132 1,251 1,514 FY 2012** 3,880 Equity & liabilities 38.7% 38.9%
    • Balanced maturity profile June 201302 19 Maturity profile of committed facilities and drawn amounts (€m) €m Facility Committed Drawn amount Q2 2013* FY 2012* Bilateral Facilities 1) 565 184 98 Other Bonds 4 4 9 ABS 570 179 161 Syndicated Loan 360 161 161 Promissory Note 269 270 348 Total Senior Debt 1,768 798 777 Convertible 2009 2) 98 92 92 Convertible 2010 2) 186 170 164 Total Debt 2,052 1,060 1,033 Cash 570 611 Net Debt 489 422 €m Q2 2013 Adjusted equity 1,493 Net debt 489 Gearing 3) 33% *Including interest 1) Including finance lease 2) Drawn amount excludes equity component 3) Net debt/Equity attributable to shareholders of Klöckner & Co SE less goodwill from business combinations subsequent to May 23, 2013 4) Incl. Swiss facilities of 156 Mio. EUR which are automatically renewed on a yearly basis Left side: committed facilities Right side: drawn amounts 52 42 261 104 112 210 67 360 8 8 11 19 46 206 371 136 160 2016 864 136 360268 186 212 98 62 2013 216 Thereafter 471 71 2015 299 186 71179 98 62 2014 ConvertiblesPromissory notesSyndicated loanABSBilaterals 4)
    • Solid financing and balance sheet structure support strategy “Klöckner & Co 2020“02 20 • Balance sheet remains strong • Equity ratio still solid at 39% • Gearing at a low level of 33% • Financing position is very robust • Diversified finance structure with 10 different finance instruments • Balanced maturity profile with average maturity of 3 years • Access to facilities of around €2.1bn in total • €570m cash • European ABS and Syndicated Loan each amounting to €360m prolonged until May 2016 • Targets for 2013 • Free cash flow positive • Reducing NWC and net debt
    • Klöckner & Co SE A Leading Multi Metal Distributor Outlook CEO Gisbert Rühl
    • Demand expectations for H203 22 As the seasonal summer slowdown approaches, markets in Europe and North America will remain quiet with prices tending overall upwards in Q3 • Construction in Germany and Switzerland slightly better, France and UK stable on low level, Spain weak • Auto is expected to be low throughout 2013, especially in France • Slightly improving demand for machinery & mechanical engineering in Germany • Auto, HVAC, barge and shipbuilding, storage tanks better • non-res construction, mining, yellow goods, machinery weaker Europe US Brazil China • Further increasing demand for agricultural equipment, trucks and in energy sector • Weaker demand for mining and sugar mills • Healthy demand for steel structures and port equipment for export • Basically all other sectors are not doing well, particularly mechanical engineering and construction equipment, which is heavily oversupplied
    • Outlook • Q3 2013 • Turnover and sales to be seasonally lower but less pronounced because of improving outlook in the US • EBITDA guidance of €30-40m driven by increasing prices and further restructuring effects kicking in • FY 2013 • Turnover and sales expected to come in below prior year`s level mainly due to weaker H1 • Operating EBITDA target at last year`s level of €140m before restructuring costs • Free cash flow expected to be positive • Net debt again to be reduced yoy despite restructuring cash-outs 03 23
    • Highlights and update on strategy01 Financials Q2 2013 Outlook Appendix 02 03 04 Agenda 24
    • Quarterly results and FY results 2008-201304 25 (€m) Q2 2013 Q1 2013 Q4 2012* Q3 2012* Q2 2012* Q1 2012* Q4 2011 Q3 2011 Q2 2011 FY 2012* FY 2011 FY 2010 FY 2009 FY 2008 Turnover (Tto) 1,690 1,646 1,585 1,764 1,863 1,857 1,636 1,765 1,763 7,068 6,661 5,314 4,119 5,974 Sales 1,698 1,625 1,633 1,847 1,964 1,945 1,739 1,885 1,885 7,388 7,095 5,198 3,860 6,750 Gross profit 305 303 298 306 340 344 307 318 337 1,288 1,315 1,136 645 1,366 % margin 18.0 18.6 18.3 16.6 17.3 17.7 17.6 16.8 17.9 17.4 18.5 21.9 16.7 20.2 EBITDA rep. 43 29 -35 18 33 44 14 37 62 60 217 238 -68 601 % margin 2.5 1.8 -2.1 1.0 1.7 2.3 0.8 1.9 3.3 0.8 3.1 4.6 -1.8 8.9 EBIT 17 2 -89 -9 -24 18 -18 8 36 -105 111 152 -178 533 Financial result -19 -19 -14 -22 -18 -25 -21 -22 -21 -80 -84 -67 -62 -70 Income before taxes -2 -16 -103 -31 -42 -8 -39 -15 15 -185 27 84 -240 463 Income taxes -2 1 -19 3 3 -4 12 3 -9 -18 -17 -4 54 -79 Net income -4 -16 -123 -29 -39 -12 -27 -12 5 -203 10 80 -186 384 Minority interests 0 0 -1 -1 0 1 -1 -1 0 -3 -1 3 3 -14 Net income KlöCo -4 -16 -122 -28 -39 -11 -27 -11 5 -200 12 78 -188 398 EPS basic (€) -0.04 -0.16 -1.22 -0.28 -0.39 -0.11 -0.27 -0.11 0.07 -2.00 0.14 1.17 -3.61 8.56 EPS diluted (€) -0.04 -0.16 -1.22 -0.28 -0.39 -0.11 -0.27 -0.11 0.07 -2.00 0.14 1.17 -3.61 8.11 *) Restated due to initial application of IAS19 revised 2011.
    • Comments Balance sheet as of June 30, 201304 26 (€m) June 30, 2013 December 31, 2012* Non-current assets 1,069 1,107 Inventories 1,198 1,254 Trade receivables 960 787 Cash & Cash equivalents 570 610 Other assets 100 122 Total assets 3,897 3,880 Equity 1,514 1,502 Total non-current liabilities 1,251 1,384 thereof financial liabilities 825 914 Total current liabilities 1,132 994 thereof trade payables 702 634 Total equity and liabilities 3,897 3,880 Net working capital 1,456 1,407 Net financial debt 489 422 Shareholders’ equity: • Remains stable at 38.9% Financial debt: • Gearing at 33% • Gross debt of €1.1bn and cash position of €0.6bn result in a net debt position of €489m *) Restated due to initial application of IAS19 revised 2011.
    • Profit & loss Q2 201304 (€m) Q2 2013 Q2 2012* Sales 1,698 1,964 Gross profit 305 340 Personnel costs -142 -163 Other operating expenses (net) -120 -144 EBITDA 43 33 Depreciation & Amortization -26 -57 EBIT 17 -24 Financial result -19 -18 EBT -2 -42 Taxes -2 3 Net income -4 -39 Minorities 0 0 Net income attributable to KCO shareholders -4 -39 27 *) Restated due to initial application of IAS19 revised 2011.
    • Segment performance Q2 201304 28 (€m) Europe Americas HQ/Consol. Total Turnover (Tto) Q2 2013 941 749 1,690 Q2 2012 1,097 766 1,863 Δ % -14.3 -2.1 -9.3 Sales Q2 2013 1,061 637 0 1,698 Q2 2012 1,237 727 0 1,964 Δ % -14.2 -12.3 -13.5 EBITDA Q2 2013 28 20 -5 43 % margin 2.6 3.2 2.5 Q2 2012* 18 22 -7 33 %margin 1.4 3.0 1.7 Δ % EBITDA 54.2 -6.6 31.7 * Restated due to initial application of IAS19 revised 2011.
    • Sales split by market, product and industry04 29 Machinery and mechanical 26% engineering Miscellaneous 10% Local dealers 12% Household appliances/ Consumer goods 6% 36% Construction industry Automotive industry 10% Sales by industry Sales by markets 38% USAFrance/Belgium 13% Switzerland 10% UK 6% 25% Germany/EEC Spain 3% Netherlands 3% Brazil 1% China <1% 21% Long products Quality steel/Stainless steel 8% Aluminium 7% Tubes 7% 46% Flat productsOthers 11% Sales by product
    • Current shareholder structure04 30 Geographical breakdown of identified institutional investors Comments • Identified institutional investors account for 51% • German investors incl. retail dominate • Top 10 shareholdings represent around 25% • Retail shareholders represent 30% As of July 2013. Other EU 4% US 42% Other World 7% Switzerland 6% Germany 24% France 8% UK 9%
    • Appendix04 31 Financial calendar 2013/2014 August 7, 2013 Q2 interim report 2013 November 6, 2013 Q3 interim report 2013 March 5, 2014 Annual Financial Statements 2013 May 7, 2014 Q1 interim report 2014 June 6, 2014 Annual General Meeting 2014, Düsseldorf August 6, 2014 Q2 interim report 2014 November 5, 2014 Q3 interim report 2014 Contact details Investor Relations Christian Pokropp, Head of Investor Relations & Corporate Communications Phone: +49 203 307 2050 Fax: +49 203 307 5025 E-mail: christian.pokropp@kloeckner.com Internet: www.kloeckner.com
    • Our Symbol the ears attentive to customer needs the eyes looking forward to new developments the nose sniffing out opportunities to improve performance the ball symbolic of our role to fetch and carry for our customers the legs always moving fast to keep up with the demands of the customers