Klöckner & Co SE. UBS Best of Germany Conference

39 

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Klöckner & Co SE

A Leading Multi Metal Distributor

UBS Best of Germany Conference

New York

CEO

Gisbert Rühl

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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.

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Agenda

Overview

01

Update on strategy

Financials

Outlook

02

03

04

Appendix

05

Outlook

04

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Klöckner & Co SE at a glance

01

Customers

Service Center / Distribution

Producers

Products :

One of the leading steel service center / distribution companies in Europe and Americas

Distribution and service platform with around 220 locations worldwide

Key figures for 2013 Sales: €6.4 billion

EBITDA: €150 million (before restructuring) Services:

Machinery and mechanical engineering

Yellow Goods

White Goods

Miscellaneous

Automotive

Commercial/ residential construction

Infrastructure

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Holistic solution from covering procurement, logistics and processing

01

Suppliers

Sourcing

Products

and services

Logistics /

distribution

As a producer-independent distributor, our customers benefit from our diverse national and international procurement options

Customers

Procurement of large quantities

Strategic partnerships

Extensive product range

Excellent product and processing quality

Wide-ranging service provision

Local presence

Individual delivery, including 24-hour-service

More than 146,000 customers

Average normal order size approx. €2,000

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Global reach – local presence

01

With around 220 locations in 15 countries we assure local availability for our customers

Austria

Belgium

Brazil

China

England

France

Germany

Ireland

Mexico

Netherlands

Puerto Rico

Scotland

Spain

Switzerland

USA

USA: 36% Brazil: 1% China: <1% D: 24% F/BE: 14% CH: 14% NL: 3% UK: 5% ES: 2% Europe: 62%

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Sales by markets, products and industries

01

Sales by markets

Sales by product

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Klöckner is one of the leading Steel Service Center / Distributors in Europe and the

US

01

Europe

US

Position in the US significantly improved whereas market share in Europe is expected to remain

stable despite heavy restructuring measures

5% ArcelorMittal Thyssen Klöckner Salzgitter Tata Steel Others Reliance Ryerson Thyssen Samuel Metals USA Namasco (Klöckner) Others 1%

2013

5% Salzgitter Tata Steel Others 4% Reliance Ryerson Kloeckner Metals Thyssen Others ArcelorMittal Thyssen Klöckner

2007

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Agenda

Overview

01

Update on strategy

Financials

Outlook

02

03

04

Appendix

05

Outlook

04

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Comprehensive transformation initiated

02

Klöckner & Co 2020

Differentiation Growth and optimization Supplier partnerships

Product and service portfolio

Digitalization Operations

External & internal growth

Stabilization Restructuring Finished by successful implementation of KCO 6.0

External growth with focus on higher value-added business Internal growth with focus on US market

Improvements of pricing, customer segmentation, product portfolio and logisitc through KCO WIN

Forces expansion of higher value-added processing services

Digitalization of the supply chain

Expansion of partnerships with specific suppliers and more favorable umbrella agreements

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KCO 6.0 successfully implemented, KCO WIN on track

02

2013 2014 €51m €61m €41m

Total annual EBITDA-impact of >€150m from 2014 onwards 2011-2012 €22m

KCO 6.0

KCO WIN

2014 2015 €30m

Total annual EBITDA-impact of ~€50m from 2015 onwards

€20m €5m

already realized

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Significant margin enhancement potential through increasing higher value-add

business and its improvement of profitability

02

Target is to increase share of higher margin processing from 15% to 25% and share of higher

value-add products from 15% to 20% by 2017

Standard products

Higher value-add products

Share of total sales

25% 35% 20% 20% Conventional processing 45% Higher value-add products and processing Higher value-add processing Actual 2013 Target 2017 15% 43% 15% 27%

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Above-average scope for higher margins in higher value-add processing

02

H ol lo w s ec ti o ns f or s te e l co n str u ct io n Commodity stockholding Lower-margin processing Sawing Higher value-add processing 3D tube laser 10% 20% 30% 40% 50%

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Additional potential with webshops and online supplier integration

02

Webshop

• Online connection to suppliers to allow direct access to their floor stocks

• Increase of sales per customer and gaining new customers through webshop solution

• Realization of significant savings per order

Conventional steel distribution supply chain highly inefficient:

• Disconnected flow of information

Suppliers Suppliers stocks KCO central stocks KCO branches Customers

EDI-Portal

By end of next year all country organizations will have implemented the new webshop

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Goal of integrating all online applications in a single B2B Exchange

02

• Increasing direct access to floor stocks of suppliers

• Apply B2B Exchange to integrate processes with suppliers

• Integration of additional services such as construction support and

Webshop, EDI-Portal and further applications merged into B2B exchange, to ease online

integration of suppliers and to enable a seamless information flow

Webshop Suppliers Suppliers stocks KCO central stocks KCO branches Customers

B2B Exchange

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Mid-term EBITDA-margin-target of >5% until 2017

02

Growth and optimization Differentiation Stabilization 2017 EBITDA-margin Sourcing Products and Services Digitalization KCO WIN 0.8% Riedo Acquisition 0.2% KCO 6.0 (remaining effects) 0.6%

2.0%

>5%

> 2.0% 2013 EBITDA-margin before restructuring and one-offs

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Agenda

Overview

01

Update on strategy

Financials

Outlook

02

03

04

Appendix

05

Outlook

04

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Substantial yoy EBITDA-improvement mainly through self-help measures

03

EBITDA-bridge (€m)

Self-help measures contributed

€13m to EBITDA against prior year

in Q2 and €27m ytd

EBITDA contribution achieved

through KCO 6.0 amounted to

€8m in Q2 and €22m ytd

KCO WIN on track with first

EBITDA contribution of €5m

in Q2

EBITDA-margin improved by 0.8%p

to 3.3% in Q2 and by 0.9%p to 3.1%

ytd

Comments

Q2 yoy

Self-help measures: €13m

12 56 43 -16 KCO WIN Effect OPEX** EBITDA Q2 2014 5 KCO 6.0 Effect Price Effect 4 Volume Effect* EBITDA Q2 2013

H1 yoy

15 22 101 72 OPEX** -16 KCO WIN 5 KCO 6.0 Price 3 EBITDA Volume EBITDA Self-help measures: €27m

* Including Riedo impact of €10m.

** Including -€7m pension adjustment NL in Q2/2013 and -€4.3m Riedo.

8

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Gross profit and EBITDA-margin improvement is gaining further momentum

03

306 302 303 305 296 288 302 325 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 16.6 18.5 18.6 18.0 18.5 19.8 19.2 19.3

EBITDA* (€m) / EBITDA-margin* (%)

Gross profit* (€m) / Gross-margin* (%)

18 22 29 43 39 40 45 56 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 1.0 1.3 1.8 2.5 2.4 2.7 2.9 3.3

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Performance improved in both segment but especially in the Americas

03

12 16 21 20 20 13 24 28 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 1.7 2.7 3.4 3.2 3.2 2.5 4.4 4.6

EBITDA* (€m) / EBITDA-margin* (%)

Europe

12 16 14 28 26 34 26 32 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 1.2 1.5 1.4 2.6 2.6 3.6 2.5 3.0

EBITDA* (€m) / EBITDA-margin* (%)

Americas

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Balance sheet remains strong

03

Equity ratio further solid at 40%

Net debt of €579m

Gearing* at 41%

Leverage** 3.2x

NWC increased from €1,330m to €1,463m qoq

* Gearing = Net debt/Equity attributable to shareholders of Klöckner & Co SE less goodwill from business combinations subsequent to May 23, 2013.

Comments

Assets 595 350 687 914 Other assets Liquidity Trade receivables Inventories Jun 30, 2014 3,658 1,156 1,238 Dec 31, 2013 3,595 1,147 1,166 637 689 366 262 911 Trade payables Other liabilities Pensions Financial liabilities Equity Jun 30, 2014 3,658 339 921 1,447 Dec 31, 2013 3,595 236 1,445

Equity & liabilities

40% 40%

** Leverage = Net debt/EBITDA before restructuring expenses last twelve months.

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Agenda

Overview

01

Update on strategy

Financials

Outlook

02

03

04

Appendix

05

Outlook

04

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Steel demand in 2014 is expected to recover in Europe and even more pronounced

in the US but challenges remain

04

143 139 140 154 145 120 184 199 +3% -28% 134 129 131 122 111 84 131 142 +4% -6%

EU-27 Steel demand (million to) NAFTA Steel demand (million to)

Steel consumption remains despite recovery in Europe about 30% below pre-crisis level

whereas demand in North America is almost back to the 2007 level

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US

Segment specific business outlook

04

Steel demand

Construction industry

Automotive industry Machinery and mechanical

engineering

Europe

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Outlook

Q3 2014

Shipments to be seasonally slightly lower

Increasing EBITDA contribution of KCO WIN measures

EBITDA expected on the level of Q2 in a range between €50 and €60m

FY 2014

Shipments and sales to be slightly up also through Riedo acquisition

EBITDA expected in a range between €190m to €210m

Reduction of IDA expense by some €25m to €155m anticipated

Expected positive net income should facilitate return to dividend payment for fiscal year 2014

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Agenda

Overview

01

Update on strategy

Financials

Outlook

02

03

04

Appendix

05

Outlook

04

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Quarterly results and FY results 2011-2014

05

(€m) Q2 2014 Q1 2014 Q4 2013 Q3 2013 Q2 2013 Q1 2013 Q4 2012* Q3 2012* Q2 2012* FY 2013 FY 2012* FY 2011 Shipments (Tto) 1,720 1,633 1,492 1,617 1,690 1,646 1,585 1,764 1,863 6,445 7,068 6,661 Sales 1,680 1,572 1,455 1,600 1,698 1,625 1,633 1,847 1,964 6,378 7,388 7,095 Gross profit 325 302 284 296 305 303 298 306 340 1,188 1,288 1,315 % margin 19.3 19.2 19.5 18.5 18.0 18.6 18.3 16.6 17.3 18.6 17.4 18.5 EBITDA 56 45 16 36 43 29 -35 18 33 124 60 217 % margin 3.3 2.9 1.1 2.3 2.5 1.8 -2.2 1.0 1.7 2.0 0.8 3.1 EBIT 33 23 -36 10 17 2 -89 -9 -24 -6 -105 111 Financial result -16 -17 -17 -19 -19 -19 -14 -22 -18 -73 -80 -84

Income before taxes 17 6 -52 -8 -2 -16 -103 -31 -42 -79 -185 27

Income taxes -7 -3 -7 -3 -2 1 -19 3 3 -12 -18 -17

Net income 10 3 -59 -11 -4 -16 -123 -29 -39 -90 -203 10

Minority interests 0 0 -5 0 0 0 -1 -1 0 -6 -3 -1

Net income KlöCo 10 3 -54 -11 -4 -16 -122 -28 -39 -85 -200 12 EPS basic (€) 0.10 0.03 -0.54 -0.11 -0.04 -0.16 -1.22 -0.28 -0.39 -0.85 -2.00 0.14 EPS diluted (€) 0.10 0.03 -0.54 -0.11 -0.04 -0.16 -1.22 -0.28 -0.39 -0.85 -2.00 0.14

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Recovery continued in both segments

05

E

ur

ope

Ame

ri

ca

s

Shipments (Tto)

Sales (€m)

EBITDA* before restructuring (€m)

Shipments (Tto)

Sales (€m)

EBITDA before restructuring (€m)

* 2012: as restated for the initial application of IAS19 revised 2011. Restructuring costs (€m) Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q3 2013 Q4 2013 1.097 1.018 908 930 941 903 839 956 987 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 1.237 1.149 1.041 1.017 1.061 1.006 935 1.015 1.072 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 35 12 16 14 28 26 34 26 32 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2** 2013 Q3** 2013 Q4** 2013 Q1 2014 Q2 2014 766 746 677 716 749 714 653 677 733 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 727 698 592 608 637 594 520 557 608 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 22 12 16 21 20 20 13 24 28 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 +5.0% +1.1% -2.3% -4.6%

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Segment performance Q2 2014

05

Europe Americas HQ/Consol. Total

Shipments (Tto) Q2 2014 987 733 1,720 Q2 2013 941 749 1,690 Δ % 5.0 -2.3 1.8 Sales (€m) Q2 2014 1,072 608 1,680 Q2 2013 1,061 637 1,698 Δ % 1.1 -4.6 -1.0 EBITDA (€m) Q2 2014 32 28 -4 56 % margin 3.0 4.6 3.3 Q2 2013 28 20 -5 43 % margin 2.6 3.2 2.5 Δ % EBITDA 18.2 36.7 29.6

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Balance sheet as of June 30, 2014

05

(€m) June 30, 2014 December 31, 2013 Non-current assets 1,041 977 Inventories 1,238 1,166 Trade receivables 914 687 Other assets 115 170

Cash & Cash equivalents 350 595

Total assets 3,658 3,595

Equity 1,447 1,445

Total non-current liabilities 1,165 1,077

thereof financial liabilities 780 727

Total current liabilities 1,046 1,073

thereof trade payables 689 637

Total equity and liabilities 3,658 3,595

Net working capital 1,463 1,216

Net financial debt 579 325

Shareholders’ equity:

Healthy at 40%

Financial debt:

Gearing at 41%

Gross debt of €0.9bn and

cash position of €0.3bn

result in a net debt position

of €579m

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05

32 197 16 16 38 52 133 561 238 360 186 0 200 400 600 800 1000 1200 2014 2015 2016 2017 Thereafter

Committed lines

Bilaterals Promissory Notes ABS 435

1,175

149

Syndicated loan

extension option of one year till May 2017 successfully executed

ABS Europe

extended by one year till May 2017

S&P

rating improved from B+, Outlook „negative“ to B+, Outlook „stable“

€m Facility Committed Drawn amount Q2 2014* FY 2013* Bilateral Facilities 1) 537 164 62 ABS 561 241 191 Syndicated Loan 360 161 161 Promissory Note 185 186 238

Total Senior Debt 1,643 752 652

Convertible 2009 0 0 98 Convertible 2010 2) 186 177 171 Total Debt 1,829 929 921 Cash 350 595 Net Debt 579 325 *Including interest 1) Including finance lease.

Improvement of maturity profile

Improvement of maturity profile

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Profit & loss Q2 2014

05

(€m) Q2 2014 Q2 2013 Sales 1,680 1,698 Gross profit 325 305 Personnel costs -146 -142

Other operating expenses (net) -123 -120

EBITDA 56 43

Depreciation & Amortization -23 -26

EBIT 33 17

Financial result -16 -19

EBT 17 -2

Taxes -7 -2

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Current shareholder structure

05

Geographical breakdown of identified

institutional investors

Comments

Identified institutional investors

account for 55%

German investors incl. retail

dominate

Top 10 shareholdings represent

around 31%

Retail shareholders represent 27%

As of July 2014 Rest of EU 6% Rest of World 7% US 47% Switzerland 4% UK 9% Germany 19% France 8%

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Current shareholder structure II

05

Voting Rights Announcements according to

WpHG (Security Trading Act)*

*) The table lists all shareholders, whose Klöckner & Co SE voting shares currently exceed one of the notification thresholds under section 21 clause 1 WpHG, based on notification.

Date of publication Subject to compulsory notification Portion of voting stock

02/06/2014 Interfer Holding GmbH 4.98%

07/04/2014 Templeton Investment Counsel, LLC 5.02%

18/03/2014 Franklin Mutual Advisors – included therein: Franklin Templeton Investment Funds (3.15%)

5.35%

27/01/2014 Allianz Global Investors Europe GmbH 3.05%

08/01/2013 Franklin Templeton Investments Corp. 4.99%

02/02/2012 Dimensional Holdings Inc. /

Dimensional Fund Advisors LP

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Products

05

Hollow Sections Flat products

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Products / Services

05

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Services

05

3D-Laser Laser cutting / Flame cutting

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Appendix

05

Financial calendar 2014

October 1-2, 2014 Capital Market Days, Berlin

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

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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

Figure

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References

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