Klöckner & Co SE. Bankhaus Lampe Deutschland Konferenz. A Leading Multi Metal Distributor. Marcus A. Ketter CFO. Baden-Baden.

Transcription

1 Klöckner & Co SE A Leading Multi Metal Distributor Marcus A. Ketter CFO Bankhaus Lampe Deutschland Konferenz Baden-Baden April 16, 2015

2 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. 2

3 Agenda 01 Overview 02 Highlights and update on strategy 03 Financials 04 Outlook 05 Appendix 3

4 01 Klöckner & Co SE at a glance Producers Distributor / Service Center Largest producer-independent steel and metal distributor and one of the leading steel service center companies in the European and American markets combined Distribution and service platform with around 220 locations worldwide Key figures for Shipments: 6.6 million tons Sales: 6.5 billion EBITDA 191 million Customers Commercial/ residential construction Infrastructure Machinery and mechanical engineering Automotive Products: Services: Yellow Goods White Goods Miscellaneous 4

5 01 Holistic solution from covering procurement, logistics and processing Suppliers Sourcing Products and services Logistics / distribution Customers As a producerindependent distributor, our customers benefit from our diverse national and international procurement options 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 Around 150,000 customers Average normal order size approx. 2,000 Klöckner & Co value chain 5

6 01 Global reach local presence With around 220 locations in 15 countries we assure local availability for our customers USA: 36% Europe: 63% UK: 6% Brazil: <1% F/BE: 13% ES: 2% NL: 3% CH: 15% D: 24% China: <1% Austria Belgium Brazil China England France Germany Ireland Mexico Netherlands Puerto Rico Scotland Spain Switzerland USA As of December 6

7 01 Sales by markets, products and industries Sales by markets Sales by industry Sales by product As of December 7

8 01 Klöckner is one of the leading Steel Service Center / Distributors in Europe and the US Position in the US significantly improved whereas market share in Europe is expected to remain stable despite heavy restructuring measures 2007 ArcelorMittal ThyssenKrupp 5% Klöckner Salzgitter Tata Steel Others Europe ~3,000 ArcelorMittal ThyssenKrupp 5% Klöckner Salzgitter Tata Steel Others 1% Reliance Ryerson ThyssenKrupp Samuel Metals USA Namasco (Klöckner) US ~1,200 4% Reliance Ryerson Kloeckner Metals ThyssenKrupp Others Others Source: Eurometal, Purchasing Magazine, Service Center News. 8

9 01 Development of HRC prices in Europe, North America and China last 5y HRC price development in Europa, North America and China USD/MT last 5y Source: Platts 9

10 01 Development of long steel prices in Europe and North America last 2y SBB long prices - Europe domestic EUR/MT last 2y SBB long prices - North America domestic USD/MT last 2y Source: Platts 10

11 Agenda 01 Overview 02 Highlights and update on strategy 03 Financials 04 Outlook 05 Appendix 11

12 02 Significantly improved results in Steel markets improved by 3% in Europe and 4% in the US, whereas KCO shipments went up only slightly by 2.4% to 6.6m tons despite acquisition of Riedo because of continued reduction of low margin business Sales increased slightly less pronounced than shipments by 2.0% to 6.5bn mainly due to lower price level in Europe Gross profit improved considerably stronger than sales by 6.1% to 1.261m. Gross margin consequently up by 0.8%p to 19.4% Strong improvement of EBITDA from 124m to 191m and net income from - 90m to 22m Positive net income allows a dividend* payment of 20 cents per share Cash flow from operating activities with 50m once again significantly positive Successful acquisition of Swiss reinforcing steel specialist Riedo kloeckner.i as Group Center of Competence for digitalization founded in Berlin Further increase of EBITDA** expected for 2015, despite very weak * Dividend proposal to the Annual General Meeting. ** Outlook does not include any effects of further restructuring measures in France. 12

13 02 Self-help measures as main driver for significant EBITDA increase in EBITDA-bridges ( m) 16 EBITDA FY 0 Volume Effect Price Effect 12 FX Price Effect Market related GP effect: 2m GP Effect Riedo 25 Self-help measures: 13m 6 7 KCO 6.0 Effect KCO WIN Effect -11 OPEX -9 FX OPEX 31 EBITDA Self-help measures: 52m Comments Self-help measures contributed 13m to EBITDA against prior year in, FY 52m EBITDA contribution achieved through KCO 6.0 amounted to 7m in, FY 36m KCO WIN impact of 6m in, FY 16m EBITDA margin improved by 0.9%p to 2.9% in FY EBITDA Volume Effect Price Effect FX Price Effect GP Effect Riedo KCO 6.0 Effect KCO WIN Effect OPEX* FX OPEX EBITDA Market related GP effect: 34m * Including - 14m pension adjustment NL and - 13m Riedo. 13

14 02 Klöckner & Co 2020 growth strategy to drive the change Klöckner & Co 2020 Digitalization 1 Digitalization of the supply chain from suppliers to customers Differentiation Products and services 2 Accelerated expansion of higher value-added products and services 3 Operations KCO WIN and further optimization of pricing Growth and optimization External & internal growth 4 Focus on higher value-added business, regionally on the US market 14

15 02 Various initiatives to digitalize the supply and service chain in progress Efficient and comfortable ordering process through new webshop Innovative tools create additional added value for customers Comprehensive EDI connections with suppliers klockner.i as Group Center of Competence established in Berlin Foundation of kloeckner.v as investment company for start-ups initiated Ambitious digitalization targets Groupwide rollout of new webshop until the end of the year Achieving more than 50% of sales online by 2019 Digitalization 1 15

16 02 Digitalization also to gain from the long tail low Start of Klöckner Multi Metal Center in Q2 Key facts European MRO market Relevant market size of ~ 100bn in Europe Little price sensitivity of target segment High retention rate of satisfied customers Relevant players are weakly positioned in online marketing No real alternative to established players Customers require very large range of (industrial) products (workwear, tools, fittings etc.) which creates opportunities to integrate with other players Buying power high Large caps Machine & plant builder Industrial companies Repair shops High margins in the long tail - 80% of customers order at list price Craftsmen Facility manager Private DIY Large (250+ empl.) Medium ( empl.) Customer size Small (1-20 empl.) 16

17 02 Business impact Timeframe Short-term Mid-term Long-term Impact Optimization of order processes for online transactions (e.g. webshop contract management platform and others) Increased customer satisfaction due to provided data and information (e.g. customer portal, late delivery notice, e-mill-certificates) Rising EDI-connections with suppliers New, digital connections between producers, suppliers and clients drive increased efficiency and process optimization in existing value networks (e.g. next-generation digital data interchange services with all participants) Massive decrease in transactions costs per order due to digitalization of sales and client management processes (e.g. predictive sales, automated proposal generation) Margin-optimized distribution of tasks and orders Massive decrease in capital lockup Uncatchable competitive advantage based on market penetration with digital services, supplier/customer integration and open platforms (e.g. Klöckner digital transaction platform) 1 17

18 02 Margin enhancement through higher value-add products and services Sales share of higher value-add products and services up from 30% () to 34% () Further increase of higher margin business to 45% of sales planed until 2017 Expansion of investments in higher value add of roughly 50% in 2015 Products and services 2 Actual Target

19 02 Optimization program KCO WIN with focus on improved pricing Measures Effective salesforce management Improved pricing Advanced customer segmentation Structured sales approach Clear target-setting on all levels with mid- and long-term development of accounts Sales performance tracking and regular performance reviews Target-oriented incentive schemes Continuous sales staff training Dynamic pricing Optimized pricing Pricing depending on market conditions Pricing tool with algorithm Value based pricing Ongoing price optimization Operations Current focus 3 Minimum pricing Pricing based on profitability Pricing metrics and review Effective sourcing, logistics and warehouse management Further bundling, special deals and increase of bonus yields Introduction of paperless warehouse processes More usage of state of the art warehouse technology 16m m Total annual EBITDA-impact of ~ 40m from 2015 onwards 19

20 02 Acceleration of profitable growth Regional growth focus on US due to better outlook Continuing strong growth of steel demand driven by automotive and recovery of construction External growth in high-margin activities back on the agenda Successful takeover of Swiss reinforcement steel specialist Riedo as first acquisition after completed restructuring Companies with higher value-add service capabilities are of particular interest Healthy balance sheet and financing create room for maneuver External & internal growth 4 20

21 02 Mid-term EBITDA margin target of >5% until 2017 >1% >0.5% >0.5% >5% 2.9% EBITDA margin Pricing Higher value add incl. remaining KCO WIN effects products & services Digitalization 2017 EBITDA margin 21

22 Agenda 01 Overview 02 Highlights and update on strategy 03 Financials 04 Outlook 05 Appendix 22

23 03 Shipments and sales Shipments (Tto) Sales ( m) 1,698 1,680 1,675 1,585 1,646 1,690 1,617 1,492 1,633 1,720 1,690 1,555 1,633 1,625 1,600 1,572 1,577 1, % +8.4% -8.0% -5.8% 2012 Q2 Q3 Q2 Q3 Increase yoy driven by Riedo Shipments decreased qoq following the usual seasonal pattern 2012 Q2 Q3 Q2 Q3 yoy increase includes Riedo and volume effects Sales decline qoq less pronounced than shipments due to stronger USD 23

24 03 Gross profit and EBITDA Gross profit* ( m) / Gross margin* (%) EBITDA* ( m) / EBITDA margin* (%) FY FY 18.7 FY 2.4 FY 17.5 FY 1.8 FY 2012 Q2 Gross margin improved continously quarter by quarter up to 19.6% in * Before restructuring costs. Q3 Q2 Q Q2 Q3 Q2 Q3 EBITDA continues to benefit from KCO 6.0 measures and from KCO WIN EBITDA margin up by 0.5%p in 24

25 XX 03 Segment performance (shipments and sales) Shipments (Tto) 6,445 Europe 3,613 Americas 2, % 6, % -1.0% 3,794 2,804 Comments Shipments Europe up by 5.0% mainly due to Riedo acquisition (+3.8%p) Americas down by 1.0% mainly due to unfavorable market development in Brazil FY Sales ( m) +2.0% 6,378 Europe 4, % FY 6,504 4,101 Sales In Europe up by 2.0% due to Riedo Americas segment up by 1.9% due to favorable price development in US Americas 2, % 2,403 FY FY 25

26 03 Segment performance (gross profit and EBITDA) Europe Americas Gross profit ( m) +6.1% 1,188 1, % +6.0% 420 FY FY EBITDA ( m) +53.3% Comments Focus on higher margin business visible in both segments Europe Gross margin up by 0.8%p to 20.5% EBITDA margin up by 0.4%p to 2.6% Americas Gross margin up by 0.7%p to 17.5% EBITDA margin up by 1.6%p to 4.2% Europe % Americas HQ/Consol % FY FY 26

27 03 Cash flow and net debt development Cash flow reconciliation in ( m) Comments EBITDA -20 Change in NWC -44 Interest -18 Taxes -59 Other 50 Cash flow from operating activities -82 M&A -50 Capex (net) 82 Free cash flow Only minor NWC build-up of 20m Other include changes in provisions and other operating assets/liabilities as well as non-cash items including gain on sale in assets Acquisitions relate to Riedo only Capex at the level of depreciation Development of net financial debt in ( m) Net Debt 325 CF from operating activities 50 * CCS = Cross Currency Swap M&A -82 Capex (net) -50 Settlement CCS* -29 Other -36 Net Debt Net debt increased from 325m to 472m despite positive operating cash flow Settlement of a hedging instrument (CCS * ) burdened net debt with 29m Other include f/x ( 15m) and accrued interest Like-for-like excluding effects of the Riedo acquisition, f/x and cross-currency swap net debt would be ~ 360m

28 03 Strong balance sheet 3,595 Assets 3,629 Equity & liabilities 3,595 3,629 Non-current assets 977 1,103 Equity 1,445 1,429 40% 39% Inventories 1,166 1,318 Financial liabilities Trade receivables Other current assets Liquidity Pensions Trade payables Other liabilities Dec 31, Dec 31, Dec 31, Dec 31, Comments Equity ratio further solid at 39% Net debt of 472m Gearing* at 34% NWC increased from 1,216m to 1,321m yoy (thereof fx 73m and 18m Riedo) 28 * Gearing = Net debt/equity attributable to shareholders of Klöckner & Co SE less goodwill from business combinations subsequent to May 23,.

29 Agenda 01 Overview 02 Highlights and update on strategy 03 Financials 04 Outlook 05 Appendix 29

30 04 Segment specific business outlook 2015 Europe US +1-2% +3-4% Steel demand Construction industry Manufacturing, machinery and mechanical engineering, etc. Automotive industry 30

31 04 Outlook* 2015 Sales to be sequentially up in Strong steel price erosion in the US, FX-related margin pressure and potential inventory write downs in Switzerland as well as further deterioration of construction in France with strong negative impact on earnings Comparable operating EBITDA expected in a range between 15m and 25m Additional negative impact on EBITDA at a mid-single-digit million Euro amount (not included in guidance) compared to due to new accounting regulation IFRIC 21 (one time recognition of levies other than spread over 12 months) FY 2015 Sales to be slightly up; negative effect of anticipated lower steel price level to be overcompensated by volume growth Further increase of EBITDA expected driven by internal measures Acquisitions in companies offering higher value-added products and processing planned Investments in start-ups to advance digitalization strategy intended * Outlook does not include any effects of further restructuring measures in France. 31

32 Agenda 01 Overview 02 Highlights and update on strategy 03 Financials 04 Outlook 05 Appendix 32

33 05 Quarterly results and FY results ( m) Q3 Q2 Q3 Q2 FY FY FY 2012* FY 2011 Shipments (Tto) 1,555 1,690 1,720 1,633 1,492 1,617 1,690 1,646 6,598 6,445 7,068 6,661 Sales 1,577 1,675 1,680 1,572 1,455 1,600 1,698 1,625 6,504 6,378 7,388 7,095 Gross profit ,261 1,188 1,288 1,315 % margin EBITDA % margin EBIT Financial result Income before taxes Income taxes Net income Minority interests Net income KlöCo EPS basic ( ) EPS diluted ( ) * Restated due to initial application IAS 19 revised

34 Americas Europe 05 Both regions recovering from their profitability lows Shipments (Tto) Sales ( m) EBITDA* before restructuring ( m) , , ,041 1, , ,006 1, % +4.0% 2012 Q2 Q3 Q2 Q Q2 Q3 Q2 Q Q2** Q3** ** Q2 Q3 Shipments (Tto) Sales ( m) EBITDA before restructuring ( m) % +16.3% 2012 Q2 Q3 Q2 Q Q2 Q3 Q2 Q Q2 Q3 Q2 Q3 Restructuring costs ( m) Q Q Q3 Europe * 2012: as restated for the initial application of IAS19 revised Americas ** Including pension release: Q2 7m, in Q3 6m and 1m and sale of French La Courneuve site 13m. 34

35 05 Balanced maturity profile December m Facility Committed Drawn amount (IFRS) FY * FY * m FY Bilateral Facilities 1) ABS Syndicated Loan Promissory Note Total Senior Debt 1, Convertible ) Convertible ) Adjusted equity 1,395 Net debt 472 Gearing 3) 34% Maturity profile of committed facilities and drawn amounts ( m) 1, Total Debt 1, Cash Net Debt * Including interest accrued. 1) Including finance lease. 2) Drawn amount excludes equity component. 3) Net debt/equity attributable to shareholders of Klöckner & Co SE less goodwill from business combinations subsequent to May 23, Bilaterals ABS Syndicated loan Promissory notes Thereafter Convertibles US ABL Left side: committed facilities Right side: drawn amounts 35

36 05 Balance sheet as of December 31, ( m) December 31, December 31, Non-current assets Inventories Trade receivables Other assets Cash & Cash equivalents Total assets Equity Total non-current liabilities Comments Shareholders equity: Healthy at 39% Financial debt: Gearing at 34% Gross debt of 0.8bn and cash position of 0.3bn result in a net debt position of 472m thereof financial liabilities Total current liabilities thereof trade payables Total equity and liabilities Net working capital Net financial debt

37 05 Profit & loss ( m) FY FY Sales 6,504 6,378 Gross profit 1,261 1,188 Personnel costs Other operating expenses (net) EBITDA Depreciation & Amortization EBIT 98-6 Financial result EBT Taxes Net income Minorities 0-5 Net income attributable to KCO shareholders

38 05 Current shareholder structure Geographical breakdown of identified institutional investors US 46% Germany 24% France 9% UK 7% Comments Identified institutional investors account for 60% German investors incl. retail dominate Top 10 shareholdings represent around 35% Retail shareholders represent 28% Switzerland 4% Rest of World 7% Rest of EU 3% As of February

39 05 Products Flat products Hollow Sections Long Products Stainless / Aluminium 39

40 05 Products / Services Coils Decoiling / Cutting / Slitting Cutting to Length / Bending Surface treatment 40

41 05 Services Laser cutting / Flame cutting 3D-Laser 3D-Laser 3D-Laser 41

42 05 Appendix Financial calendar 2015 May 7, 2015 interim report 2015 May 12, 2015 Annual General Meeting 2015, Düsseldorf August 6, 2015 Q2 interim report 2015 November 5, 2015 Q3 interim report 2015 Contact details Investor Relations Christian Pokropp, Head of Investor Relations & Corporate Communications Phone: Fax: Internet: 42

43 Our Symbol the ears attentive to customer needs the eyes looking forward to new developments the nose sniffing out opportunities to improve performance the legs always moving fast to keep up with the demands of the customers the ball symbolic of our role to fetch and carry for our customers