03.11.2015
Klöckner & Co. SE DE000KC01000
DGAP-News: KLÖCKNER & CO SE SEES EARNINGS DOWN IN FIRST NINE MONTHS OF 2015
DGAP-News: Klöckner & Co. SE / Key word(s): 9-month figures
KLÖCKNER & CO SE SEES EARNINGS DOWN IN FIRST NINE MONTHS OF 2015
03.11.2015 / 07:00
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- Sales up by 1.2% compared with prior-year period to EUR5.0 billion as a
result of positive exchange rate effects despite lower prices and
quantities
- Gross profit margin at 18.9% due to drop in steel prices, compared with
19.3% in prior-year period
- EBITDA of EUR22 million additionally impacted by EUR54 million in
restructuring expenses; EBITDA before restructuring expenses
correspondingly at EUR76 million
- Positive free cash flow of EUR42 million compared with negative EUR184
million in prior-year period
- Significant progress made in digital transformation with introduction
of contract platform in Germany and the USA, entry into attractive
segment comprising online sales to craftsmen and private customers in
Germany and involvement in internet of things project for automated
steel order placement by production machinery
- Further expansion of business in higher value-added products and
services with entry into higher value-added steel fabrication segment
through acquisition of American Fabricators, USA, and decision to
substantially expand aluminum flat products range for the automotive
industry in Europe
- EBITDA before restructuring expenses in single-digit millions of euros
expected in fourth quarter and correspondingly up to EUR85 million for
full year 2015
Duisburg, Germany, November 3, 2015 - The first nine months of 2015 saw
sales increase by 1.2% to EUR5.0 billion as a result of positive exchange
rate effects despite lower prices and quantities. The gross profit margin
fell to 18.9% due to the drop in steel prices, compared with 19.3% in the
prior-year period. EBITDA before restructuring expenses was correspondingly
down from EUR158 million in the prior-year period to EUR76 million.
Deducting once-only expenditure for the KCO WIN+ restructuring program
launched in summer, EBITDA stood at EUR22 million. The pretax result was a
negative EUR91 million, compared with a positive EUR43 million in the
prior-year period. Adding in tax income of EUR5 million left a net loss of
EUR85 million. Basic earnings per share thus came to a negative EUR0.84,
compared with a positive EUR0.26 in the prior-year period.
Gisbert Rühl, CEO of Klöckner & Co SE: "We are responding to another
downturn in market conditions by rapidly implementing the restructuring
measures we launched in summer as part of the extended KCO WIN+ program.
The measures are coming along well within schedule and will make an
important contribution to achieving the expected return to positive figures
as early as next year."
Market-driven impacts on earnings in both segments
The lower price level meant that Europe segment sales were down despite
positive exchange rate effects, dropping 2.0% to EUR3.1 billion. EBITDA
before restructuring expenses came to EUR57 million, compared with EUR91
million in the prior-year period. Earnings were notably impacted by price
pressure in Switzerland following the appreciation of the Swiss Franc early
in the year and the very weak business situation throughout the entire
reporting period in France and the United Kingdom.
In contrast, sales in the Americas segment increased by 6.9% to EUR1.9
billion. A lower price level and falling volumes were more than offset by
the higher US dollar/euro exchange rate. EBITDA decreased to EUR34 million,
compared with EUR80 million in the prior-year period. Earnings were mostly
brought down by the falling steel prices as a result of import pressure and
collapsing market prices for scrap. Slow demand in anticipation of a
further fall in prices had an additional negative effect on earnings.
Digitalization opens door to new market segments
Klöckner & Co continues to forge ahead with digitalization. This is
reflected among other things in the rollout of a contract platform allowing
customers to view all relevant information on their contract status and
place call-off orders for products online. The digital integration of some
250 Klöckner & Co customers in Germany has now been followed up with the
highly successful launch of the service in the USA. Within a short space of
time, the new solution already generated over USD 1 million in sales.
In September, working in harness with Berlin-based online specialist dealer
Contorion, Klöckner & Co entered into the attractive segment comprising
online sales to craftsmen and private customers in Germany. Dedicated order
processing and shipping infrastructure has been put in place at the
Company's Frechen location to ensure an efficient delivery service for this
segment. Additions are planned to the range of merchandise sold through
Contorion along with further online marketing channels under a
multi-channel strategy.
Klöckner & Co has now also gained a foothold in the internet of things
business segment with an involvement in the AXOOM software project
spearheaded by Trumpf, an international high-technology company
headquartered in Germany. The Klöckner & Co contract portal has already
been integrated into the AXOOM user interface for the purpose. This paves
the way for a fully automated requirements quantification, ordering and
delivery process for products such as steel for production machinery going
forward. The new solution will be presented this week at the Blechexpo
trade fair in Stuttgart, Germany, and next week at Fabtech in Chicago, USA,
with the market launch planned for April 2016.
Gisbert Rühl: "Our collaboration with Contorion and Trumpf is proof
positive that, given our high level of digital expertise, we are now in
cross-industry online trading and internet of things projects the partner
of choice from the steel industry."
Growth in higher-margin business
Klöckner & Co has made tangible progress in expanding its business with
higher value-added products and services. The percentage of sales generated
in this segment is to be increased through both internal and external
growth from 34% in the last fiscal year to 45% in 2017.
A key step in this direction was the acquisition of American Fabricators,
Nashville, Tennessee, USA at the start of the fourth quarter. This means
that after significantly stepping up its service center activities in the
USA, Klöckner & Co has now also moved into the higher value-added steel
fabrication segment. American Fabricators specializes in the professional
fabrication of complex steel parts for customers from a wide range of
different industries. The highly profitable company with an approximately
150-strong workforce generates annual sales of some USD 30 million.
A decision has also been made to build a service center to process aluminum
flat products for the automotive and manufacturing industries in Europe at
the Company's Bönen location in North Rhine-Westphalia, Germany. Through
its subsidiary Becker Stahl-Service, Klöckner & Co is investing a figure in
the low to middle double-digit millions of euros, substantially expanding
its product range for what is one of the most promising materials for the
automotive industry. Completion is scheduled for 2017.
Gisbert Rühl: "Recent business developments show that we need to further
increase the percentage of sales we generate with higher value-added
products and services in order to reduce the impact that steel price
fluctuations have on earnings. The purchase of American Fabricators and the
expansion of the aluminum business are two key steps in this direction."
Outlook
In Europe, Klöckner & Co expects real steel demand over the year as a whole
to show a slight increase of around 1%, notably driven by growth in the
automotive industry. In the USA, the slump in the oil and gas sector cannot
be fully compensated with growth elsewhere and, as a net outcome, a
decrease in real steel demand of around 2% is now expected.
The pressure from falling prices and slow demand continued at the beginning
of the fourth quarter. For the final quarter, which is in any case
traditionally weak, operating income (EBITDA) before restructuring expenses
is therefore anticipated to be only in the single-digit millions of euros.
That puts the forecast for operating income (EBITDA) before restructuring
expenses for the full 2015 fiscal year at up to EUR85 million - after EUR76
million in the first nine month. Despite the impacts reducing earnings,
free cash flow is expected to be positive as measured over the year as a
whole.
In fiscal year 2016, even if the market environment is no more than stable,
operating income (EBITDA) is forecast to increase substantially and net
income will consequently be comfortably back into positive figures.
Additional stimulus may come from the anti-dumping measures introduced in
the USA and Europe primarily against Chinese exports.
About Klöckner & Co:
Klöckner & Co is one of the largest producer-independent distributors of
steel and metal products and one of the leading steel service center
companies worldwide. Based on its distribution and service network of
around 220 locations in 15 countries, the Group supplies more than 150,000
customers. In addition to companies in the construction industry as well as
machinery and mechanical engineering, Klöckner & Co serves customers in the
automotive and chemical industry, in shipbuilding and in fields of
household appliances, consumer goods and energy. Currently Klöckner & Co
has around 9,600 employees. The Group had sales of around EUR6.5 billion in
fiscal 2014.
The shares of Klöckner & Co SE are admitted to trading on the regulated
market segment (Regulierter Markt) of the Frankfurt Stock Exchange
(Frankfurter Wertpapierbörse) with further post-admission obligations
(Prime Standard). Klöckner & Co shares are listed in the MDAX(R)-Index of
Deutsche Börse.
ISIN: DE000KC01000; WKN: KC0100; Common Code: 025808576.
Contact person:
Christian Pokropp - Press Spokesperson
Head of Investor Relations & Corporate Communications
Phone: +49 (0) 203-307-2050
Fax: +49 (0) 203-307-5025
Email: [email protected]
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03.11.2015 Dissemination of a Corporate News, transmitted by DGAP - a
service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.
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Language: English
Company: Klöckner & Co. SE
Am Silberpalais 1
47057 Duisburg
Germany
Phone: +49 (0)203 / 307-0
Fax: +49 (0)203 / 307-5000
E-mail: [email protected]
Internet: www.kloeckner.com
ISIN: DE000KC01000
WKN: KC0100
Listed: Regulated Market in Frankfurt (Prime Standard); Regulated
Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover,
Munich, Stuttgart
End of News DGAP News Service
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407795 03.11.2015
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