Klöckner & Co SE. Commerzbank German Investment Seminar A Leading Multi Metal Distributor. Gisbert Rühl CEO. New York.

Transcription

1 Klöckner & Co SE A Leading Multi Metal Distributor Gisbert Rühl CEO Commerzbank German Investment Seminar 2015 New York January 12, 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 Service Center / Distribution One of the leading steel service center / distribution companies in Europe and Americas Distribution and service platform with around 220 locations worldwide Key figures for Sales: 6.4 billion EBITDA: 150 million (before restructuring) 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 More than 146,000 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: 62% UK: 5% Brazil: 1% F/BE: 14% ES: 2% NL: 3% CH: 14% 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 Thyssen 5% Klöckner Salzgitter Tata Steel Others Europe ArcelorMittal Thyssen 5% Klöckner Salzgitter Tata Steel Others 1% Reliance Ryerson Thyssen Samuel Metals USA Namasco (Klöckner) US 4% Reliance Ryerson Kloeckner Metals Thyssen Others Others Source: Eurometal, Purchasing Magazine, Service Center News. 8

9 Agenda 01 Overview 02 Highlights and update on strategy 03 Financials 04 Outlook 05 Appendix 9

10 02 Highlights Steel distribution market remained stable in Europe* but improved significantly in the US (+5.0%**) KCO sales went up roughly in line with shipments by 4.7% yoy to 1.7bn Gross profit improved by 9.9% to 325m, gross margin expansion by 0.9%p to 19.4% yoy EBITDA of 59m came in at the upper end of guidance range of 50 to 60m Positive quarterly net income of 15m achieved Leverage reduced from 3.5x to 2.8x EBITDA yoy EBITDA in expected to be in a range between 30 and 40m EBITDA guidance for the year as a whole narrowed to between 190m and 200m * Source: Eurometal; distribution shipments in in Europe yoy. ** Source: MSCI; distribution shipments/ SSC in in the US yoy. 10

11 02 Substantial yoy EBITDA-improvement mainly through self-help measures EBITDA-bridge ( m) Comments yoy 36 EBITDA 3 Volume Effect 14 Price Effect 9 GP Effect Riedo * Including - 6m pension adjustment NL and - 4m Riedo. 9M yoy Self-help measures: 12m 5 7 KCO 6.0 Effect KCO WIN Effect Self-help measures: 39m OPEX* EBITDA 160 Self-help measures contributed 12m to EBITDA against prior year in and 39m ytd EBITDA contribution achieved through KCO 6.0 amounted to 7m in and 29m ytd KCO WIN impact of 5m in and 10m ytd EBITDA margin improved by 1.2%p to 3.5% in and by 1.0%p to 3.2% ytd EBITDA 9M Volume Effect Price Effect GP Effect Riedo KCO 6.0 Effect KCO WIN Effect OPEX* EBITDA 9M * Including - 13m pension adjustment NL and - 9m Riedo. 11

12 02 Self help measures with an EBITDA-contribution of 39m in the first nine month of KCO m 61m Total annual EBITDA-impact of ~ 150m from onwards 29m 38m already realized KCO WIN 10m 16m m Total annual EBITDA-impact of ~ 50m from 2015 onwards already realized 12

13 02 Comprehensive transformation initiated Klöckner & Co 2020 Stabilization Growth and optimization Differentiation Enabling activities Restructuring External & internal growth Operations Sourcing Products and services Digitalization Management & pers. development Controlling & IT systems Finished by implementation of KCO 6.0 External growth with focus on higher value-added business Internal growth with focus on US market Improvements through KCO WIN Realization of higher scale-effects through expansion of partnerships with specific suppliers Broad product range and accelerated expansion of higher valueadded processing and services Digitalization of supply chain Increased effort in management capabilities and measurability of people management Deployment of most modern controlling and IT systems 13

14 02 Acceleration of profitable growth Regional growth focus on US due to better outlook Low energy costs 1 External & internal growth Reindustrialization More favorable demographics External growth in high-margin activities back on the agenda Takeover of Swiss reinforcement steel specialist Riedo as first acquisition after successfully completed restructuring Mid-sized companies with higher value-add processing capabilities are of particular interest Healthy balance sheet and financing create room for maneuver 14

15 02 KCO WIN lays focus on improved pricing 2 Operations KCO WIN Initiatives Optimized pricing Sales Force Effectiveness Pricing Impact on profit Dynamic pricing Pricing depending on market conditions Pricing tool with algorithms Purchasing Excellence Warehouse Management and Logistics Current focus Minimum pricing Optimized pricing Value-based pricing Ongoing price optimization Pricing based on profitability Pricing metrics and review Reactive pricing One-off pricing without control Lack of coordination 15 Degree of optimization

16 02 Additional economies of scale will be created through improved procurement and stronger integration of the supply chain 3 Sourcing Supplier Integration / EDI Concentrate procurement for higher volumes Design efficient materials and information flows between Klöckner and suppliers Economies of scale through volume concentration Achieve savings and bonuses through concentration Agreements relating to special deals /opportunistic procurement Build uninterrupted supply chains to increase efficiency and reduce NWC Optimize logistics and warehousing across the supply chain Optimize business processes with suppliers through electronic data interchange (EDI) Direct access to supplier stock 16

17 02 Stronger differentiation and better margins through higher value-add products and processing Until 2017 share of sales with higher margin processing and higher value-add products will be increased to 45% 4 Products & Services Actual Target 2017 Share of total sales Commodities 43% 15% 27% 15% Conventional processing Higher value-add processing 35% 20% 20% 25% Higher valueadd products 45% Higher value-add products and processing 17

18 02 Digitalization of supply chain from the supplier to the customer No direct flow of information from the customer to the supplier and vice versa Multiple stock transfers, frequent transportation Suppliers Supplier warehouse Integrated SAP system Central warehouse distribution Warehouse distribution Customers No IT interface, no electronic access to inventories Webshop Steel 24/7 All national companies will have introduced the web shop by the end of next year Online transactions are expected to contribute at least 50% to sales 5 years from now Webshop functionality is constantly being expanded through integration of the tools of the digitalization initiatives Customer relationship management EDI portal for integration of suppliers Smart e-warehousing and e-logistics processes Target: internet-platform to integrate and controll the entire supply chain 5 Digitalization 18

19 02 Mid-term EBITDA margin target of >5% until 2017 Stabilization Growth and optimization Differentiation > 2.0% >5% 2.0% 0.6% 0.2% 0.8% EBITDA margin before restructuring and one-offs KCO 6.0 (remaining effects) Riedo acquisition KCO WIN Sourcing, products and services, digitalization 2017 EBITDA margin 19

20 Agenda 01 Overview 02 Highlights and update on strategy 03 Financials 04 Outlook 05 Appendix 20

21 03 Shipments and sales Shipments (Tto) Sales ( m) 1,764 1,585 1,646 1,690 1,617 1,492 1,633 1,720 1,690 1,847 1,633 1,625 1,698 1,600 1,455 1,572 1,680 1, % +4.7% -1.8% -0.3% Increase yoy driven by Riedo Shipments decreased qoq following the usual seasonal pattern yoy increase includes Riedo and market effects Sales decline qoq less pronounced than shipments due to higher prices 21

22 03 Gross profit and EBITDA margin improvement is keeping momentum Gross profit* ( m) / Gross margin* (%) EBITDA* ( m) / EBITDA margin* (%) FY M FY 3.2 9M 17.5 FY 1.8 FY Gross margin up in by 0.9%p from 18.5% to 19.4% yoy * Before restructuring costs. EBITDA continues to benefit from KCO 6.0 measures and now additionally from KCO WIN EBITDA margin improved in from 2.3% to 3.5% yoy 22

23 03 Segment performance (shipments and sales) Europe Americas Shipments (Tto) 4.5% 1,617 1, % % Comments Shipments Europe up by 6.0% mainly due to Riedo acquisition (+5.7%p) Americas up by 2.6% due to favorable market development Sales ( m) 4.7% 1,600 Europe 1, % 1,675 1,041 Sales In Europe up by 3.4% due to Riedo Americas segment up by 6.8% also impacted by stronger USD Americas +6.8%

24 03 Segment performance (gross profit and EBITDA) Gross profit ( m) 296 Europe 197 Americas % +9.5% +10.7% EBITDA ( m) Comments Focus on higher margin business visible in both segments Europe Gross margin up by 1.1%p to 20.7% EBITDA margin up by 0.6%p to 3.2% Americas Gross margin up by 0.6%p to 17.3% EBITDA margin up by 1.6%p to 4.5% +60.8% % 33 Europe 26 Americas HQ/Consol % +52.9%

25 03 Cash flow and net debt development Cash flow reconciliation in ( m) EBITDA 31 Change in NWC -3 Interest -6 Taxes -23 Other 58 Cash flow from operating activities -14 Capex 44 Free cash flow Comments Seasonal NWC release reflected in free cash flow of 44m Other include changes in provisions, in other operating assets/liabilities as well as non-cash items Capex at run-rate level Development of net financial debt in ( m) June 30, 579 CF from operating activities 58 Capex (net) -14 Other -22 September 30, 557 Net debt decreased from 579m to 557m mainly due to positive operating cash flow driven by NWC release Other include - 12m f/x 25

26 03 Balance sheet remains strong 3,595 Assets 3,764 Equity & liabilities 3,595 3,764 Inventories Trade receivables Liquidity Other assets 1,166 1, ,147 1,204 Equity Financial liabilities Pensions Trade payables Other liabilities 1,445 1,463 40% 39% Dec 31, Sep 30, Dec 31, Sep 30, Comments Equity ratio further solid at 39% Net debt of 557m compared to 325m on Dec. 31, Gearing* at 39% Leverage** 2.8x NWC increased from 1,463m to 1,479m qoq f/x related * Gearing = Net debt/equity attributable to shareholders of Klöckner & Co SE less goodwill from business combinations subsequent to May 23,. ** Leverage = Net debt/ebitda before restructuring expenses last twelve months. 26

27 Agenda 01 Overview 02 Highlights and update on strategy 03 Financials 04 Outlook 05 Appendix 27

28 04 Segment specific business outlook Europe US +2% +5-6% Steel demand Construction industry Machinery and mechanical engineering Automotive industry 28

29 04 Outlook Shipments to be lower qoq due to seasonality and weaker business environment in Europe Declining prices in the US with negative impact on earnings in the Americas Segment EBITDA expected in a range between 30 and 40m FY Sales and shipments to be slightly up - also through Riedo acquisition EBITDA guidance narrowed to between 190m and 200m Reduction of IDA expense by some 25m to 155m anticipated Expected positive net income should facilitate return to dividend payment for fiscal year 29

30 Agenda 01 Overview 02 Highlights and update on strategy 03 Financials 04 Outlook 05 Appendix 30

31 05 Quarterly results and FY results ( m) 2012* 2012* FY FY 2012* FY 2011 Shipments (Tto) 1,690 1,720 1,633 1,492 1,617 1,690 1,646 1,585 1,764 6,445 7,068 6,661 Sales 1,675 1,680 1,572 1,455 1,600 1,698 1,625 1,633 1,847 6,378 7,388 7,095 Gross profit ,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

32 05 Recovery continued in both segments Shipments (Tto) Sales ( m) EBITDA* before restructuring ( m) Europe 1, , ,041 1,017 1,061 1,006 1,015 1,072 1, % +3.4% Americas Shipments (Tto) % Sales ( m) % EBITDA before restructuring ( m) Restructuring costs ( m) Europe * 2012: as restated for the initial application of IAS19 revised Americas ** Including pension release: 7m, in 6m and 1m and sale of French La Courneuve site 13m. 32

33 05 Improvement of maturity profile Syndicated loan extension option of one year till May 2017 successfully executed ABS Europe extended by one year till May 2017 S&P rating improved from B+, Outlook negative to B+, Outlook stable m Facility Committed Drawn amount (IFRS) * FY * Bilateral Facilities 1) Committed lines 1, ABS Syndicated Loan Promissory Note Total Senior Debt 1, Convertible Convertible ) Total Debt 1, Cash Net Debt *Including interest accrued. 1) Including finance lease. 2) Drawn amount excludes equity component Thereafter Bilaterals Promissory Notes ABS US ABL Syndicated Loan Convertibles 33

34 05 Current shareholder structure Geographical breakdown of identified institutional investors US 46% Germany 20% France 11% UK 7% Comments Identified institutional investors account for 59% German investors incl. retail dominate Top 10 shareholdings represent around 33% Retail shareholders represent 27% Switzerland 4% Rest of EU 4% Rest of World 8% As of October 34

35 05 Current shareholder structure II Voting Rights Announcements according to WpHG (Security Trading Act)* Date of publication Subject to compulsory notification Portion of voting stock 02/12/ Federated Global Investment Management Corp. 3.00% 02/06/ Interfer Holding GmbH 4.98% 07/04/ Templeton Investment Counsel, LLC 5.02% 18/03/ Franklin Mutual Advisors included therein: Franklin Templeton Investment Funds (3.15%) 5.35% 27/01/ Allianz Global Investors Europe GmbH 3.05% 08/01/ Franklin Templeton Investments Corp. 4.99% 02/02/2012 Dimensional Holdings Inc. / Dimensional Fund Advisors LP 3.06% 100% freefloat *) The table lists all shareholders, whose Klöckner & Co SE voting shares currently exceed or reach one of the notification thresholds under section 21 clause 1 WpHG, based on notification. 35

36 05 Products Flat products Hollow Sections Long Products Stainless / Aluminium 36

37 05 Products / Services Coils Decoiling / Cutting / Slitting Cutting to Length / Bending Surface treatment 37

38 05 Services Laser cutting / Flame cutting 3D-Laser 3D-Laser 3D-Laser 38

39 05 Appendix Financial calendar 2015 March 5, 2015 Annual Financial Statements May 7, 2015 interim report 2015 May 12, 2015 Annual General Meeting 2015, Düsseldorf August 6, 2015 interim report 2015 November 5, 2015 interim report 2015 Contact details Investor Relations Christian Pokropp, Head of Investor Relations & Corporate Communications Phone: Fax: Internet: 39

40 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