1. Klöckner & Co SE
A Leading Multi Metal Distributor
Klöckner & Co SE
Full Year Results 2011
Roadshow March 2012
CEO/CFO
Gisbert Rühl
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
00
4. Highlights FY 2011 and until today
• Turnover and sales significantly improved by 25.4% and 36.5% respectively
• EBITDA (€217m) below last year (€238m) leading to a slightly positive net income (€10m)
not fully compensating the weight of economic downturn
• Delivering on “Klöckner & Co 2020” strategy exceeding first time €7bn sales
• Transforming deal with Macsteel catapulting us from #10 to #3 in the US
• Pilot acquisition in emerging markets with Frefer in Brazil
• First SSC in China opened
• Capital raising for further growth, €1bn growth capital available
• Immediate reaction with profitability action plan
• Expansion of the Board of Management to reflect importance of Americas segment to be
more than one third
01
4
5. We delivered on what we promised01
Guidance for FY 2011 delivered
Turnover growth > 25% 25.4%
Sales growth > 35% 36.5%
Increase in EBITDA vs. €238m in 2010 €217m
Gearing < 75% 29.0%
Equity ratio > 30% 39.2%
Net debt < €500m €471m
5
7. Strategy “Klöckner & Co 2020”: Progress in 201102
• Acquisition of Macsteel in the US and Frefer in Brazil contributed to
increased annual turnover by 25% from 5.3m to to 6.7m to and sales
by 37% from €5.2bn to €7.1bn
• Successful market entry in China
• Market out-performance in the US supported by continued
investment in value added processing
• Market under-performance in Europe also because of product
portfolio adjustments, esp. in Q4
• Structural measures across all country organizations
• Headcount reduction by 6% vs. Q3 or ~700 employees
• Targeting 1%p-EBITDA margin improvement, i.e. ~€70m p.a.
• One-off costs low double digit fully offset with disposal proceeds
• Status Q4: headcount reduction of ~200 already, €10m one-offs in Q4
• Management reviews completed
Organic growth
strategy
Management &
Personnel
Development
Business
optimization
External growth
strategy
2010 2011
Turnover
5.3m to
6.7m to
Market Klöckner Market Klöckner
KCO vs. market growth
+2.3%
Management Review
Level 1
Level 3
Level 2
25
70
165
Division Managers Holding
Direct Reports of Country C
Department Managers Holding
Direct Reports of 2nd level
with Mgmt. Functions
Level 1
Level 3
Level 2
25
70
165
C-Level of Countries
Division Managers Holding
Direct Reports of Country C-Lev.
Department Managers Holding
Direct Reports of 2nd level
with Mgmt. Functions
Board
+25%
-3.8%
US EU
7
Headcount reduction
-196
Q3 2011 FY 2011
11,381
11,577
8. Update on major acquisitions and their integration02
Frefer/Brazil
• Sales contribution since consolidation on June 1
€59m
• Turnover 75Tto since June 1
• Structurally difficult market with longerlasting
overcapacities due to strong local currency which
attracted imports and affected exports. As a
consequence local mills are pushing more steel
through their local distribution channels
• Changing the business model to add more value
added processing and niche products to differentiate
from mill tied distributors; i.e. through redundant
equipment transfer from the US to Brazil
• Sharing best practices and knowledge transfer within
the Americas segment
• Consolidation of locations to create efficiencies
Kloeckner Metals US (MSCUSA/Namasco)
• Sales contribution of €781m since consolidation in May 1,
annualized segments„ sales impact > 1/3
• Turnover 0.8 million Tons since consolidation in May 1
• EBITDA not yet satisfactory but progressing well into 2012
• Combined NWC significantly reduced by tighter inventory
management through central purchasing
Synergies:
• Purchasing synergies realized in transaction prices and
rebates
• Joint headquarters in Roswell, Georgia
• Common sales force already realizing cross selling effects
• Realignment of group operations along product lines
complete
• Common brand since March 1 with Kloeckner Metals US
• Conversion of Macsteel locations to common IT platform
by mid year
8
9. Strategy “Klöckner & Co 2020”: Targets for 201202
• At least no focus in H1
• Further market outperformance in the US after the integration of Macsteel through
significant cross-selling effects
• Further reduction of highly commoditized businesses in Europe should be partially
compensated by increasing sales of higher value products
• Full implementation of profitability action plan measures
• Full implementation of country specific projects and measures
• Implementation of a common performance management
Organic growth
strategy
Management &
Personnel
Development
Business
optimization
External growth
strategy
9
16. Net income slightly positive in 201103
• Tax rate high i.a. to non-recognition of deferred
tax assets on losses incurred in 2011
• FY net income affected by restructuring
charges and ppa on intangibles driven D&A
effects of €39m
Net income by quarter (€m) Comments
12
2
47
15 17
44
5
-12
-27
Q4
2009
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Net income by full year (€m)
-21
-20
-12
-186
-17
10
Net Income
FY 2009
Net Income
FY 2010 EBITDA D&A
Financial
Result Taxes
Net Income
FY 2011
80
16
17. Cash flow slightly positive before capex and acquisitions03
* exchange rate effects, interest
Cash flow reconciliation in FY 2011 (€m)
EBITDA
Change in
NWC Taxes Other
CF from
operating
activities
Capex
net Acquisitions Free CF
-127
-37
-47
-38
217
6
-444 -476
• Capex (net) with €38m below D&A ex ppa
• Purchase prices paid for acquisitions (€444m)
mainly caused the negative free cashflow
Comments
17
18. Capital increase partly compensated acquisition related debt increase03
* exchange rate effects, interest
Development of net financial debt in FY 2011
(€m)
2010
CF from
operating
activities Capex Acquisitions
Capital
increase Dividends
Assumed
debt Other* 2011
Development of net financial debt in Q4 2011
(€m)
+6
-38
-444
-22
-137
516
-236
-116
-471
Q3
CF from
operating
activities Capex Dividends Other* Q4
+154
-17 -2 -26
-580
-471
• Debt reduction in Q4 mainly driven by NWC
release
18
19. Strong balance sheet03
* Gearing = Net debt/Equity attributable to shareholders of
Klöckner & Co SE less goodwill from business
combinations subsequent to May 28, 2010
Comments
• Equity ratio of 39%
• Net debt of €471m
• Gearing* at 29%
• NWC decreased by €158m to €1,534m qoq
• NWC/sales structurally increased by 2%p
due to MSCUSA acquisition, i.e.new normal
~22%
50%
27.5%
28.9%
19.6%
3.0%
21.0%
Balance sheet total 2011: €4,706m
39.2%
32.4%
28.4%
Non-current
assets
1,295
Inventories
1,362
Trade receivables
922
Other current
assets 140
Liquidity
987
Equity
1,843
Non-current
Liabilities
1,526
Current liabilities
1,337
100%
0%
19
20. Balanced maturity profile with first repayment in July 201203
€m Facility Committed
Drawn amount
FY 2011* FY 2010*
Bilateral Facilities1) 610 126 73
Other Bonds 20 20 0
ABS 575 175 88
Syndicated Loan 500 226 226
Promissory Note2) 343 349 147
Total Senior Debt 2,048 896 534
Convertible 20073) 325 319 306
Convertible 20093) 98 86 81
Convertible 20103) 186 157 151
Total Debt 2,657 1,458 1,072
Cash 987 935
Net Debt 471 137
€m Q4 2011
Adjusted equity 1,654
Net debt 471
Gearing4) 29%
*Including interest
1) Including finance lease
2) New promissory notes issued in Q2 2011 (€198)
3) Drawn amount excludes equity component
4) Net debt/Equity attributable to shareholders of Klöckner & Co SE less goodwill from business combinations
subsequent to May 28, 2010
Maturity profile of committed facilities and drawn
amounts (€m)
Committed facilities
Drawn amounts
667
527
675
296
487
374
109
397
266
352
2012 2013 2014 2015 Thereafter
20
22. Segment specific business outlooks04
Americas
• US: small growth in construction, funding for
commercial projects improving, government
related sectors (i.e. hospitals, schools, highways)
showing strengths ahead of the elections;
industrial machinery and equipment growing
strongly, esp. in farming related businesses,
construction equipment, telecom/IT, mining,
energy; appliances and residential construction
depending on consumer confidence trend;
decreasing unemployment rate supportive
• Brazil: steel distribution highly competitive at the
moment given mills enforcing local distribution,
strong BRL favours imports and hindering exports,
nevertheless market growth trend intact with huge
infrastructure pent-up demand
Europe
• Germany: demand holding up well due to machinery and
mechanical engineering, but VDMA reports backdrop in
order entries of 27% last three months
• Switzerland: construction still strong, but first signs of
cooldown; mechanical engineering suffering from
high CHF
• France: construction is trending sidewards as fiscal
supports fading out and business confidence decreasing
for commercial construction
• UK: confidence in construction sector is improving
slightly but overall activity to stay subdued due to
budgetary cuts, only commercial (esp. London) and
public transportation related construction might grow
• Spain: construction still recessive with further declines
not to be ruled out
22
23. Outlook
• H1 2012
• Turnover to be sequentially up in Q1 and again in Q2 expected
• EBITDA in Q1 expected to be €40-50m with further increase in Q2
• Opposite to 2011, Q2 from todays‟ perspective will be stronger than Q1, whereas H2 not yet
predictable
• FY 2012
• In North- and South America we expect an increasing and in Europe a declining steel demand:
• Americas: up by mid single digit percentage point plus consolidation effects
• Europe: down by up to a mid single digit percentage point
Overall increasing turnover as well as sales expected for Klöckner & Co
• EBITDA target-margin achievement of 6% for Americas reasonable but not for the group already
due to Europe
• Profitability action plan targeting annualized contribution of 1%p EBITDA-margin improvement
• All initiated measures in Europe and the robust growth in the US should support an increasing
EBITDA in 2012 compared to 2011
04
23
27. Strong Growth: 24 acquisitions since the IPO, 2 in 201105
27
Acquisitions1) Acquired sales1),2)
€141m
€567m
€108m
2
4
12
2
2005 2006 2007 2008 2009 2010
4
€231m
€712m
2011
2
€1.15bn
¹ Date of announcement 2 Sales in the year prior to acquisitions
Country Acquired 1) Company Sales (FY)2)
GER Mar 2010 Becker Stahl-Service €600m
CH Jan 2010 Bläsi €32m
2010 4 acquisitions €712m
US Mar 2008 Temtco €226m
UK Jan 2008 Multitubes €5m
2008 2 acquisitions €231m
CH Sep 2007 Lehner & Tonossi €9m
UK Sep 2007 Interpipe €14m
US Sep 2007 ScanSteel €7m
BG Aug 2007 Metalsnab €36m
UK Jun 2007 Westok €26m
US May 2007 Premier Steel €23m
GER Apr 2007 Zweygart €11m
GER Apr 2007 Max Carl €15m
GER Apr 2007 Edelstahlservice €17m
US Apr 2007 Primary Steel €360m
NL Apr 2007 Teuling €14m
F Jan 2007 Tournier €35m
2007 12 acquisitions €567m
2006 4 acquisitions €108m
USA Dec 2010 Lake Steel €50m
USA Sep 2010 Angeles Welding €30m
Brazil May 2011 Frefer €150m
USA April 2011 Macsteel €1bn
2011 2 acquisitions €1,150m
28. Comments
Balance sheet as of December 31, 201105
28
(€m) December 31, 2011 December 31, 2010
Non-current assets 1,295 856
Inventories 1,362 899
Trade receivables 922 703
Cash & Cash equivalents 987 935
Other assets 140 98
Total assets 4,706 3,491
Equity 1,843 1,290
Total non-current
liabilities
1,526 1,361
thereof financial liabilities 1,068 1,020
Total current liabilities 1,337 840
thereof trade payables 750 585
Total equity and
liabilities
4,706 3,491
Net working capital 1,534 1,017
Net financial debt 471 137
Shareholders’ equity:
• Stable at 39% despite
NWC and net financial
debt increase, benefitting
from capital increase
Financial debt:
• Gearing at 29%
• Gross debt of €1.5bn and
cash position of €1bn
result in a net debt position
of €471m
NWC:
• Swing mainly driven by
acquisitions
29. Profit & loss 201105
(€m) FY 2011 FY 2010
Sales 7,095 5,198
Gross profit 1,315 1,136
Personnel costs -588 -487
Other operating expenses -562 -447
EBITDA 217 238
Depreciation & Amortization -106 -86
EBIT 111 152
Financial result -84 -68
EBT 27 84
Taxes -17 -4
Net income 10 80
Minorities -1 2
Net income attributable to KCO shareholders 12 78
29
30. Segment performance Q4 201105
30
(€m) Europe Americas* HQ/Consol. Total
Turnover (Tto)
Q4 2011 990 646 1,636
Q4 2010 1,029 289 1,318
Δ % -3.8 123.5 24.1
Sales
Q4 2011 1,137 602 1,739
Q4 2010 1,104 228 1,332
Δ % 3.0 163.9 30.5
EBITDA
Q4 2011 12 13 -11 14
% margin 1.0 2.1 0.8
Q4 2010 45 7 -4 48
%margin 4.1 2.8 3.6
Δ % EBITDA -74.3 99.8 -71.7
* in 2010 North America
• Excl. MSCUSA, Frefer and Lake
Steel turnover increase in Americas
was 7.8% and sales increase was
27.3% yoy
• Without acquisitions total volume
decreased by 1.3% and total sales
increased by 7.1% yoy
Comments
31. Acquisitions shift exposure towards more promising regions and products05
24% Long productsQuality steel/Stainless steel 8%
Aluminium 7%
Tubes 6%
42% Flat productsOthers 13%
Sales by product
28% USA
France/Belgium 16%
Switzerland 13%
UK 6%
28% Germany/EEC
Spain 4%
Sales by markets
Netherlands 3%
Brazil 1%
China <1%
31
Machinery and mechanical
24% engineering
Miscellaneous 11%
Local dealers 10%
Household appliances/
Consumer goods 7%
37% Construction industry
Automotive industry 11%
Sales by industry
32. Current shareholder structure05
32
Geographical breakdown of identified
institutional investors
Comments
• Identified institutional investors
account for 50%
• German investors incl. retail
dominate
• Top 10 shareholdings represent
around 27%
• Retail shareholders represent 26%
• 100% freefloat
Other World 1%
Germany 28%
Other EU 20%
Norway 9%
UK 15%
US 18%
Switzerland 9%
As of December 2011
33. 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
33
