01.03.2016
Klöckner & Co. SE DE000KC01000
DGAP-News: Klöckner & Co SE reports marked drop in earnings but strong positive cash flow in fiscal year 2015
DGAP-News: Klöckner & Co. SE / Key word(s): Final Results
Klöckner & Co SE reports marked drop in earnings but strong positive cash
flow in fiscal year 2015
01.03.2016 / 07:00
The issuer is solely responsible for the content of this announcement.
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- Sales down - despite positive exchange rate effects - due to lower
prices and volumes, falling 0.9% to EUR6.4 billion
- Gross profit margin narrowed on negative price trend to 19.2%, against
19.4% in prior-year period
- EBITDA before restructuring expenses at EUR86 million, versus EUR191
million in prior year; after restructuring expenses of EUR63 million,
EBITDA was EUR24 million
- Net loss of EUR349 million under added impact of goodwill impairments
in North America activities
- Strong positive free cash flow of EUR191 million, compared with
negative EUR64 million in prior year
- Very solid balance sheet maintained with 39% equity ratio
- Implementation of digitalization strategy ramped up with major progress
and positive response among suppliers, customers and competitors
- Sharp increase in EBITDA expected with net income marginally back in
positive figures in 2016
Duisburg, Germany, March 1, 2016 - The escalating steel crisis tangibly
impacted sales and earnings performance at Klöckner & Co last year. Despite
positive exchange rate effects, lower prices and volumes pushed sales down
by 0.9% to EUR6.4 billion. Global price decline also made for a fall in the
gross profit margin from 19.4% in the prior year to 19.2%. In consequence,
EBITDA before restructuring expenses dropped from EUR191 million to EUR86
million. After restructuring expenses of EUR63 million, EBITDA was EUR24
million. Under the extra impact of goodwill impairments in North America
activities, earnings before taxes (EBT) was a negative EUR399 million.
Allowing for tax income of EUR50 million, the Group's net loss stood at
EUR349 million. This meant that earnings per share came to a negative
EUR3.48, compared with a positive EUR0.22 in the prior-year period.
The negative earnings performance contrasted with a positive free cash flow
of EUR191 million, mainly driven by cuts in net working capital. Net debt
was trimmed further as a result, from EUR472 million to EUR385 million. The
equity ratio remains solid at 39%.
Gisbert Rühl, CEO of Klöckner & Co SE: "The quantities of cheap steel
flooding the world steel markets, mostly due to overproduction in China,
have had a marked impact also on our own sales and earnings performance.
Even though this hampered progress made with modifications under our
"Klöckner & Co 2020" strategy, we once again took direct action and
generated a strong free cash flow by rigorously cutting net working
capital."
Market-driven pressure on earnings in both segments
Despite a positive exchange rate effect, sales in the Europe segment fell
by 2.9% to EUR4.0 billion, mainly due to the price trend. The decrease in
EBITDA before restructuring expenses to EUR69 million, compared with EUR109
million in the prior year, was mainly triggered by the squeeze on margins
from falling prices in what was a highly competitive market.
Despite lower prices and volumes, on the other hand, sales in the Americas
segment increased by 2.4% to EUR2.5 billion as a result of exchange rate
changes. Mainly due to pressure on margins triggered by declining prices,
as in the Europe segment, EBITDA before restructuring expenses went down to
EUR37 million, as against EUR100 million in the prior-year period.
Further progress in digitalization
Klöckner & Co made major strides in its digital transformation. A number of
wholesalers and major steel producers have already linked up with Klöckner
online for procurement purposes. The first Klöckner-developed tools, such
as a contract portal, are being used successfully by customers. With its
extensive digital know-how, Klöckner & Co is also the partner of choice
from the steel industry when it comes to cross-sectoral digitalization
projects. For instance, working in harness with Berlin-based startup
Contorion, Klöckner & Co entered the segment comprising online sales to
craftsmen and private customers. Klöckner & Co is also the exclusive
partner of an Industry 4.0 project being conducted by machinery
manufacturer Trumpf. Going forward, the partnership will enable production
machines to order steel from Klöckner & Co autonomously. To this end, the
Klöckner & Co contract portal has already been integrated into the Trumpf's
"Axoom" customer platform. In Germany Klöckner & Co has additionally
entered into a collaboration with Sage, one of the world's largest
providers of business software. The two companies will jointly market an
ERP solution specially preconfigured for steel and metal processors. The
system will enable customers to professionally manage their business
processes as well as automatically trigger online orders for steel and
metal products in the Klöckner range.
The new Klöckner & Co web shop also went online today in Germany and is to
be successively rolled out also in other countries. Developed using a
radically customer-centric design thinking approach, the solution sets new
industry standards in terms of user-friendliness and convenience in buying
steel online. Over the course of fiscal year 2016, the new web shop and
other tools will be integrated into the Klöckner service platform, which
likewise went live today in a basic version. This gives customers and
partners a central access point for data and all tools, which they can use
much more efficiently than before. In another step, Klöckner & Co is
planning to launch an industry platform from 2017 that will also be open to
competitors. It will further enhance product diversity and price
transparency for customers. At the same time, Klöckner & Co will gain extra
earnings potential by charging transaction fees for sales made on the
platform.
Gisbert Rühl: "The progress already made, coupled with the positive
response from suppliers, customers and competitors shows us that we are on
the right track with our digitalization drive. To further extend our
digital lead in the industry, we aim to step up investment spending in this
area and double the workforce at our digitalization subsidiary kloeckner.i
this year to at least 40. Generating over 50% of sales online by 2019
remains our target."
In the future, graduates from the ReDI School of Digital Integration in
Berlin, which caters to refugees, will also be eligible for newly created
positions at kloeckner.i. Klöckner & Co is main sponsor of the school's
educational program and networking events, which play an important role not
only in integrating refugees into German society but also in overcoming the
shortage of IT experts.
Further expansion in higher-margin business
In addition, Klöckner & Co has made further headway in expanding its
business with higher value-added products and processing services. The
share of sales accounted for by such products and services was raised from
34% to 39% in 2015. Alongside organic growth, Klöckner & Co's successful
entry into the steel fabrication segment with the acquisition of American
Fabricators in the USA also contributed to this increase. At the same time,
construction of a service center to process aluminum flat products for the
European automotive and manufacturing industries was initiated at the Bönen
site in North Rhine-Westphalia, Germany. This means Klöckner & Co is right
on target to generate 45% of sales with higher-margin business by 2017 - a
share that is to be further boosted to over 50% by 2020.
Outlook
Along with most economic research institutes, Klöckner & Co expects GDP
growth of 2% and 3% this year for its key sales markets of Europe and the
USA, respectively. This should also give a marginal boost to real steel
demand in these two regions.
Despite the anticipated market growth, Klöckner & Co expects a slight dip
in sales due to the restructuring measures.
Buoyed by a more favorable market environment coupled with initial thrust
from the KCO WIN+ restructuring and optimization program, operating income
is expected to be significantly above the EUR86 million EBITDA adjusted for
restructuring expenses recorded in 2015. Earnings will likely only begin
picking up significantly year-on-year in the second quarter. The sluggish
market trend was initially sustained into the first few weeks of fiscal
year 2016. There is an added negative impact on earnings in the opening
quarter due to the requirement under International Financial Reporting
Standards to recognize levies as expense for the full year. As a result,
first-quarter EBITDA is only expected to be between EUR10 million and EUR15
million.
In contrast to the prior year, no further expense is anticipated for
goodwill impairments in 2016. Additional alleviating factors will follow
from lower interest expense due to reductions in financial liabilities. For
this reason, too, net income is expected to be marginally back into
positive figures in the current fiscal year following the loss in 2015.
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 200 locations in 14 countries, the Group supplies more than 140,000
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 EUR6.4 billion in
fiscal 2015.
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 Klöckner & Co SE:
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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01.03.2016 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.
The DGAP Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
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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; Terminbörse EUREX
End of News DGAP News Service
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