Klöckner & Co SE

EANS-News: Klöckner & Co SE
Half-year operating income (EBITDA) shaped by contrary steel cycles during first and second quarter. Major boost in sales volumes and sales. Capital increase successful. Outlook of more than 25% sales and sales volume ...

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quarterly report

Duisburg (euro adhoc) - • Sales volumes increased compared with first half of
2010 by 24.1% to 3.3 million tons (Q2: 1.8 million tons compared with 1.4
million tons in Q2 2010) 
• Sales up by 40.8% compared with the prior-year period to approximately 
EUR3.5 billion (Q2: EUR1.9 billion compared with EUR1.4 billion in Q2 2010)
• Operating income (EBITDA) improved from EUR129 million in prior-year period to
EUR166 million; however, second-quarter EBITDA, at EUR62 million, down on EUR100
million prior-year figure
• Net income at EUR50 million, compared with EUR49 million in prior-year period
• Earnings per share at EUR0.69, compared with EUR0.71 in comparative prior-year
• Successful capital increase with net proceeds of EUR517 million lays
foundation for further growth
All figures for first six months compared with same period of prior year 

Duisburg, August 10, 2011: After healthy growth in operating income (EBITDA) in
the first quarter of 2011, the second quarter brought a visible decrease in
earnings momentum with EBITDA of EUR62 million. This development largely
reflected the downtrend in steel prices, which after a sharp rise in the first
quarter came under pressure in the second. However, the second quarter also
brought a further major boost to sales volumes and sales, notably from the
acquisition of Macsteel Service Centers USA ("MSCUSA"). Gisbert Rühl, Chairman
of the Management Board of Klöckner & Co SE: "After a first quarter that saw us
start the year with a tailwind, the economic recovery visibly lost speed in the
second quarter and even slowed right down toward the end, with prices in part
dropping sharply. Our customers showed a certain reluctance to make purchases
because they expected prices to continue downwards. This also put increasing
pressure on margins. Although there is once more considerably greater
uncertainty, we confirm our outlook of more than 25% growth in sales volumes and
sales in 2011, provided that current developments on the global capital markets
do not lead back into a recession."

Strong growth in sales volumes and sales
Sustained robust demand from year to year and notably the two acquisitions
enabled Klöckner & Co to generate sales volumes of 3.3 million tons in the first
six months of 2011, a substantial 24.1% more than in the prior-year period (2.6
million tons). Sales volumes gained 13.8% in Europe and 62.3% in the Americas
segment compared with the prior-year figures. Adjusted for the acquisitions in
2010 and 2011, sales volumes in the Americas segment were up 16.1% on the
prior-year period, while adjusted sales volumes for the Group as a whole rose by
With a year-on-year rise in average prices despite the current falling price
trend, sales grew more strongly than sales volumes. Group sales totaled some
EUR3.5 billion in the first half of 2011, an increase of 40.8% - excluding
acquisitions, 26.1% - compared with the first half of 2010. During the second
quarter, falling prices and associated customer reluctance to purchase exerted
noticeable pressure on margins. Combined with mainly price-related inventory
writedowns toward the end of the reporting period, this led to a gross profit
margin that at 19.9% was significantly down on the 23.0% in the prior-year
period. Operating income (EBITDA) was increased - mainly as a result of the good
business situation in the first quarter of 2011 - from EUR129 million in the
first half of 2010 to EUR166 million (an increase of 28.5%) in the first half of
2011. This corresponds to an EBITDA margin of 4.8% (HY1/2010: 5.3%). In the
second quarter, however, EBITDA was down at EUR62 million compared with EUR100
million in the prior-year period, due to a significant extent to EUR15 million
in inventory writedowns.
EBIT in the first six months of 2011 came to EUR122 million (HY1/2010: EUR89
million) and tracked the trend in EBITDA. Earnings before taxes (EBT) came to
EUR81 million, compared with EUR57 million in the prior-year period. Klöckner &
Co generated net income of EUR50 million (HY1/2010: EUR49 million). Basic
earnings per share stood at EUR0.69, compared with EUR0.71 in the prior-year

Strong balance sheet and financing structure maintained 
The changes in the statement of financial position are mainly shaped by the
acquisitions of MSCUSA and Frefer completed in the second quarter and by the
capital increase. Total assets increased as a result by 41.4% to EUR4,936
million. Acquisition accounting and higher sales volumes increased resources
tied up in net working capital to EUR1,713 million, compared with EUR1,017
million at the end of fiscal 2010. The inflow of resources from the capital
increase was a key factor in maintaining liquid funds at the high level of
EUR1,035 million, compared with EUR935 million as of December 31, 2010, despite
the cash outflow on payment of the purchase price for MSCUSA and Frefer and the
higher net working capital.
The equity ratio came to some 37% as of June 30, 2011, on a par with the 2010
fiscal year-end. After payment of the purchase price for the two acquisitions
and after the share issue, net financial debt stood at EUR600 million, compared
with EUR137 million at the end of the prior fiscal year.

Milestones in the first half of 2011 in implementation of the strategy "Klöckner
& Co 2020" 
The second quarter saw Klöckner & Co attain three milestones in the 
strategy "Klöckner & Co 2020" presented in October last year: 
1. The acquisition of Macsteel Service Centers USA ("MSCUSA") was completed at
the end of April. MSCUSA is one of the leading flat steel service center
companies in the USA, with sales of some USD 1.3 billion in 2010. The
acquisition doubles Klöckner & Co´s sales and number of locations in North
America. It adds flat products to a product range previously focused on long
products and heavy plate. Klöckner & Co is now among the market leaders in all
three product segments in the USA and has moved up to become the third largest
steel and metal distributor in North America. Integration of the company into
the existing US country organization proceeds apace. The potential synergies are
estimated to be significantly bigger than initially expected. The US country
organization will operate in the future under a single brand and is now the
largest in the Group, with 30% of sales. 
2. At the end of May, Klöckner & Co acquired a 70% share in the Frefer Group,
Brazil ("Frefer"). With approximately 360 employees at 14 locations, the group
generated sales of some BRL 340 million (about EUR150 million) in 2010. The move
marks Klöckner & Co´s entry into the fast-growing emerging economies of South
3. The 50% capital increase was successfully carried out in June and generated
net proceeds of EUR517 million, which will mainly be used to continue the
"Klöckner & Co 2020" growth strategy. 

Regarding business performance in 2011, despite the global economic slowdown and
provided that the current developments on global capital markets do not lead
back into a recession, Klöckner & Co continues to anticipate growth of more than
25% in sales volumes and sales, with acquisitions contributing significantly to
the increase. The Company projects a slight seasonal reduction in demand in the
third quarter. Earnings are consequently expected to be below the second quarter
for seasonal reasons. For the fourth quarter, and accordingly for the full year,
an earnings forecast is currently subject to great uncertainty. Against this
background Klöckner & Co does not further expect to reach its medium-term target
EBITDA margin of 6% already for the current year.
Gisbert Rühl: "In acquiring MSCUSA and Frefer in Brazil, we have systematically
pushed ahead our long-term growth strategy "Klöckner & Co 2020" and laid key
groundwork for the onward development of Klöckner & Co. The capital increase
successfully completed in June additionally lays the foundation for us to
continue pursuing our "Klöckner & Co 2020" growth strategy with ambitious

Further inquiry note:
Dr. Thilo Theilen
Leiter Investor Relations
Telefon: +49 (0)203 307 2050
E-Mail: thilo.theilen@kloeckner.de

end of announcement                               euro adhoc 

company:     Klöckner & Co SE
             Am Silberpalais 1
             D-47057 Duisburg
phone:       +49(0)203-307-0
FAX:         +49(0)203-307-5000
mail:     info@kloeckner.de
WWW:      http://www.kloeckner.de
sector:      Metal Goods & Engineering
ISIN:        DE000KC01000
indexes:     CDAX, Classic All Share, Prime All Share
stockmarkets: regulated dealing/prime standard: Frankfurt, free trade: Berlin,
             Hamburg, Stuttgart, Düsseldorf, München 
language:   English

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