Klöckner & Co SE. Roadshow Macquarie/ Danske Bank. A Leading Multi Metal Distributor. Marcus A. Ketter CFO. Helsinki/Copenhagen. September 5-6, 2013

Transcription

1 Klöckner & Co SE A Leading Multi Metal Distributor Marcus A. Ketter CFO Roadshow Macquarie/ Danske Bank Helsinki/Copenhagen September 5-6,

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 /H1 04 Outlook 05 Appendix 3

4 01 Klöckner & Co SE at a glance Producers Products : Services: Distributor / Service Center Klöckner & Co SE 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 230 locations worldwide Key figures for Turnover: Sales: EBITDA 7.1 million tons 7.4 billion 139 million (before restructuring) Customers Commercial/ residential construction Infrastructure Machinery and mechanical engineering Automotive 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 More than 160,000 customers Average normal order size approx. 2,000 Klöckner & Co value chain 5

6 01 Global reach local presence With around 230 locations in 15 countries we assure local availability for our customers USA: 38% Europe: 60% UK: 6% Brazil: 1% F/BE: 13% ES: 3% NL: 3% CH: 10% D*: 25% China: 1% Austria Belgium Brazil China England France Germany Ireland Mexico Netherlands Puerto Rico Scotland Spain Switzerland USA As of December * EEC included, but completely sold in Q1 6

7 01 Acquisitions shift exposure towards more promising regions and products As of December * EEC included, but completely sold in Q1 7

8 01 Klöckner is together with TK the second largest steel and metal distributor in Europe and number three in the US Position in the US significantly improved whereas market share in Europe is expected to remain stable despite heavy restructuring measures 2007 Europe 5% AMDS TK KCO Salzgitter Tata Others 5% AMDS TK KCO Salzgitter Tata Others 1% Reliance Ryerson TK Samuel O'Neal Russel Macsteel Metals USA PNA Namasco Others US 4% Reliance Ryerson KloecknerMetals TK Others Source: Eurometal, Purchasing Magazine, Service Center News 8

9 01 Steel demand in EU-27 still well below pre crisis level Continuous recovery in North America since 2009, but again sharp decline in EU-27 Development in Brazil surprisingly weak since 2010, whereas steel demand in China is further increasing High overcapacities in Europe and China disturb global balance of supply and demand Capacity utilization too low to strengthen margins through stronger price discipline EU-27 NAFTA Brazil >850 China % % % % >25% % e e Source: WSA Installed steel production capacity in million t Steel demand in million t e e

10 Agenda 01 Overview 02 Highlights and update on strategy 03 Financials /H1 04 Outlook 05 Appendix 10

11 02 Negative market impact increasingly compensated by far advanced restructuring measures EBITDA-margin improved, net loss reduced Market especially in Europe (-7,4% yoy)* but also in the US (-2.5% yoy)** in further under pressure Turnover of Klöckner & Co declined by 9.3% yoy also due to closure and divestment of sites and exit of low margin business (-5.0%p) Sales -13.5% yoy additionally burdened by lower price level Gross profit of 305m under proportionally by 11.4% below prior year, gross margin improved from 17.5% to 18.0% -EBITDA of 43m met guidance of 35-45m also w/o incl. 7m from the release of pension accruals Restructuring measures far advanced: 60 out of 70 sites closed and out of more than HC reduced; extended measures to be implemented by the end of, EBITDA contribution of 17m in and 29m in H1 realized Operating EBITDA of between 30m- 40m expected for Q3 Full year operating EBITDA target at last year`s level of 140m (before restructuring) despite weaker H1. Restructuring costs of 18m (w/o compensating effects) expected against 77m in. * Source: Eurometal; turnover of distribution in in Europe yoy. ** Source: MSCI; turnover of distribution/ SSC in in the US yoy. 11

12 02 Against the background of continuing muted outlook for the European steel market we further extended our comprehensive restructuring program (KCO 6.0) in May Measures Program extension in France Realization of further synergy potential in the US Reduction of overall > 2,000 employees (= 17%) and ~70 sites Total cost reduction increased to 190m Total annual EBITDA-impact increased to ~ 160m (before: 150m) Reduction of NWC by > 170m Additional cost of approximately 18m mainly offset by NWC release - 51m 29m 65m Total annual EBITDA-impact of ~ 160m m already realized 12

13 02 Restructuring far advanced Employees 11,577-1,200 UK Europe ESP F EEC -359 GER Americas US BR -23 9,995 Holding F, US ~9,700 Comments 1,800 out of more than 2,000 HC reductions completed 60 out of 70 targeted branches closed or sold since start of program in Q3 Q3 Sites Reduced by ~ 1,600, including temps ~1,800 Q4 Only extended measures concerning France and the US outstanding which are according to plan to be implemented in H UK ESP F EEC GER US BR F, US Q3 Q4 13

14 02 KCO 6.0 measures having strong impact on the P&L KCO 6.0 EBITDA impact Comments 77* ) EBITDA H1-27 Volume Effect -37 Price Effect -11 KCO 6.0 GP effect KCO 6.0 EBITDA expenses 29m 40 KCO 6.0 Fix-cost effect 30 OPEX 72 EBITDA H1 In H1 measures contributed an additional 29m to EBITDA against prior year, Q1: 12m, : 17m Cost cuts achieved trough KCO 6.0 amounted to 40m in H1 Gross profit despite higher margin -75m due to lower turnover OPEX declined by 9% compared to Total GP effect: ~ 75m OPEX in m -9% 1) After restructuring costs of 20m ) Includes one-off gain of 7m due to release of pension accruals. 3) Incl. expenses due to initial application of IAS19 revised and excl. restructuring expenses. -2.2% -2.6% -2.3% -1.8% 12 3) Q3 12 3) Q4 12 3) Q

15 02 KCO WIN measures to support Klöckner & Co 2020 strategy Growth and optimization External & internal growth Operations KCO WIN Profitable growth strategy with focus on value added products and services Optimized net working capital Optimized pricing and sales force management Global sourcing to leverage price potential and global material flows Differentiation Enabling activities Service model Business model innovations Management & personnel development Controlling & IT systems Advanced logistics Extended e-commerce solutions Specific value streams for servicing customers Opportunities for disruptive innovations through fundamental business model changes Optimized and extended management reviews and development programs Advanced systems for Accounting, Controlling, Audit, Tax & Treasury Extended Corporate IT Advanced global collaboration 15

16 02 Exposure to peripheral states in Europe is rather limited after restructuring 95% of European business is in Core Europe (Sales ) 2,000 Reduced by end of the year 95% 6,923 9% 5% 36% European Employees 1) 14 sold (EEC) 23% 20% 2% 46 closed end of <5% 155 European sites 2) 2) 1) Basis is September 2) Distribution locations only 16

17 02 Despite market distortion basis for reaching higher margin level established through transformation of Group structure and cost cutting Exposure to historically more commoditized European general line distribution cut by half until acquisitions restructuring growth 2015e 6.3bn 8.6bn 3% Canada Temtco 2008 Canada % USA 14% CH Major Primary 2007 Macsteel Major divestments / Organic USA 43% USA grow and increase margin Brazil 1% EM 70% European general line distribution BSS 2010 KVT % CH 9% BSS grow and stabilize high earnings level EEC Restructuring KCO % European general line distribution improve profitable core 17

18 02 In the same period share of higher margin business will be increased by 11%pts Sales exposure to more commoditized construction business down from 42% in 2007 to 30% by 2015 Others 27% Others 28% Others 28% 31% Automotive 6% Automotive 12% Machinery 25% +6%pts Automotive 14% Machinery +5%pts 25% Machinery 28% 42% Construction 42% -7%pts Construction 35% -5%pts Construction 30% 2007 e 2015e 18

19 Agenda 01 Overview 02 Highlights and update on strategy 03 Financials /H1 04 Outlook 05 Appendix 19

20 03 Financials Turnover Sales 1,863 Tto -9.3% 1,690 Tto 1,964m -13.5% 1,698m Gross profit EBITDA 344m* -11.4% 340m** 305m 50m* -13.5% -10.2% 33m** 43m +31.7% * Excluding restructuring costs but restated for the initial application of IAS19 revised. ** Including restructuring costs and restated for the initial application of IAS19 revised. Restructuring costs 20

21 03 Financials H1 Turnover Sales 3,720 Tto -10.3% 3,336 Tto 3,909m -15.0% 3,322m H1 H1 H1 H1 Gross profit EBITDA 687m* -11.6% 683m** 97m* -11.1% 608m -26.1% 77m** -6.5% 72m H1 H1 H1 H1 * Excluding restructuring costs but restated for the initial application of IAS19 revised. ** Including restructuring costs and restated for the initial application of IAS19 revised. Restructuring costs 21

22 03 Turnover and sales Turnover (Tto) & Americas share Sales ( m) & Americas +30.5% share 1,857 1,863 1,763 1,765 1,764 1,636 1,585 1, % 1, ,885 1,885 1,945 1,964 1,847 1,739 1,633 1, % 1, % +4.5% Q3 Q4 Q1 Q3 Q4 Q1 Q3 Q4 Q1 Q3 Q4 Q1 Turnover down 9.3% yoy due to weak steel markets and restructuring impact of -5.0%p but sequentially up by 2.7% driven by seasonal effects Turnover share of Americas segment continuously increasing from 32% in to over 44% in Sales -13.5% yoy additionally impacted by lower price level Average price per ton down yoy ( : 1,004 vs. : 1,054) 22

23 03 Gross profit and EBITDA Gross profit ( m) / Gross-margin (%) EBITDA ( m) / EBITDA-margin (%) * 47* 50* 43* * * * * 1.3* 2.4* 2.5* * 18 21* * Q3 Q4 Q1 Q3 Q4 Q1 Q3 Q4 Q1 ** ** Q3 ** Q4 ** Q1 Despite further declining prices, gross profit margin improved compared to (+0.5%p) mainly due to exit of low margin business Strong cost reduction with positive effect on EBITDA-margin, generating significantly higher EBITDA qoq out of only slightly improved gross profit * Before restructuring costs. ** As restated for the initial application of IAS19 revised. * Incl. 7m pension release; without release 2.1% EBITDA-margin 23

24 03 Key figures by segment Turnover (Tto) Sales ( m) EBITDA ( m) Europe 1,365 1,251 1,223 1,237 1,192 1,137 1,149 1,067 1,105 1,097 1,041 1,017 1, , % -14.2% * 22* 35* 12* 16* 14 28*** Q3 Q4 Q1 Q3 Q4 Q1 Q3 Q4 Q1 Q3 Q4 Q1 Q3 Q4 Q1 Q3 Q4 Q1 ** ** ** ** Turnover (Tto) Sales ( m) EBITDA ( m) Americas % -12.3% * Q3 Q4 Q1 Q3 Q4 Q1 Q3 Q4 Q1 Q3 Q4 Q1 Q3 Q4 Q1 Q3 Q4 Q1 ** ** ** ** * Restructuring costs: Europe: 3m in Q1, 17m in, -1m in Q3 and 57m in Q4; Q4 : 10m; Americas: 1m in Q4. ** As restated for the initial application of IAS19 revised. *** Includes 7m release of pensions. 24

25 03 Cash flow and net debt development Cash flow reconciliation in ( m) EBITDA Change in reported NWC -29 Interest Taxes Other CF from operating activities -8 Capex net -20 Free CF Development of net financial debt in ( m) Q1 CF from operating activities Capex (net) Other* Comments NWC reduced qoq due to weak demand Capex (net) of -8m Other mainly includes cash outs for restructuring provisions of 11m and payments for settling hedging derivates of 12m Interest relates to cash outs mainly for convertible bond ( 6m), promissory notes ( 10m), transaction cost for ABS and syndicated loan renewal ( 2m) and interest derivates ( 3m) * exchange rate effects, interest. 25

26 03 Strong balance sheet 3,880 Assets 3,897 Equity & liabilities 3,880 3,897 Non-current assets 1,107 1,069 Equity 1,502 1, % 38.9% Inventories 1,254 1,198 Non-current liabilities 1,384 1,251 Trade receivables Other current assets Liquidity Current liabilities 994 1,132 FY ** FY ** Comments Equity ratio still solid at 39% Net debt of 489m Gearing* at 33% NWC increased seasonally by 49m to 1,456m * Gearing = Net debt/equity attributable to shareholders of Klöckner & Co SE less goodwill from business combinations subsequent to May 23,. ** As restated for the initial application of IAS 19 rev.. 26

27 03 Balanced maturity profile June m Facility Committed Drawn amount * FY * m Bilateral Facilities 1) Other Bonds ABS Syndicated Loan Promissory Note Total Senior Debt 1, Convertible ) Adjusted equity 1,493 Net debt 489 Gearing 3) 33% Maturity profile of committed facilities and drawn amounts ( m) Convertible ) Total Debt 2,052 1,060 1,033 Cash Net Debt *Including interest 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, 4) Incl. Swiss facilities of 156 Mio. EUR which are automatically renewed on a yearly basis 4) Bilaterals ABS Syndicated loan Promissory notes Left side: committed facilities Right side: drawn amounts Thereafter Convertibles 27

28 03 Solid financing and balance sheet structure support strategy Klöckner & Co 2020 Balance sheet remains strong Equity ratio still solid at 39% Gearing at a low level of 33% Financing position is very robust Diversified finance structure with 10 different finance instruments Balanced maturity profile with average maturity of 3 years Access to facilities of around 2.1bn in total 570m cash European ABS and Syndicated Loan each amounting to 360m prolonged until May 2016 Targets for Free cash flow positive Reducing NWC and net debt 28

29 Agenda 01 Overview 02 Highlights and update on strategy 03 Financials /H1 04 Outlook 05 Appendix 29

30 04 Demand expectations for H2 As the seasonal summer slowdown approaches, markets in Europe and North America will remain quiet with prices tending overall upwards in Q3 Europe US Construction in Germany and Switzerland slightly better, France and UK stable on low level, Spain weak Auto is expected to be low throughout, especially in France Slightly improving demand for machinery & mechanical engineering in Germany Auto, HVAC, barge and shipbuilding, storage tanks better non-res construction, mining, yellow goods, machinery weaker Brazil Further increasing demand for agricultural equipment, trucks and in energy sector Weaker demand for mining and sugar mills China Healthy demand for steel structures and port equipment for export Basically all other sectors are not doing well, particularly mechanical engineering and construction equipment, which is heavily oversupplied 30

31 04 Outlook Q3 Turnover and sales to be seasonally lower but less pronounced because of improving outlook in the US EBITDA guidance of 30-40m driven by increasing prices and further restructuring effects kicking in FY Turnover and sales expected to come in below prior year`s level mainly due to weaker H1 Operating EBITDA target at last year`s level of 140m before restructuring costs Free cash flow expected to be positive Net debt again to be reduced yoy despite restructuring cash-outs 31

32 Agenda 01 Overview 02 Highlights and update on strategy 03 Financials /H1 04 Outlook 05 Appendix 32

33 05 Quarterly results and FY results ( m) Q1 Q4 * Q3 * * Q1 * Q4 Q3 FY * FY FY 2010 FY 2009 FY 2008 Turnover (Tto) 1,690 1,646 1,585 1,764 1,863 1,857 1,636 1,765 1,763 7,068 6,661 5,314 4,119 5,974 Sales 1,698 1,625 1,633 1,847 1,964 1,945 1,739 1,885 1,885 7,388 7,095 5,198 3,860 6,750 Gross profit ,288 1,315 1, ,366 % margin EBITDA rep % 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 of IAS19 revised. 33

34 05 Balance sheet as of June 30, ( m) June 30, December 31, * Non-current assets 1,069 1,107 Inventories 1,198 1,254 Trade receivables Cash & Cash equivalents Other assets Total assets 3,897 3,880 Equity 1,514 1,502 Total non-current liabilities 1,251 1,384 thereof financial liabilities Comments Shareholders equity: Remains stable at 38.9% Financial debt: Gearing at 33% Gross debt of 1.1bn and cash position of 0.6bn result in a net debt position of 489m Total current liabilities 1, thereof trade payables Total equity and liabilities 3,897 3,880 Net working capital 1,456 1,407 Net financial debt *) Restated due to initial application of IAS19 revised. 34

35 05 Statement of changes in equity -132 Improvement mainly due to higher interest rates 8 1,634 1, Net investment hedges f/x foreign subsidiaries 1, Revised equity as of December 31, * Equity as of December 31, (as restated for IAS19) Net Income IAS 19R F/X and Hedging Reserves Equity as of March 31, * As restated for the initial application of IAS 19 rev. 35

36 05 KCO 6.0 EBITDA impact Q1 and Q ) KCO 6.0 EBITDA expenses 12m ) -6 KCO 6.0 EBITDA expenses 17m EBITDA Volume Effect Price Effect KCO 6.0 GP effect KCO 6.0 Fix-cost effect OPEX EBITDA EBITDA Volume Effect Price Effect KCO 6.0 GP effect KCO 6.0 Fix-cost effect OPEX 2) EBITDA Total GP effect: 41m Total GP effect: 34m 1) Restructuring costs. 2) Includes one-off gain of 7m due to release of pension accruals. 36

37 05 Profit & loss ( m) * Sales 1,698 1,964 Gross profit Personnel costs Other operating expenses (net) EBITDA Depreciation & Amortization EBIT Financial result EBT Taxes -2 3 Net income Minorities 0 0 Net income attributable to KCO shareholders *) Restated due to initial application of IAS19 revised. 37

38 05 Segment performance ( m) Europe Americas HQ/Consol. Total Turnover (Tto) ,690 1, ,863 % Sales 1, ,698 1, ,964 % EBITDA % margin * %margin % EBITDA * Restated due to initial application of IAS19 revised. 38

39 05 Strong Growth: 24 acquisitions since the IPO Country Acquired 1) Company Sales (FY) 2) Brazil May Frefer 150m USA April Macsteel 1bn 2 acquisitions 1,150m USA Dec 2010 Lake Steel 50m USA Sep 2010 Angeles Welding 30m GER Mar 2010 Becker Stahl-Service 600m CH Jan 2010 Bläsi 32m acquisitions 712m US Mar 2008 Temtco 226m UK Jan 2008 Multitubes 5m acquisitions 231m CH Sep 2007 Lehner & Tonossi 9m UK Sep 2007 Interpipe 14m US Sep 2007 ScanSteel 7m BG Aug 2007 Metalsnab 36m UK Jun 2007 Westok 26m US May 2007 Premier Steel 23m GER Apr 2007 Zweygart 11m GER Apr 2007 Max Carl 15m GER Apr 2007 Edelstahlservice 17m US Apr 2007 Primary Steel 360m NL Apr 2007 Teuling 14m F Jan 2007 Tournier 35m acquisitions 567m acquisitions 108m ¹ Date of announcement 2 Sales in the year prior to acquisitions Acquisitions 1) Acquired sales 1),2) 712m 567m m 141m 108m bn 2 39

40 05 Current shareholder structure Geographical breakdown of identified institutional investors US 42% Germany 24% UK 9% France 8% Switzerland 6% Other EU 4% Comments Identified institutional investors account for 51% German investors incl. retail dominate Top 10 shareholdings represent around 25% Retail shareholders represent 30% Other World 7% As of July. 40

41 05 Appendix Financial calendar /2014 November 6, Q3 interim report March 5, 2014 Annual Financial Statements May 7, 2014 Q1 interim report 2014 June 6, 2014 Annual General Meeting 2014, Düsseldorf August 6, 2014 interim report 2014 November 5, 2014 Q3 interim report 2014 Contact details Investor Relations Christian Pokropp, Head of Investor Relations & Corporate Communications Phone: Fax: Internet: 41

42 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