Klöckner & Co AG - Q2/H Results - Analysts and Investors Conference Call. August 15, 2007

Transcription

1 Klöckner & Co AG Q2/H Results Analysts and Investors Conference Call August 15, 2007 Dr. Thomas Ludwig CEO Gisbert Rühl CFO

2 Agenda 1. Highlights H1 2007, market and strategy Dr. Thomas Ludwig 2. Financials Q2/H and outlook Gisbert Rühl, CFO Appendix 2

3 Highlights H and until today Good results supported by strong market environment in Europe Business optimisation program STAR fully on track Eight successful acquisitions; pipeline of further targets Increased free float from 55% to 100% Further optimization of financing: Successful placement of 600 million MultiCurrency Revolving Credit Facility Successful issuance of 325 million Convertible Bond Fully redemption of high yield bond Sale of 49% stake in Klöckner Information Services (IT) Ongoing profitable growth 3

4 Financial highlights Q2/H ( m) Q Q Ä% H H Ä% Volume (Ttons) 1,663 1, ,292 3, Sales 1,650 1, ,199 2, EBITDA EBIT

5 Industry trends supporting Klöckner s strategy Globalization and consolidation Large costs savings Higher and more flexible capacity utilization Much better supply discipline and higher pricing power creating an improved balance between supply and demand Stable global demand growth Far quicker destocking High capacity utilisation of steel mills Positive impact on distribution industry Ongoing consolidation favoring large scale distributors Higher prices with much shorter downturns support more stable earnings and cash flows for distributors 5

6 Profitable growth Profitable growth through valueadded distribution and services within multi metals to companies in Europe and North America Grow more than the market Continuous business optimization 1 Acquisitions driving market consolidation 2 Organic growth and expansion into new markets 3 STAR Program: Purchasing Distribution network 6

7 1 Acquisitions driving market consolidation Acquisitions Next steps Country Acquired June 2007 May 2007 April 2007 April 2007 Company Westok Premier Steel Zweygart Max Carl Sales 26 million 23 million 11 million 15 million Further acquisitions in core markets at attractive valuations: Leverage existing structure with 10 to 12 smalland midsize bolton acquisitions in 2007 Large scale acquisitions when appropriate Include attractive industries, e.g. oil and gas April 2007 April 2007 April 2007 Jan 2007 H Edelstahlservice Primary Steel Teuling Tournier 8 acquisitions 4 acquisitions 17 million 360 million 14 million 35 million 501 million 108 million Benefits Significant synergies Streamlining operations, processes and sales force Integration of STAR Economies of scale Stronger purchasing power acquisitions 141 million 7

8 2 Organic growth and expansion into new markets Status quo Growth above GDP in core markets partly as a result of the outstanding development of the construction and machinery/mechanical engineering industries and steel prices Eastern European facilities established in Poland, Czech Republic, Romania and Baltic States Next steps Expansion of strong market positions in core markets: Selective extension of product range Increase valueadded services through investments in new processing capacity Opening of new branches in Eastern Europe Evaluating of market entry in other countries like Slovakia, Turkey and Russia Strategy Leveraging existing distribution network Benefits Sustainable profitable growth 8

9 3 STAR: Status quo H and next steps Status quo Next steps Purchasing Additional frame contracts with main suppliers Extended global sourcing for third party countries Implementation of new organization in Germany (January 1, 2007) almost completed Implementation of a software supporting stock management Establish European sourcing (STAR Phase II) Increase sourcing from worldclass suppliers with structural cost advantages Implement unified article codes Distribution Improved performance as a result of restructured distribution network (warehouses): Q1 2007: Concentration of warehouse structure in the Iowa region in US Q1 2007: Restructuring of service center business in Switzerland Start of rollout of the optimization tool Prodacapo (activity based costing) in Spain, UK and Eastern European Countries Continuous improvement of distribution network throughout the Group with support of the optimizationtool Prodacapo Ongoing rollout throughout European countries Restructuring of warehouse structure in Spain Finalize implementation of SAP throughout the European organization (France, Switzerland) and interface SAP with Prodacapo 9

10 3 STAR: Phase I finalized in 2008, further potential in phase II Overall targets: Phase I ( ) Central purchasing on country level, especially in Germany Improvement of distribution network Improvement of inventory management Upside potential 2006: ~ 20 million 2007: ~ 40 million 2008: ~ 20 million ~ 80 million Phase II (2008 onwards) Overall targets: European Sourcing Ongoing improvement of distribution network 10

11 Target Setting 2007 / Achievements in H Targets 2007 Achievements H Acquisitions: Acquisitions: 8 in 6 months 2 Organic growth: Min. 2.5% = 140 million 2 Organic growth: 12% before acquisitions 3 STAR program: Additional 40 million EBITDA 3 STAR program: On track 4 Expansion: New branches in Eastern Europe: Romania Poland Czech Republic Baltic States 4 Expansion: New branches in Eastern Europe: Opening of new warehouse in the short term 11

12 Agenda 1. Highlights H1 2007, market and strategy Dr. Thomas Ludwig 2. Financials Q2/H and outlook Gisbert Rühl, CFO Appendix 12

13 Summary income statement Q2/H ( m) Q Q Ä% H H Ä% Sales 1,650 1, , Gross profit % margin EBITDA % margin EBIT Financial result Income before taxes Income taxes Minority interests Net income EPS

14 Segment performance H ( m) Sales Sales H H Ä % EBITDA EBITDA H H Ä % Comments Europe North America 2, , Sales for H in Europe including about 9 million from Aesga (E) 4 million from Gauss (CH) 21 million from Tournier (F) 5 million from Teuling (NL) 3 million from Edelstahlservice (D) 1.5 million together from Max Carl and Zweygart (D) 8 million from Westok (UK) HQ / Consol Sales for H in North America including about 26 million from Action Steel 54 million from Primary 2.5 million from Premier Total 3,199 2,

15 Balance sheet H ( m) Longterm assets Inventories Trade receivables Cash & Cash equivalents Other assets Total assets Equity Total longterm liabilities thereof financial liabilities Total shortterm liabilities thereof trade payables Other liabilities June 30, ,095 1, , , , December 31, , , Comments Financial debt as of June 30, 2007: Syndicated loan: 517million ABS: 339 million Bank borrowings: 190 million Increased net financial debt due to acquisitions and higher NWC Equity: Decrease driven by increase of stake in Swiss Holding and dividend distribution Further, equity ratio decreased due to higher assets from 31% to 22% Total equity and liabilities Net working capital Net financial debt 3,234 1, ,552 1, Net Working Capital: Increase driven by sales, higher price levels and acquisitions 15

16 Statement of cash flow ( m) H H Comments Operating CF Changes in net working capital Others Cash flow from operating activities Inflow from disposals of fixed assets/others Outflow from investments in fixed assets Strong business development reflected in positive cash flow deriving from operational activities and increased NWC requirements Cash flow from investing activities Proceeds from capital increase Changes in financial liabilities Net interest payments Dividends Investing cash flow in H mainly impacted by cash outflow due to the various acquisitions and increased stake in our Swiss Holding Cash flow from financing activities Total cash flow

17 General financial targets and limits Underlying sales growth General target/limit > 10% p.a Actual H % Underlying EBITDA margin > 6% 6.1% Leverage (Net financial debt/ebitda LTM) < 3.0x 2.4x Gearing (Net financial debt/equity) < 150% 139% Challenging financial targets throughout the cycle 17

18 New holding facility and convertible bond increase scope for further acquisitions ( m) Old debt structure Change in debt structure New debt structure ABS Europe ABS USA Total Syndicated loan Bilateral credit agreements Total senior bank facilities Convertible bond High yield bond Total facilities 1, ,785 18

19 Convertible bonds terms and conditions Size: 325 million Shares underlying: approx. 4 million Denomination: 50,000 Maturity date: July 27, 2012 (5 years) Coupon: 1.50% p.a. Reference price: Conversion price: (35% above reference price) Conversion ratio: shares per bond Conversion right: September 6, 2007 until July 18, 2012 Early redemption at the option of the issuer: from August 15, 2010 onwards only possible if share price exceeds approx. 105 (= 130% of the conversion price) Listed on the Freiverkehr segment of the Frankfurt Stock Exchange (Open Market) 19

20 Outlook / guidance 2007 Basic assumptions for 2007 Positive prospects for the steel industry Economic growth in relevant markets of about 1.8% to 5% in 2007 Stable and increasing demand especially in the construction and machinery industries Price development stable or better Outlook / guidance At least 15% top line growth mainly driven by acquisitions EBITDA approximately on reported 2006 level Dividend continuity: 30% payout ratio after deduction of extraordinary income Again strong results in

21 Financial calendar 2007 and contact details Financial calendar 2007 September 19: November 14: Analysts and Investors Meeting Q3 Interim Report Contact details Investor Relations Claudia Nickolaus, Head of IR Phone: Fax: Internet: 21

22 Agenda 1. Highlights H1 2007, market and strategy Dr. Thomas Ludwig 2. Financials Q2/H and outlook Gisbert Rühl, CFO Appendix 22

23 Appendix Table of contents Quarterly results 2007/2006 and FY results 2006/2005 Primary Steel Acquisitions in Germany 23

24 Quarterly results and FY results 2006/2005 ( m) Q Q Q Q Q Q FY 2006 FY 2005* Sales 1,650 1,550 1,398 1,394 1,418 1,323 5,532 4,964 Gross profit , % margin EBITDA % margin EBIT Financial result Income before taxes Income taxes Minority interests Net income Earnings per share in * Proforma consolidated figures for FY 2005, without release of negative goodwill of 139 million and without transaction costs of 39 million, without restructuring expenses of 17 million (incurred Q4) and without activity disposal of 1,9 million (incurred Q4). 24

25 Primary Steel is a perfect fit California Oakland Tulare Santa Fee Springs Arizona Phoenix Namasco Gen. line Namasco Processing Primary outlet Primary Sales office Geographical Scope Austin Houston Dubuque Iowa Missouri Louisville West Memphis Arkansas Dallas Louisiana Texas Indiana Chicago Illinois Indianapolis B ham Alabama New Orleans Atlanta Georgia Tampa North Carolina South Carolina Florida Charlotte Charleston Savannah Jacksonville Orlando Maine Middletown Connecticut New Castle Maryland Pompano Portland Sales 2006 Namasco* : Primary: Key Facts 570 million 360 million Primary s leading market position in plate distribution combined with Namasco s strong position in long products Additional attractive growth perspective from Primary s main segments heavy equipment, oil & gas, power generation, transportation and railcar and shipbuilding Significant improved geographical coverage providing a much stronger platform for further bolton acquisitions * Sales of Klöckner & Co US 25

26 Attractive H1 acquisitions in Germany Company Max Carl Edelstahlservice Zweygart Sales 15.0 million 16.7 million 11.3 million Comments Specialized distributor of stainless tubular products and accessories with valueadded services supplies from Hungarian site Expands KSM s position in specialty stainless products which is key thrust in its diversification strategy Synergies from integration with recently acquired Dutch Teuling Local general line distributor Sizeable synergies in purchasing Improvement local market position Local general line distributor servicing the Stuttgart area Integration with existing KSM location in Stuttgart will improve market position Synergies in purchasing and from backoffice integration 26

27 Our symbol the ears attentive to customer needs the eyes looking forward to new developments the nose sniffling out opportunities to improve performance the ball symbolic of our role to fetch and carry for our customers the legs always moving fast to keep up with the demands of the customers 27

28 Disclaimer This presentation contains forwardlooking statements. These statements use words like "believes, "assumes," "expects" or similar formulations. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of our company and those either expressed or implied by these statements. These factors include, among other things: Downturns in the business cycle of the industries in which we compete; Increases in the prices of our raw materials, especially if we are unable to pass these costs along to customers; Fluctuation in international currency exchange rates as well as changes in the general economic climate and other factors identified in this presentation. In view of these uncertainties, we caution you not to place undue reliance on these forwardlooking statements. We assume no liability whatsoever to update these forwardlooking statements or to conform them to future events or developments. 28