Multi Metal
Distribution
The journal of the Klöckner & Co Group
At a glance:
Our product portfolio
Interview: Synergies through
Group-wide processes
Service special:
Processing for every need
Behind the scenes:
From the order to the delivery
As a producer-independent distributor, we have broad
procurement leeway – extending around the world.
3
Dear readers,
Editorial
Steel and metal distribution at companies like Klöckner & Co is just as interesting as it is challen-ging. Klöckner & Co SE also offers numerous ser-vices to complement its global sourcing of more than 200,000 steel and metal products and their regional distribution through 260 warehouse loca-tions in Europe and north America. These services include logistics concepts tailored specifically to meet customer needs, the completion of indivi-dual processing steps and the assumption of the complete initial manufacturing stage. For compa-nies like ours, countless opportunities and chances are created, particularly in the area of transnation-al steel and mettransnation-al distribution.
With this journal, we would like to give you some deeper insights into the world of Klöckner & Co, and introduce you to our business model and our work. i hope you enjoy this edition.
Dr. Thomas ludwig
Chairman of the Management board of Klöckner & Co SE
On TrACK, ThAnKS TO FlExibiliTy
The Annual report 2008
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At 260 locations in Europe and north America, Klöckner & Co offers around 200,000 steel and metal products to more than 185,000 customers. Annual sales volume totals 6 million tons. The most important members of this product range include long steel, flat steel, pipes, quality and stainless steel as well as aluminum.
We primarily supply small and mid-sized compa-nies located in the regions near our locations with an average order volume of less than A 2,000. international companies also regularly use our products and services (for more information, see the article “Washing, cutting, laying” on page 10). The two most important industrial branches for Klöckner & Co are the construction industry as well as mechanical engineering and plant con-struction. Other customers are involved in branches such as automotive, household appliances, ship-building and energy provision, etc.
When you say
steel, you mean
Klöckner & Co
A product line that
meets all needs.
The construction industry is broken down into the main segments of structural construction as well as civil engineering and underground structures. Structural construction primarily employs long products, including beams, hollow steel sections and steel bars. These products are used to erect load-bearing structures, such as roofs, the stories of buildings, walls and bridges. The extent of the delivery is based on the size of the customer. it can range from a single steel beam to
pre-manu-factured items for a major construction site. in the area of civil engineering and underground struc-tures, reinforcing products are used in addition to the products already mentioned.
in some countries, products are also provided to special segments of the construction industry – including heating, ventilation, air conditioning, plumbing, roof and wall erection as well as water supply. The product line is particularly extensive, encompassing tens of thousands of items.
The product range of Klöckner & Co is also espe-cially broad in mechanical engineering and plant construction. Quality and stainless steels, usually
in the form of round material, are the focal point of the product line. Our customers also need flat and long stainless steel products, flat and heavy plates, aluminum and pipes.
round material is used in such areas as the pro-duction of shafts and gears. Flat products are pri-marily utilized in casing parts and coverings. heavy plates are used to make special-purpose vehicles and cranes. long products are employed in beam structures.
because different products are demanded in the various countries and regions where we do busi-ness, we have adapted our offerings to meet the particular customer structure. in taking this ap-proach, we ensure that we have exactly the right products in the warehouse to meet local needs.
6
Tomorrow’s profits lie in international
Product Management
On January 1, 2009, Klöckner & Co SE created the new section for international Product Management and placed it under the umbrella of the holding company. The idea to introduce international Prod-uct Management at the company arose from the performance program STAr. Ulrich becker, the Management board member who is responsible for the segment Europe and purchasing, is overseeing the introduction of this change. Oliver bosse, the former CEO of the Spanish country operation, is leading the new section.
International Product Management (IPM) will be primarily responsible for Group-wide product and purchasing strategies. The IPM section is broken down into five core areas:
1. Purchasing and supplier strategy 2. inventory management
3. Sales-volume and product strategy 4. Warehousing and logistics strategy 5. import management
The top priority at the moment is developing the global purchasing and supplier strategy. To carry out this work, special teams of purchasing special-ists from a variety of subsidiaries were formed on the cross-national level. These specialists are re-viewing a number of suppliers on the product level according to defined criteria. Their job is to classify suppliers and decide with whom Klöckner & Co will work in the future and to what extent. The aim is to reduce the number of core suppliers in order to bundle purchasing quantities and, by doing so, to optimize price and payment conditions.
Synergies from Group-wide processes.
interview
Ulrich becker, Member of the Management board
at Klöckner & Co SE
What are the responsibilities of the newly created International Product Section?
The primary responsibility will be to develop cross-national product and sourcing strategies. The new aspect is that this is happening on the Group level
for the first time. Up to now, the individual coun-try operations have been responsible for working out their own strategies.
“As a result of the current market situation, our
current point is global purchasing and supplier
management.”
As a result of the current market situation, our current point is global purchasing and supplier man- agement. by bundling purchasing quantities here, synergies can be generated in the fastest possible way. At the same time, international inventory management is being set up. Subsequently, a Euro-pean logistics concept will be prepared, and, finally, a Group-wide product strategy will be implemen-ted.
Why is International Product Management so important for the Group?
We need concepts that have a Group-wide impact. The operational areas of purchasing, inventory management, product development, logistics and import management have tremendous potential that must be exploited. As a result of international purchasing management, for instance, our purchasing power will be bundled. And thanks to international inventory management and an intel-ligent logistics concept, we can optimize our in-ventories and use them more efficiently – and we can do so across national borders.
Are there any other benefits?
Certainly. Just consider the increased transparency through various levels: An improved overview of supplier conditions and faster recognition of un-desirable developments in inventories. in
particu-lar, inventory reporting will make a decisive contri-bution to the systematic refinement of our products and logistics strategies.
When will the integration phase be completed?
international Product Management is scheduled to be implemented across Europe by the end of 2010. The work is a little more difficult in the US. As a result of the geographic distance and funda-mentally different structures in comparison with
Europe, we will be unable to completely integrate the United States into our process procedures. One exception is supplier management. in this area, the United States is scheduled to be grad-ually integrated into the overall concept. initially, though, we will concentrate completely on the Eu-ropean region because we can take advantage of synergy effects more rapidly here.
Ulrich Becker
is a member of the Management board of Klöckner & Co SE with operational responsibility for the segment of Eu-rope and functional responsibility for purchasing, logistics and process management. before joining Klöckner, he worked for a number of companies, including Krupp Stahl AG, Mannesmann handel AG, benteler handel Gmbh and benteler Automobiltechnik Gmbh.
8
“With the help of International Product
Man-agement, we will be able to implement
strat-egies throughout the Group more rapidly.”
What impact will International Product Manage-ment have on the future strategy of the Group?
With the help of international Product Manage-ment, we will be able to implement strategies throughout the Group more rapidly. For this rea-son, iPM will be systematically integrated into fu-ture decisions, including those to determine which
You became Head of International Product Man-agement at the beginning of the year. What are you planning to do in the next few months?
A top priority is the rapid implementation of the international purchasing and supplier strategy. The
acquisitions would make sense for Klöckner & Co and which would not. in the future, we will have to pay closer attention to the question of whether our acquisitions will have a positive effect on the entire Group and not just on individual country operations. As a result, international Product Man-agement has overarching importance.
interview
Oliver bosse, head of international Product Management
decisions about our future core suppliers have al-ready been made, and most of the negotiations have been successfully completed. The next step is to actively introduce the system into each country operation and, accordingly, to set up international inventory management. Up to a certain point, though, we are dependent on SAP implementation here because all of our country operations are not yet connected to SAP. The implementation is scheduled to be completed by mid-2010.The team of international Product Management is to be completed by the end of the first quarter in 2009. Klöckner Global Sourcing (KGS) – which will be part of iPM in the future – is another important part of the strategy and will focus on expanding third-country imports and international projects.
“By reducing the number of suppliers, we will
strengthen our position as buyers and achieve
better conditions as a result.”
What impact will the introduction of International Product Management have on work procedures?
Decision-making processes will change. in the past, decisions about supplier selection, inventories, product strategy or logistics were made on the country level. beginning right now, cross-national teams made up of procurers, sales specialists and logistics experts are responsible for individual prod- uct groups. These teams are led by the European product managers. international Product Manage-ment makes its decisions on the basis of the infor-mation collected by the teams. Purchasing itself remains a country issue.
How will the new purchasing strategy change the relationship with suppliers? Which criteria will be used to make the selections?
We are striving to use a “one-face-to-the-supplier” concept. Our suppliers will work with only one contact person from international Product Man-agement. by reducing the number of suppliers, we will strengthen our position as buyers and achieve better conditions as a result. Suppliers, at least our core suppliers, will benefit from the fact that we will purchase large quantities from them. Aside from price and payment conditions, service quality and reliability will remain the most important se-lection criteria. We do not plan to make any com-promises here in the future.
What impact will the introduction of International Product Management have on the Group and its structure?
in the future, the focal point will be centered more on the individual product groups and less on the individual country organization. To ensure that
international Product Management works success-fully, we need to have a smooth flow of commu-nications. both communications between the in-dividual countries and communications with the holding company will gain particular significance. Our aim is to make the Group more international. in these terms, i think we are definitely on the right path.
Oliver Bosse
Oliver bosse is head of international Product Management. he has held various positions at Klöckner & Co since 1994 – including the position of CFO at the Dutch country opera-tion in rotterdam. Most recently, he served as CEO of the Spanish country operation in
10
Washing, cutting, laying.
Material just the way the customer needs it.
The range of services offered by Klöckner & Coin-cludes not only warehousing and delivery of multi metal products, but also professional prefabrica-tion. As the specialist for complete solutions, we process the material exactly to the customer’s specifications before it is delivered. in other words: We take over a complete manufacturing step for the customer – and he can focus completely on his own work.
Our customers can also set up far-reaching partnerships with us. in such a relationship, we act as an integrated value-creation partner who is responsible for the prefabrication and finishing processes of the first and second manufacturing steps. This work employs heavy-duty production equipment like CnC lathe and milling machines, automatic saws and flame-cutting units.
At our 260 locations, we offer all sorts of processing and services – designed to meet the exact needs of local customers. The most important services are:
• Cutting to length • Sawing • Flame cutting • bending • lathing • Decoiling • Slitting • Shot-blasting • Coating
The close relationship between Klöckner & Co and the shipbuilder Meyer Werft in Papenburg exemplifies such a partnership. The responsible branch operates a so-called consignment ware-house containing ship sheets that is located right next to the shipyard. This markedly accelerates handling speed while reducing inventories and capital lockup. For its exceptional work, the branch was selected “Partner of the year 2008” and presented with the innovation award by Meyer Werft.
international customers that have production sites in various countries can rely on a very special service. We assign an individual customer-service assistant to these companies. With the help of these assistants, the customers can order all products and services offered by Klöckner & Co – to be sent to each of their individual factories. The services we provide in supply-chain management include:
• Customer-driven procurement of raw materials
• Warehousing and stockpiling
• Processing, order picking and labeling • Delivery to the factories
• Disposal and recycling concepts
Thanks to our far-reaching network of locations, we can supply a single customer’s various factories just in time. We can also manage consignment warehouses. Using country-specific as-is analyses, we determine a customer’s need for such a warehouse in a process that examines material consumption, work procedures and logistics. We then conduct a business-process analysis that reveals ways to raise efficiency and lower costs. A national supply concept is compiled on the basis of these results.
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08:00 a.m.
The telephone rings.
Mr. Müller, a procurement employee at a mechan-ical engineering company in the region, calls his customer-service assistant to place an order for 15 steel tubes that he wants to have delivered on the following morning to his facility located 80 kilo-meters away.
Start
here today, there tomorrow.
24 hours from the order to the delivery.
At Klöckner & Co, long-term customer relationships are the rule.
Both our customers and our employees place great value on
per-sonal contact and a cooperative working relationship. Our
custom-ers’ branches and our own warehouse sites are usually located in
the same region.
One of the greatest strengths of Klöckner & Co is its just-in-time delivery. As a producer-indepen-dent multi metal distributor, we ensure that our customers receive steel and other metals in exact-ly the right form and at exactexact-ly the right time. The following example shows how a typical order is handled at Klöckner & Co.
Start
08:01 a.m.
Mr. Müller receives assistance.
The customer-service employee can inform him right away about the number and dimensions of tubes in the warehouse. Mr. Müller is also told about prefabrication and stock lengths.
Our customer-service employees are
orga-nized by product group. Each of them is
con-sidered to be a proven specialist in his or her
area of responsibility. As a result, we assure
that our customers receive professional
assis-tance every time they place an order.
The customer-service employee can see at
once in the system where the ordered product
is stored, in what amount and in which
dimen-sions.
08:15 a.m.
Mr. Müller places the order.
Ten long, seamless steel pipes measuring 60.3 x 5.0 mm, conforming to En 10220, in pre-sawn, fixed stock lengths of 5,500 mm and five lengths of welded square tubes measuring 40.0 x 2.0 mm, conforming to En 10310-5, in fixed stock lengths of about 6,000 mm, direct delivery to the site at 8 a.m. on the following day.
08:16 a.m.
The customer-service employee
enters the order into the system.
The individual branches are connected with one another by an SAP platform. Two processes are au-tomatically put into motion:
1. A requisition form is sent to the warehouse. The requisition order contains all information needed to process the order: Material, amount, dimensions, processing, packaging.
2. A scheduling form is sent to the dispatcher. The scheduling form contains the name, address, delivery time and delivery size.
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Our branches are distributed in such a
way that every warehouse in Europe has
a delivery radius of only 150 kilometers.
In North America, the radius is 250
kilo-meters.
06:00 a.m.
The trucks pull out of the warehouse.
08:00 a.m.
Mr. Müller receives his 15 steel tubes –
right on time.
Goal
08:45 a.m.
The tubes are picked.
They are arranged in the correct number, pro-cessed to the correct length and then prepared for transport.
08:46 a.m.
The order is scheduled.
Subsequently, the dispatcher schedules the routes for the next day – based on weight, extent and route.
10:00 p.m.
The trucks are loaded on the
basis of the delivery lists.
In modern, computer-managed high-bay
ware-houses, the material is automatically removed
from the corresponding bay and processed if
necessary. The entire process lasts several hours
– depending on the size of the delivery and the
type of processing.
15 Publisher: Klöckner & Co SE Am Silberpalais 1 D-47057 Duisburg Telephone +49 203 307- 0 Fax +49 203 307- 5000 Editorial Office:
Corporate Communications/investor relations
KlöCKnEr & CO GrOUP – KEy FiGUrES
imprint
Design:
EGGErT GrOUP Gmbh & Co. KG benrather Straße 18–20 D-40213 Düsseldorf Print: Druckstudio Gmbh Professor-Oehler-Straße 10 D-40589 Düsseldorf Income Statement 2008 2007 2006
Sales A million 6,750 6,274 5,532
Earnings before interest, taxes,
depreciation and amortization (EbiTDA) A million 600 371 395
Earnings before interest and taxes (EbiT) A million 533 307 337
Earnings before taxes (EbT) A million 463 210 273
Earnings after taxes (EAT) A million 384 156 235
Earnings per share (basic) A 8.56 2.87 4.44
Earnings per share (diluted) A 8.11 2.87 4.44
Cash Flow Statement
2008 2007 2006
Cash flow from operating activities A million 187 109 132
Cash flow from investing activities A million 72 –378 10
Balance Sheet
Dec. 31, Dec. 31, Dec. 31,
2008 2008 2008
Working capital*) A million 1,407 1,323**) 1,135
net cash indebtedness A million 571 746 365
Equity A million 1,074 845 799
balance sheet total A million 3,075 2,966 2,552
Key Figures
2008 2007 2006
Sales volume to’000 5,974 6,478 6,127
Employees at end of period (Dec. 31) 10,282 10,581 9,688
* ) Working capital = inventories plus trade receivables less trade payables
