Klöckner & Co - Q3 2013 Results, Press Telephone Conference, November 6, 2013

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Klöckner & Co - Q3 2013 Results, Press Telephone Conference, November 6, 2013

  1. 1. Klöckner & Co SE A Leading Multi Metal Distributor Gisbert Rühl CEO Q3 2013 Results Press Telephone Conference November 6, 2013
  2. 2. 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
  3. 3. Agenda 01 Highlights and update on strategy 02 Financials Q3/9M 2013 03 Outlook 04 Appendix 3
  4. 4. 01 • • • • • Highlights Markets in Q3 continued to be weak in Europe (-2.1% yoy)* but improved in the US (+4.6% yoy)** Klöckner & Co turnover decreased by 8.3% yoy also due to restructuring measures (-4.9%p) and further reduction of commodity business; sales down by 13.4% yoy Gross profit margin improved from 16.6% to 18.5%. Gross profit declined consequently significantly less than sales by 3.2% to €296m EBITDA of €39m (before restructuring) met guidance of €30-40m also without €6m one-off from the release of pension accruals Restructuring program KCO 6.0 far advanced: 61 out of 71 sites closed and HC reduced by more than 2,000 since 9/2011; all measures to be implemented by the end of 2013 • Optimization measures KCO WIN with EBITDA-contribution of €20m in 2014 and additional €30m in 2015 onwards initiated • FY-EBITDA target of €140m (before restructuring) and positive FCF confirmed * Source: Eurometal; turnover of distribution in Q3 in Europe yoy. ** Source: MSCI; turnover of distribution/SSC in Q3 in the US yoy. 4
  5. 5. 01 Restructuring program KCO 6.0 on track and far advanced Measures • • • • • • • Remaining measures in France and the US (optimization after integration of macsteel) to be implemented by the end of the year Total headcount reduction 2,200 = 19% (2,000 already realized) Total site closures 71 = 24% (61 already closed or sold) Total cost reduction of €190m (€107m realized) Total annual EBITDA-impact of ~€160m (€94m realized) Reduction of NWC by >€170m largely realized Additional cost of approximately €25m mainly offset by NWC release €51m 2011-2012 2013 €43m €65m €45m 2014 already realized 5 Total annual EBITDA-impact of ~€160m
  6. 6. 01 Turnaround through self-help measures visible despite weak markets KCO 6.0 EBITDA-impact Q3 KCO 6.0 EBITDA contribution €14m 39 2 Comments • 9 -23 10 44* 18 36 19 11 -14 6 29 5 16 • -4 EBITDA Q3 2012 YTD Volume Effect Price Effect KCO 6.0 GP effect KCO 6.0 Cost effect KCO 6.0 EBITDA contribution €43m 20 -23 39 14 110 2 25 39 10 44* 108 95 -14 30 4 EBITDA 9M 2012 EBITDA Q3 2013 Volume Effect Price Effect • Restructuring charges Market related GP effect: €-5m 115 OPEX 1) 29 60 16 -4 17 KCO 6.0 GP effect Market related GP effect: €-69m KCO 6.0 Cost effect OPEX1) EBITDA 9M 2013 6 • In Q3 measures contributed an additional €14m to EBITDA against prior year, ytd €43m Cost cuts achieved trough KCO 6.0 amounted to €19m in Q3, ytd €60m Negative volume and price effects of €5m in Q3 overcompensated by €14m positive KCO 6.0 effects Neagtive volume and price effects ytd of €69m for the most part compensated by €43m positive KCO 6.0 effects 1) Incl. one-off gain of €6m (ytd €13m) due to release of pension provisions.
  7. 7. 01 Further improvement potential through KCO WIN measures with short term EBITDAcontribution Reaction to still unsatisfying market environment in Europe • • • • • Optimized pricing and sales force management Improved customer relationship management Further improved sourcing to leverage price potential Reduction of logistic costs Downsizing of corporate and country holdings 2014 €20m Total annual EBITDA-impact of ~€50m 2015 €30m 7
  8. 8. SERVICES MARKETS 01 KCO WIN measures support our unchanged long-term strategy US CH + BSS EUROPEAN GENERAL LINE KCO WIN Growth market is the US where re-shoring of manufacturing will be driven by low energy and labor costs Profitable business units in Switzerland and BSS should grow further and stabilize their high earnings level Profitability of European general line distribution business has to be improved short-term  Transformation towards higher value-added services also to integrate more into the supply chains of our customers  PRODUCTS Competitive advantage against smaller and mid-size competitors by providing a brought range of multi metals and services through widespread net work structure Improvement of product portfolio by reducing commodities further and increasing sales of higher margin products 8 
  9. 9. Agenda 01 Highlights and update on strategy 02 Financials Q3/9M 2013 03 Outlook 04 Appendix 9
  10. 10. 02 Financials Q3/9M 2013 Jan. 1 – Sep. 30, 2013 Income statement Jan. 1 – Sep. 30, 2012* Q3 2013 Q3 2012* Sales € million 4,922 5,755 1,600 1,847 Gross profit € million 904 989 296 306 % 18.4 17.2 18.5 16.6 EBITDA before restructuring expenses € million 110 115 39 18 Earnings before interest, taxes, depreciation and amortization (EBITDA) € million 108 95 36 Earnings before interest and taxes (EBIT) € million 110 115 39 18 Earnings before taxes (EBT) € million 30 -15 10 -9 Net income before restructuring expenses (2012: before restructuring expenses and impairments) € million -26 -82 -8 Net income € million -31 -80 -11 -29 Net income attributable to shareholders of Klöckner & Co SE € million -31 -78 -11 -28 Earnings per share (basic) € -0.31 -0.87 -0.11 -0.28 Earnings per share (diluted) € -0.31 -0.87 -0.11 -0.28 Gross profit margin Jan. 1 – Sep. 30, 2013 Cash flow statement/ Cash flow Jan. 1 – Sep. 30, 2012* Q3 2013 18 -31 Q3 2012* Cash flow from operating activities € million -2 -86 44 - Cash flow from investing activities € million -25 -18 -11 -10 Free cash flow**) € million -27 -104 33 -10 *) Comparative amounts for 2012 restated due to the first-time adoption of IAS 19 rev. 2011. Further information can be taken from note 2 to the financial statements. **) Free cash flow = Cash flow from operating activities plus cash flow from investing activities. 10
  11. 11. 02 Gross profit and EBITDA Gross profit (€m) / Gross-margin (%) EBITDA (€m) / EBITDA-margin (%) 50* 344 47* 344* 43* 37 2.4* 2.5* 39* 2.5* 2.4* 1.8 1.9 318 306 307 17.6 17.7 Q3 2011 • 302* 17.5* 16.8 18.5* 18.6 18.0 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 296 29 1.0 21* 1.3* 303 16.6 Q4 2011 305 1.3* 24* 18.5 18 +~1%p Q3 2013 Q3 2011 • Despite further declining prices, gross profit margin improved compared to Q3 2012 mainly due to exit of low margin business Q4 2011 Q1 Q2 Q3 Q4 Q1 2012** 2012** 2012** 2012** 2013 Q3 2013 Strong cost reduction with positive effect on EBITDA-margin, generating significantly higher EBITDA yoy * Before restructuring costs and including in Q2 2013 €7m and in Q3 2013 €6m pension release; without release 2.1% EBITDA-margin in Q2 as well as in Q3. . As restated for the initial application of IAS19 revised 2011. ** 11 Q2 2013
  12. 12. 02 Strong balance sheet Assets 3,880 Non-current assets 1,107 Equity & liabilities 3,880 3,712 1,039 Equity 1,502 3,712 38.7% Inventories 1,254 1,512 40.7% 1,384 1,174 Trade payables 634 606 Other current liabilities 360 420 1,168 Non-current liabilities Trade receivables 787 843 Other current assets 122 Liquidity 610 103 559 Dec 31, 2012* Sept 30, 2013 Dec 31, 2012* Sept 30, 2013 Comments • • • • Equity ratio further solid at 41% * As restated for the initial application of IAS 19 rev. 2011. Net debt of €462m ** Gearing = Net debt/Equity attributable to shareholders of Klöckner & Co SE less goodwill from business combinations subsequent to May 23, 2013. Gearing** at 31% NWC decreased by €51m to €1,405m qoq 12
  13. 13. Agenda 01 Highlights and update on strategy 02 Financials Q3/9M 2013 03 Outlook 04 Appendix 13
  14. 14. 03 Current trading and outlook • Europe • • • US Brazil • • • China • Outlook for construction is mixed: Further recovery in U.K. expected, housing in Germany remains relatively strong but also non-res is gaining some momentum, NL seems to be through the trough, Switzerland remains healthy and France weak Automotive continues to be weak in France, is improving slightly in Germany and doing well in UK After mechanical engineering dropped significantly in the beginning of this year especially in Germany market is currently gaining momentum into 2014 through pent-up demand and improving exports Automotive, energy, HVAC, shipbuilding and residential construction were strong this year, while military equipment, non-res construction, mining, yellow goods were weak Picture will not change significantly for the most sectors except non-res construction where volumes should pick-up slightly Appliances, agricultural equipment and non-res construction are expected to stay strong, whereas demand for industrial machines, sugar mills, electronics and residential construction remain low Engineering, energy, port equipment and railway continues to be strong, whereas mining equipment and construction machinery business are expected to remain weak China's policy remains to discourage exports of primary steel products; instead, exports of value-added products, such as steel components, machinery, heavy equipment, marine oil-drilling platforms are being supported. In this area significant growth is expected 14
  15. 15. 03 • Outlook Q4 2013 • Turnover and sales to be seasonally lower but less pronounced because of improving outlook in the US • EBITDA guidance of €30 before restructuring driven by further restructuring effects kicking in • FY 2013 • Turnover and sales expected to come in below prior year`s level mainly due to weaker markets in H1 and restructuring impact • • • EBITDA target at last year`s level of €140m before restructuring costs confirmed Free cash flow expected to be again meaningful positive Net debt again to be reduced further yoy despite restructuring cash-outs 15
  16. 16. Agenda 01 Highlights and update on strategy 02 Financials Q3/9M 2013 03 Outlook 04 Appendix 16
  17. 17. 04 Appendix Financial calendar 2013/2014 November 6, 2013 Q3 interim report 2013 March 6, 2014 Annual Financial Statements 2013 May 8, 2014 Q1 interim report 2014 May 23, 2014 Annual General Meeting 2014, Düsseldorf August 7, 2014 Q2 interim report 2014 November 6, 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 17
  18. 18. Our Symbol the ears attentive to customer needs the eyes looking forward to new developments the nose sniffing out opportunities to improve performance the legs always moving fast to keep up with the demands of the customers the ball symbolic of our role to fetch and carry for our customers

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