Klöckner & Co SE A Leading Multi Metal Distributor Gisbert Rühl CEO Marcus A. Ketter CFO Results Analysts and Investors Conference November 6,
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
Klöckner & Co SE A Leading Multi Metal Distributor Gisbert Rühl CEO Highlights and update on strategy
01 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. 4
01 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 108 8 19 17 Self-help measures: 12m 5 7 KCO 6.0 Effect KCO WIN Effect Self-help measures: 39m 10 29-15 OPEX* -31 59 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. 5
01 Self help measures with an EBITDA-contribution of 39m in the first nine month of KCO 6.0 2011-51m 61m Total annual EBITDA-impact of ~ 150m from onwards 29m 38m already realized KCO WIN 10m 16m 2015 34m Total annual EBITDA-impact of ~ 50m from 2015 onwards already realized 6
01 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 7
01 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 8
Klöckner & Co SE A Leading Multi Metal Distributor Marcus A. Ketter CFO Financials
02 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 1,675 +4.5% +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 10
02 Gross profit and EBITDA margin improvement is keeping momentum Gross profit* ( m) / Gross margin* (%) 325 325 EBITDA* ( m) / EBITDA margin* (%) 56 59 306 302 303 305 302 43 39 40 45 296 288 18.7 FY 19.3 9M 18 22 29 2.4 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 11
02 Segment performance (shipments and sales) Europe Americas Shipments (Tto) 4.5% 1,617 1,690 +6.0% 903 957 +2.6% 714 733 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 1,006 +3.4% 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% 594 634 12
02 Segment performance (gross profit and EBITDA) Gross profit ( m) 296 Europe 197 Americas 99 +9.9% +9.5% +10.7% EBITDA ( m) 325 216 110 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% 59 36 +25.9% 33 Europe 26 Americas HQ/Consol. 17-7 +66.5% +52.9% 29-3 13
02 Cash flow and net debt development Cash flow reconciliation in ( m) 36 59 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 14
02 Balance sheet remains strong 3,595 Assets 3,764 Equity & liabilities 3,595 3,764 Inventories Trade receivables Liquidity Other assets 1,166 1,296 687 883 595 381 1,147 1,204 Equity Financial liabilities Pensions Trade payables Other liabilities 1,445 1,463 40% 39% 911 930 236 286 637 700 366 385 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. 15
Klöckner & Co SE A Leading Multi Metal Distributor Gisbert Rühl CEO Outlook
03 Segment specific business outlook Europe US +2% +5-6% Steel demand Construction industry Machinery and mechanical engineering Automotive industry 17
03 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 Resumption of dividend payments planned for fiscal year 18
Agenda 01 Highlights and update on strategy 02 Financials 03 Outlook 04 Appendix 19
04 Quarterly results and FY results 2011- ( m) * * FY FY * 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 325 325 302 284 296 305 303 298 306 1,188 1,288 1,315 % margin 19.4 19.3 19.2 19.5 18.5 18.0 18.6 18.3 16.6 18.6 17.4 18.5 EBITDA 59 56 45 16 36 43 29-35 18 124 60 217 % margin 3.5 3.3 2.9 1.1 2.3 2.5 1.8-2.2 1.0 2.0 0.8 3.1 EBIT 36 33 23-36 10 17 2-89 -9-6 -105 111 Financial result -14-16 -17-17 -19-19 -19-14 -22-73 -80-84 Income before taxes 22 17 6-52 -8-2 -16-103 -31-79 -185 27 Income taxes -7-7 -3-7 -3-2 1-19 3-12 -18-17 Net income 15 10 3-59 -11-4 -16-123 -29-90 -203 10 Minority interests 0 0 0-5 0 0 0-1 -1-6 -3-1 Net income KlöCo 15 10 3-54 -11-4 -16-122 -28-85 -200 12 EPS basic ( ) 0.15 0.10 0.03-0.54-0.11-0.04-0.16-1.22-0.28-0.85-2.00 0.14 EPS diluted ( ) 0.15 0.10 0.03-0.54-0.11-0.04-0.16-1.22-0.28-0.85-2.00 0.14 * Restated due to initial application IAS 19 revised 2011. 20
Americas Europe 04 Recovery continued in both segments Shipments (Tto) Sales ( m) EBITDA* before restructuring ( m) 1,018 908 930 941 903 839 956 987 957 1,149 1,041 1,017 1,061 1,006 935 1,015 1,072 1,041 28 26 34 26 32 33 +6.0% +3.4% 12 16 14 Shipments (Tto) 746 749 677 716 714 653 677 733 733 Sales ( m) 698 637 592 608 594 520 557 608 634 EBITDA before restructuring ( m) 28 29 24 21 20 20 16 12 13 +2.6% +6.8% Restructuring costs ( m) 2011 Europe 10 3 17-1 57 13 * : as restated for the initial application of IAS19 revised 2011. Americas 1 2 11 ** Including pension release: 7m, in 6m and 1m and sale of French La Courneuve site 13m. 21
04 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) 578 141 62 1200 1000 Committed lines 1,213 360 ABS 579 267 191 Syndicated Loan 360 162 161 Promissory Note 185 188 238 Total Senior Debt 1,702 758 652 Convertible 2009 0 0 98 Convertible 2010 2) 186 180 171 Total Debt 1,888 938 921 800 600 400 200 466 186 52 157 258 579 Cash 381 595 Net Debt 557 325 *Including interest accrued. 1) Including finance lease. 2) Drawn amount excludes equity component. 0 228 133 14 24 16 38 2015 2016 2017 Thereafter Bilaterals Promissory Notes ABS US ABL Syndicated Loan Convertibles 22
04 Sales by markets, products and industries As of December 31, 23
04 Current shareholder structure Geographical breakdown of identified institutional investors Comments Identified institutional investors account for 59% German investors incl. retail dominate Top 10 shareholdings represent around 33% Retail shareholders represent 27% As of October 24
04 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: +49 203 307 2050 Fax: +49 203 307 5025 E-mail: Internet: christian.pokropp@kloeckner.com www.kloeckner.com 25
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