Corporate | 7 May 2015 07:00
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Klöckner & Co. SE / Key word(s): Quarter Results
– Sales up by 8.0% to EUR1.7 billion driven by acquisitions and exchange rate changes – Gross profit margin down from 19.2% to 18.2% due to sharp drop in steel prices, most of all in the US – Adjusted operating income (EBITDA) of EUR17 million at lower end of projected range of EUR15 million to EUR25 million – Significantly higher operating EBITDA of EUR35 million to EUR45 million expected for the second quarter Figures relate to first three months of 2015 relative to first three months of prior year.
Duisburg, Germany, May 7, 2015 –
Driven mainly by last year’s acquisition of Riedo, shipments increased in the first three months of 2015 by 1.7% to 1.7 million tons. Exchange rate changes made for stronger sales growth of 8.0% to EUR1.7 billion. Due to a sharp drop in prices – above all in the US – gross profit went up by a significantly smaller increment than sales, increasing by 2.5% to EUR310 million, compared with EUR302 million in the prior-year period. The gross profit margin narrowed accordingly by one percentage point, from 19.2% to 18.2%. Adjusted operating income (EBITDA), at EUR17 million
Gisbert Rühl, CEO of Klöckner & Co SE: “The drop in earnings in the first quarter due to the sharp fall in steel prices in the US – and also in Switzerland thanks to exchange rate movements – is a disappointment without any doubt. By the same token, it underlines the need to forge ahead with our strategy toward higher value-added services and digital interconnectivity. This is the only way we can break free of the grip of steel price dependency.”
Earnings burdened in both segments
Driven solely by exchange rate changes, sales in the Americas segment increased by 20.8% to EUR0.7 billion. Conversely, there was severe pressure on margins as a result of a partial collapse in steel prices triggered by the high level of imports. It was also necessary to recognize inventory write-downs. Accordingly, segment EBITDA fell sharply from EUR21 million in the prior-year period to EUR7 million in the first three months of 2015.
In April, Klöckner & Co extended, ahead of term, a EUR360 million syndicated loan with its core banks by one year to May 2018. The transaction enabled Klöckner & Co to secure more favorable financing terms while further improving the maturity profile of its broadly diversified portfolio of financing instruments. Outlook Klöckner & Co anticipates a rise of between 1% and 2% in European steel demand in the current year. The main growth impetus is expected to come from machinery and mechanical engineering as well as from the automotive industry, which stand to benefit from a weaker euro and lower oil prices. For the US, a slight increase in steel demand of between 1 and 2% is anticipated as well. The boost to household spending power from lower oil prices is notably stimulating residential construction and the automotive industry. This should at least make up for the negative effect of reduced steel demand from the oil and gas sector. Despite the fact that steel prices have continued to fall in the US up to now, Group sales should increase slightly in the second quarter due to seasonal factors. Operating EBITDA is projected to be in a range of between EUR35 million and EUR45 million. The expected rise in earnings compared with the preceding quarter will be helped along by the anticipated reduction in pressure from falling steel prices and also increasingly by the impact of internal optimization measures. Gisbert Rühl: “We expect to see a noticeable rise in operating income in the second half of the year. However, our announced target of an increase in EBITDA for the full year – before restructuring measures – appears very ambitious in light of the significantly altered environment.”
About Klöckner & Co:
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.
2015-05-07 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 |
| 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: | Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Hanover, Munich, Stuttgart | |
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| 354137 2015-05-07 |