Corporate | 6 March 2014 06:59
Klöckner & Co SE: Earnings improved in 2013 despite weak markets
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Klöckner & Co. SE / Key word(s): Final Results
– Market and restructuring-driven decreases in turnover and sales, with turnover down 8.8% to 6.4 million tons and sales down 13.7% to approximately EUR6.4 billion. – Gross profit margin increased through stronger focus on higher-margin business from 17.4% to 18.6%. – Operating income (EBITDA) improved from EUR60 million to EUR124 million. – EBITDA before restructuring at EUR150 million – including gain on disposal of real estate of EUR11 million – better than prior year (EUR137 million) despite contraction in markets. – Group net loss reduced from EUR-203 million in prior-year period to EUR- 90 million. – Net financial debt down on prior year, from EUR422 million to EUR325 million. – KCO 6.0 restructuring program successfully completed with annual EBITDA effect of EUR150 million. – KCO WIN optimization program successfully started with expected EBITDA contribution of EUR20 million this year and EUR50 million from 2015. – First acquisition since successful completion of restructuring: 75% stake in Swiss reinforcing steel specialist Riedo Bau + Stahl AG acquired. – EBITDA guidance for Q1: EUR40 million to EUR50 million. Figures relate to fiscal year 2013 relative to prior year. Duisburg, Germany, March 6, 2014 – Klöckner & Co SE’s turnover fell by a total of 8.8% in fiscal year 2013 as a result of the ongoing contraction in the European steel market combined with location closures and the discontinuation of low-margin businesses under the Company’s restructuring program. Sales declined at an even sharper rate due to lower price levels, most of all in the first half year, falling by 13.7% in the year as a whole. Gross profit went down from EUR1.3 billion to EUR1.2 billion in line with the lower volume of business. Focusing on higher-margin business, however, already began to pay off with a 1.2 percentage point improvement in the gross profit margin from 17.4% to 18.6%. Operating income (EBITDA) stood at EUR124 million, up from EUR60 million in the prior-year period. Due to EUR84 million in cost savings, it was possible to more than offset the market-driven impact on earnings. This also benefited EBITDA adjusted for restructuring expenses, which likewise increased, from EUR137 million in the prior year to EUR150 million. Earnings before interest and taxes (EBIT) picked up even more substantially in fiscal year 2013 from a negative EUR105 million to a negative EUR 6 million, mostly because of a reduction in impairments from EUR55 million in the prior year to EUR26 million. Partly due to the reduced interest burden, net income improved to a negative EUR90 million as against a negative EUR203 million a year earlier. Basic earnings per share went up correspondingly to a negative EUR0.85 compared with a negative EUR2.00 in the prior-year period. Gisbert Rühl, CEO of Klöckner & Co SE: “With our comprehensive restructuring measures, we achieved the turnaround in fiscal year 2013. As early as in the second half year, the boost to earnings from the restructuring program was already substantially bigger than the negative impact from the market contraction.”
Earnings hit by tough market in both segments
Turnover declined in the Americas segment by 3.7% during 2013, mainly due to a weaker-than-expected market environment and stronger focus on higher-margin business;
Restructuring finished
KCO WIN optimization program on track
“Klöckner & Co 2020” long-term growth strategy adapted
Klöckner & Co acquires majority of Swiss reinforcing steel specialists
The share purchase contract provides for the company to be acquired in full within two years. The transaction is still subject to normal closing conditions but has already been approved, with a different transaction structure, by the Swiss Competition Commission. The modified transaction structure will be subsequently reported to the Competition Commission and is not likely to change the approval decision. Gisbert Rühl: “In acquiring Riedo, we have strengthened our leading market position in the attractive Swiss market for reinforcing steel. Furthermore, the ability to utilize Riedo’s state-of-the-art sites will enable savings on necessary investments in the lower to medium double-digit million euro range, as well as leveraging substantial synergies.”
Outlook
Overall, successful completion of the KCO 6.0 restructuring program, the incipient impact of the KCO WIN follow-up program, and the more positive market outlook spell a significant improvement in the earnings situation. A tangible increase in gross profit combined with lower costs means that operating income (EBITDA) before restructuring expenses ought to substantially exceed the EUR150 million prior-year figure. The main earnings drivers will be the planned incremental contributions to EBITDA of around EUR40 million from the completed KCO 6.0 restructuring program and of EUR20 million from the KCO WIN optimization program. Although the earnings boost from the optimization measures will mostly kick in during the second half year, a marked increase in earnings is already expected in the current quarter, with EBITDA of EUR40 million to EUR50 million
Gisbert Rühl: “In the current year, we plan to generate again a positive pretax result through our own efforts – even if the generally expected market recovery fails to materialize – and from 2015 we once more aim to pay a dividend. Likewise we are optimistic for the years beyond. By continuing to systematically implement our “Klöckner & Co 2020″ strategy adapted in line with the shift in market conditions, we will further improve our earnings potential and press ahead with growth once again.” About Klöckner & Co: Klöckner & Co is the largest producer-independent distributor of steel and metal products and one of the leading steel service center companies in the European and American markets combined. The core business of Klöckner & Co is the warehousing and distribution of steel and non-ferrous metals as well as the operation of steel service centers. Based on the Group’s distribution and service network, more than 146,000 customers are supplied through around 220 locations in 15 countries. Currently, Klöckner & Co employs around 9,600 employees. The Group had sales of around EUR6.4 billion in fiscal year 2013. 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.
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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: | info@kloeckner.com | |
| Internet: | www.kloeckner.com | |
| ISIN: | DE000KC01000 | |
| WKN: | KC0100 | |
| Listed: | Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, Hannover, München, Stuttgart | |
| End of News | DGAP News-Service |
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