Kloeckner & Co SE · XETR:KCO

Kloeckner & — Klöckner & — Shareholder Meeting (May 2014)

25 slides from Kloeckner &'s shareholder meeting presentation, May 23, 2014

  1. Slide 1: Klöckner & Co SE Annual General Meeting 2014

    Klöckner & Co SE A Leading Multi Metal Distributor Gisbert Rühl Annual General Meeting 2014 CEO May 23, 2014

  2. Slide 2: Disclaimer

    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

  3. Slide 3: Steel demand very weak in 2013 – most of all in Europe

    01 Steel demand very weak in 2013 – most of all in Europe • Steel demand in Europe remains 30% and in the US 9% below pre crisis level • Further decline of demand in steel distribution in Europe and only lateral movement in the US Steel demand total (in mt) Steel demand distribution sector in 2013 -

  4. Slide 4: Prices and capacity utilization still largely on negative trend

    01 Prices and capacity utilization still largely on negative trend • Slight recovery of steel prices in the US only towards the end of the year Price development Worldwide capacity utilization 700 100% Jun 08 650 90% 92.7% Jun 11 Feb 13 Apr 10 83.4% 80.5% 84.4% 600 80% Mar 13 550 79.9% 70% Dec 10 De

  5. Slide 5: Negative market impacts largely offset by KCO 6.0 restructuring program

    01 Negative market impacts largely offset by KCO 6.0 restructuring program KCO 6.0 EBITDA-impact Comments Full year KCO 6.0 • Cost cuts of €84m achieved through 150 KCO 6.0 137 EBITDA-impact: €61m 81 26 • EBITDA-impact of €61m realized -77 47 through KCO 6.0 -45 34 124 • EBITDA before restructuring

  6. Slide 6: KCO 6.0 restructuring program fully implemented by 2013 year-end

    01 KCO 6.0 restructuring program fully implemented by 2013 year-end Measures • Total headcount reduction of 2,300 = 1/5 of total workforce • Total site closures 71 = 1/4 of total sites • Total cost reduction of €174m (€148m realized) • Total annual EBITDA-impact of €150m (€126m realized) • Reduction

  7. Slide 7: Continuous improvement in gross profit margin and EBITDA margin

    01 Continuous improvement in gross profit margin and EBITDA margin Gross profit (€m) / Gross profit margin (%) EBITDA (€m) / EBITDA margin (%) 47 50 344 344 43* 307 306 305 40* 302 303 296 39* 288 19.8 2.7* 18.7 FY 29* 2.4 2.5 2.4* 24 2.4* FY 18.6 18.5 +1.2%p 22* 18.5 18 1.8* FY 2.5* +0.6%p 17.5 17.

  8. Slide 8: Earnings and cash flow increased in 2013

    01 Earnings and cash flow increased in 2013 Turnover, sales, earnings and cash flow Comments (€m) FY 2013 FY 2012 ∆ • Turnover and sales market and restructuring related significantly lower Turnover (in Tto) 6,445 7,068 -623 • Net income burdened by restructuring Sales 6,378 7,388 -1,010 costs (€26m

  9. Slide 9: Balance sheet held strong despite net loss

    01 Balance sheet held strong despite net loss Balance sheet as of December 31, 2013: €3,595m Comments 100% Non-current 27.2% • Equity ratio slightly increased to 40% assets 977 40.2% Equity 1,445 • NWC reduced from €1,407m to €1,216m against prior year • Liquidity of €595m on par with prior Inventor

  10. Slide 10: Share price performance not yet satisfactory in 2013, but outperformer in 2014

    01 Share price performance not yet satisfactory in 2013, but outperformer in 2014 Performance Klöckner & Co-share in comparison to DAX®, MDAX® and Bloomberg Broker recommendation Europe Steel Index® (values indexed) 150% 2013 2014 2014 - Number of ratings - 140% 130% May 2014 120% 110% Buy 17 100% H

  11. Slide 11: Substantial EBITDA improvement in Q1 2014, once again from KCO 6.0 measures

    01 Substantial EBITDA improvement in Q1 2014, once again from KCO 6.0 measures KCO 6.0 EBITDA-impact Comments Q1 -23 KCO 6.0 EBITDA-impact: • Cost cuts through KCO 6.0 of €17m €14m • EBITDA-impact of €14m realized 45 through KCO 6.0 0 • EBITDA margin improved in total by 17 1.1%p to 2.9% 29 3 -1 -3

  12. Slide 12: Gross profit margin and EBITDA margin further increased also in Q1 2014

    01 Gross profit margin and EBITDA margin further increased also in Q1 2014 Gross profit (€m) / Gross profit margin (%) EBITDA (€m) / EBITDA margin (%) 50 344 344 47 45 43* 306 302 303 305 296 302 40* 288 39* 19.2 Q1 2.9 Q1 29* 18.7 FY 2.4* FY 22* 17.5 FY 18 1.8* FY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q

  13. Slide 13: Q1 net income back into positive figures for first time after turnaround

    01 Q1 net income back into positive figures for first time after turnaround Turnover, sales, earnings and cash flow Comment (€m) Q1 2014 Q1 2013 ∆ • Turnover on par with prior year level despite restructuring related cutbacks Turnover (in Tto) 1,633 1,646 -13 in low margin business Sales 1,572 1,625

  14. Slide 14: European steel demand forecast to pick up in 2014, with even stronger growth in USA

    01 European steel demand forecast to pick up in 2014, with even stronger growth in USA Europe US +1-2%* GDP +2-3%* Construction industry Machinery and mechanical engineering Automotive industry +2% Steel demand +3-4% *Expectation corresponding to Bloomberg Consensus 14

  15. Slide 15: Targeting positive net income and resumption of dividend payments

    01 Targeting positive net income and resumption of dividend payments Expectations for • Seasonal increase in turnover Q2 2014 • EBITDA in Q2 to come in between €50m - €60m • Turnover and sales to be slightly up • EBITDA to be significantly up compared to last year‘s figure mainly driven by €41m KCO

  16. Slide 16: Further improvement in earnings through comprehensive transformation

    01 Further improvement in earnings through comprehensive transformation Finished Short-term Mid-term Long-term Restructuring Optimization Growth & Business model Klöckner & Co 2020 Optimization changes 2013 2014 2015 2016 KCO 6.0 Stabilization Restructuring KCO WIN Operations Growth and optimization

  17. Slide 17: Additional short-term positive earnings impact from KCO WIN

    01 Additional short-term positive earnings impact from KCO WIN • Advanced customer segmentation • Structured sales approach Effective • Clear target-setting on all levels salesforce management • Performance tracking and regular performance reviews • Target-oriented incentive schemes • Continuous sal

  18. Slide 18: Clear acquisition strategy to support growth in higher-margin business

    01 Clear acquisition strategy to support growth in higher-margin business • External growth with focus on targets which fulfill the following requirements: • Companies which support our strategy of increasing higher margin processing through corresponding processing facilities preferably External su

  19. Slide 19: Higher-margin products and processing to increase to over 50% of sales in the long term

    01 Higher-margin products and processing to increase to over 50% of sales in the long term • Target is to increase share of higher margin processing from 15% to 25% and share of higher value-add products from 15% to 18% by 2017 Share of total sales Actual 2013 Target 2017 Conventional processing Sta

  20. Slide 20: Above-average scope for higher margins in higher value-add processing

    01 Above-average scope for higher margins in higher value-add processing Gross profit margin 50% 40% 30% 20% 10% Hollow sections for steel construction Lower-margin Higher value-add Commodity processing processing stockholding Sawing 3D tube laser 20

  21. Slide 21: Added potential with webshops and online supplier integration

    01 Added potential with webshops and online supplier integration • By end of next year all country organizations will have implemented the new webshop • Target of generating at least 50% of sales online in five years Webshop EDI- Portal KCO Suppliers central KCO Suppliers stocks stocks branches Cust

  22. Slide 22: Goal of integrating all online applications in a single B2B exchange

    01 Goal of integrating all online applications in a single B2B exchange • Webshop, EDI-Portal and further applications merged into B2B exchange, to ease online integration of suppliers and to enable a seamless information flow B2B exchange Webshop KCO Suppliers central KCO Suppliers stocks stocks br

  23. Slide 23: Systematically implementing all planned measures leverages major potential for improvement

    01 Systematically implementing all planned measures leverages major potential for improvement Klöckner & Co 2020 Stabilization Restructuring Makes sure that profitability is improving further Operations Growth and optimization External & internal growth Supports our growth target Broad & higher valu

  24. Slide 24: Targeted increase in EBITDA margin to 5% by 2017

    01 Targeted increase in EBITDA margin to 5% by 2017 Stabilization Growth and optimization Differentiation ~5% 0.4% - 0.8% 0.5% - 1.0% 0.8% 0.2% 2.0% 0.6% 2013 KCO 6.0 Riedo KCO WIN Portfolio Digitalization 2017 EBITDA (further Acquisition EBITDA before effects) restructuring and one-offs 24

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Klöckner & — Shareholder Meeting (May 2014) on 6ix