Klöckner & Co SE. M. M. Warburg & Co Warburg Highlights 2013

Transcription

1 Klöckner & Co SE A Leading Multi Metal Distributor Marcus A. Ketter CFO M. M. Warburg & Co Warburg Highlights 2013 Hamburg June 7, 2013

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 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 240 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 240 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

7 01 Acquisitions shift exposure towards more promising regions and products Sales by markets China <1% Brazil 1% Netherlands 3% Spain 3% UK 8% 25% Germany* Switzerland 10% France/Belgium 13% 38% USA Sales by industry Sales by product Others 11% 46% Flat products Miscellaneous 10% Household appliances/ Consumer goods 6% Automotive industry 10% Local dealers 12% 36% Construction industry Machinery and 26% mechanical engineering Tubes 7% Aluminium 7% Quality steel/stainless steel 8% 21% Long products As of December * EEC included, but completely sold in

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 e e Source: WSA Installed steel production capacity in million t Steel demand in million t 9

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

11 02 Strong benefit from restructuring margins improving, costs down, but volumes are lacking behind First quarter overshadowed by macro uncertainty, price declines and severe weather conditions in Europe; nevertheless turnover development in both regions beat markets Europe and also Americas started slowly into the year with turnover +3.8%qoq, but -11.4%yoy (restructuring impact -3.3%p), sales was only stable qoq due to price decline all over the board, -16.5%yoy Restructuring showing double success: gross margin improved from 17.7% to 18.6% and cost-cutting of 16m feeding through to bottom line with 12m EBITDA impact EBITDA with 29m at low end of guidance range of 30-40m despite adverse conditions Restructuring well on track with 1,600 HC reduced and 50 sites closed European ABS-program extended until May 2016 with 360m (in Syndicated Loan extended until May 2016 with 360m : slight improvement in turnover and EBITDA to 35-45m 11

12 02 KCO 6.0 measures having strong impact on the P&L KCO 6.0 EBITDA impact 44* KCO 6.0 EBITDA expenses 12m Program measures Turnover was 11.4% down on the prior year Sales came down 16.5% on the prior year, additionally impacted by falling prices EBITDA Volume Effect Price Effect KCO 6.0 GP effect KCO 6.0 Fix-cost effect Variable costs EBITDA 2013 Total GP effect: 41m * After restructuring costs of 3m. OPEX in m -7.5% % -2.2% -2.6% -2.3% 12* 12* 12* 12* 13 * incl. expenses due to initial application of IAS19 revised and excl. restructuring expenses. 12

13 02 Annual EBITDA contribution of ~ 160m from 2014 onwards through restructuring program KCO 6.0 Measures Program extension in France Realization of further synergy potential in the US Reduction of overall > employees (= 17%) and ~70 sites Cost reduction by 190m Total annual EBITDA-impact increased to ~ 160m (before: 150m) Reduction of NWC by 165m Additional cost of approximately 16m Annual incremental EBITDA-impact - 51m m* 65m Total annual EBITDA-impact of ~ 160m m * End of April already realized 13

14 02 Implementation of restructuring measures KCO 6.0 are progressing according to plan Employees Comments 11,577-1,042 Europe Sites 290 UK UK ESP F -299 EEC GER US Americas Reduced by 1,365, including temps ~1,600 ESP EEC GER BR ,212 BR Holding F ~9, End of F, USA 240 Sale of Eastern European activities accomplished Restructuring France: Original measures to be implemented according to plan in, program extension with additional 5 sites resolved and implemented until year end Optimization program USA: Merger and consolidation of 5 sites in order to increase profitability and utilization of further synergy potentials 2013 End of

15 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% 44 closed end of % 155 European sites 2) 2) 1) Basis is September 2) Distribution locations only 15

16 02 Despite market distortion basis for reaching the 6% EBITDA-margin target 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 EBITDAmargin target % Brazil 1% EM 70% European general line distribution BSS 2010 KVT % CH 9% BSS grow and stabilize high earnings level % 6.0% EEC 2013 Restructuring KCO % European general line distribution improve profitable core % 16

17 02 In the same period share of higher margin business will be increased by 11%pts 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% e 2015e 17

18 02 Summary Klöckner & Co development and strategy Transformation process: KCO has improved its Group structure significantly since 2007 Share of higher margin business has been increased substantially In Europe the exposure to commoditized general line distribution and the suffering peripheral states has been heavily decreased Focus of further growth is concentrated on the more attractive US market Even if significant changes and improvements are so far not reflected in results because of extremely weak market conditions, Klöckner & Co will strongly benefit from cost savings when markets recover 18

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

20 03 Financials 2013 Turnover Sales 1,857 Tto -11.4% 1,646 Tto 1,945m -16.5% 1,625m Gross profit EBITDA 344m -11.9% 303m % 47m* 29m 44m 2013 * Before restructuring costs 20

21 03 Turnover and sales Turnover (Tto) & Americas share Sales ( m) & Americas +30.5% share 1, ,763 1,765 1, ,857 1,863 1,764 1,585 1, % +3.8% 1, ,885 1, , ,945 1,964 1, % 1,633 1, % Turnover increased less than usual qoq due to economic uncertainty and also restructuring impact (- 3.3%p) Additionally, both segments were impacted by less working days compared to prior year Average prices per ton decreased significantly in qoq (: 987 vs. : 1,030) 21

22 03 Gross profit and EBITDA Gross profit ( m) / Gross-margin (%) 104 EBITDA ( m) / EBITDA-margin (%) * * * * 50* * * * 2.5* * 1.3* ** ** ** ** 2013 Despite strongly declining prices, gross profit margin remained stable compared to and increased substantially vs. last year (+0.9%p) EBITDA-margin benefitting from strong cost reduction, pulling out substantially higher EBITDA out of roughly stable gross profit * Before restructuring costs ** As restated for the initial application of IAS19 revised 22

23 Americas Europe 03 Key figures by segment Turnover (Tto) Sales ( m) EBITDA ( m)* 1,290 1,365 1,251 1,164 1,192 1, ,105 1,097 1, ,137 1,223 1,237 1,149 1,041 1, % -16.9% Turnover (Tto) Sales ( m) EBITDA ( m)* 2013 ** ** ** ** % -15.8% ** ** ** ** 2013 * EBITDA before restructuring; Restructuring costs: Europe: : 10m in ; : 3m in, 17m in, -1m in and 57m in ; Americas: : 1m in ** As restated for the initial application of IAS19 revised 23

24 03 Cash flow reflects seasonal built up of NWC Cash flow reconciliation in 2013 ( m) Comments NWC seasonally increased Capex (net) of 6m Cash interests are less than 1/3 of P&L interest charges due to accretion of debt EBITDA Change in reported NWC -5 Interest Taxes Other CF from operating activities -6 Capex net Free CF component for outstanding convertibles and interest costs on pensions Development of net financial debt in 2013 ( m) CF from operating activities Capex (net) Other* * exchange rate effects, interest

25 03 Strong balance sheet Assets FY vs ,880 4,076 Equity & liabilities FY vs ,880 4,076 Non-current assets 1,107 1,099 Equity 1, % 1, % Inventories 1,254 1,286 Non-current liabilities 1,384 1,483 Trade receivables Other current assets Liquidity Current liabilities 994 1,086 Comments Assets FY ** Assets 2013 Equity ratio still solid at 37% Net debt of 482m Gearing* at 35% NWC seasonally increased by 84m to 1,491m Equity & liabilities FY ** Equity & liabilities 2013 * Gearing = Net debt/equity attributable to shareholders of Klöckner & Co SE less goodwill from business combinations subsequent to May 28, 2010 ** As restated for the initial application of IAS 19 rev. 25

26 03 Statement of changes in equity -132 Comprehensive income: + 4m 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, 2013 * As restated for the initial application of IAS 19 rev. 26

27 03 Balanced maturity profile March 2013 m Facility Committed Drawn amount 2013* FY * m 2013 Bilateral Facilities 1) Other Bonds ABS 5) Syndicated Loan 5) Promissory Note Total Senior Debt 1, Convertible ) Convertible ) Total Debt 2,154 1,145 1,033 Cash 4) 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 28, ) Incl. cash in assets held for sale 5) European ABS and Syndicated Loan renewed in /2013 6) Incl. Swiss facilities of 230m which are automatically renewed on a yearly basis Adjusted equity 1,359 Net debt 482 Gearing 3) 35% Maturity profile of committed facilities and drawn amounts ( m) ) 5) Left side: committed facilities Right side: drawn amounts Thereafter Bilaterals ABS Syndicated loan Promissory notes Convertibles

28 Agenda 01 Overview 02 Highlights and update on strategy 03 Financials Outlook 05 Appendix 28

29 04 Outlook 2013 Turnover to be sequentially up in rather based on seasonality than on economic improvement EBITDA in against this background expected to be between 35-45m FY 2013 Guidance of stable turnover and sales with EBITDA of 200m looks increasingly unrealistic, since there are currently no signs visible of a still widely anticipated recovery in second half of the year Restructuring measures in France further extended. EBITDA contribution of overall 65m in 2013 and 45m in 2014 Optimization program to improve profitability in the US by utilizing synergy potentials after strong growth initiated Positive free cash flow expected Further reduction of net debt despite restructuring costs 29

30 Agenda 01 Overview 02 Highlights and update on strategy 03 Financials Outlook 05 Appendix 30

31 05 Quarterly results and FY results ( m) 2013 * * * * FY * FY FY 2010 FY 2009 FY 2008 Turnover (Tto) 1,646 1,585 1,764 1,863 1,857 1,636 1,765 1,763 1,498 7,068 6,661 5,314 4,119 5,974 Sales 1,625 1,633 1,847 1,964 1,945 1,739 1,885 1,885 1,587 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 ( ) * As restated due to initial application of IAS19 revised. 31

32 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 32

33 05 Balance sheet as of December 31, ( m) March 31, 2013 December 31, * Non-current assets 1,099 1,107 Inventories 1,287 1,254 Trade receivables Cash & Cash equivalents Other assets Total assets 4,076 3,880 Equity 1,507 1,502 Total non-current liabilities 1,483 1,384 thereof financial liabilities 1, Comments Shareholders equity: Decrease to 37% mainly caused by NWC increase Financial debt: Gearing at 35% Gross debt of 1.2bn and cash position of 0.7bn result in a net debt position of 482m Total current liabilities 1, thereof trade payables Total equity and liabilities 4,076 3,880 Net working capital 1,491 1,407 Net financial debt *) Restated due to initial application of IAS19 revised. 33

34 05 Profit & loss 2013 ( m) 2013 * Sales 1,625 1,945 Gross profit Personnel costs Other operating expenses (net) EBITDA Depreciation & Amortization EBIT 2 18 Financial result EBT Taxes 1-4 Net income Minorities 0 1 Net income attributable to KCO shareholders *) Restated due to initial application of IAS19 revised. 34

35 05 Segment performance 2013 ( m) Europe Americas HQ/Consol. Total Turnover (Tto) ,646 1, ,857 Δ % Sales , ,625 1, ,945 Δ % EBITDA % margin %margin Δ % EBITDA

36 05 Current shareholder structure Geographical breakdown of identified institutional investors US 39% Germany 27% France 10% Switzerland 5% UK 3% Comments Identified institutional investors account for 40% German investors incl. retail dominate Top 10 shareholdings represent around 23% Retail shareholders represent 31% Other EU 8% Other World 8% As of April

37 05 Appendix Financial calendar 2013 August 7, 2013 interim report 2013 November 6, 2013 interim report 2013 Contact details Investor Relations Christian Pokropp, Head of Investor Relations & Corporate Communications Phone: Fax: Internet: 37

38 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