Klöckner & Co - Roadshow Presentation March 13-14, 2013

31
Klöckner & Co SE A Leading Multi Metal Distributor Roadshow Deutsche Bank USA CEO Gisbert Rühl March 13 - 14, 2013

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Roadshow Deutsche Bank USA

Transcript of Klöckner & Co - Roadshow Presentation March 13-14, 2013

Page 1: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Klöckner & Co SE

A Leading Multi Metal Distributor

Roadshow Deutsche Bank

USACEOGisbert Rühl

March 13 - 14, 2013

Page 2: Klöckner & Co - Roadshow Presentation March 13-14, 2013

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.

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Page 3: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Highlights and update on strategy01

Financials Q4/FY 2012

Outlook

Appendix

02

03

04

Agenda

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Page 4: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Restructuring ahead of plan – but markets esp. in Europe still challenging

Challenging environment used to do necessary adjust ments to return to profitable growth even without market support• Steel markets in Europe and finally also in the US have been heavily under pressure

• EBITDA before restructuring (€139m) below last year (€227m)

• Net income of -€198m strongly impacted by restructuring costs and other one-offs

• Turnover and sales improved by 6.1% and 4.1% to 7.1m To and €7.4bn respectively

• US again cornerstone of growth profile: +31% turnover yoy

• FCF generation with €67m showing companies’ strict NWC-management and compensation of restructuring expenses by cash releases

• Strong net debt reduction from €596m in Q3 to €422m and by €49m yoy

• Restructuring ahead of plan: €60m EBITDA contribution targeted for 2013

• Restructuring driven earnings improvement to ~€200m EBITDA (+45%) at stable turnover in 2013 expected

• Further market growth in the US anticipated while Europe should pass the trough

• Management Board strengthened by Marcus A. Ketter and Karsten Lork

• Interfer Holding GmbH belonging to Dr. Albrecht Knauf acquired a stake of 7.82% in Klöckner & Co

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Page 5: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Klöckner & Co 2020 strategy

Acquisition of distributors and steel service centers with higher-margin products and value added services

01

Externalgrowth

strategy

Organicgrowth

strategy

Business optimization

Personnel & Management development

Stronger focus on expansion of value added services especially for industrial customer segments

Realizing scale benefits in purchasing and product management and optimization of logistics and inventory management

Group-wide talent and performance management supported by attractive and structured compensation and benefits system

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Page 6: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Flexible response to challenging market environment01

• Against the background of the current market situation we have streamlined our strategy and implemented an extensive restructuring program in Europe

Business optimization

Organicgrowth

strategy

Cur

rent

focu

s

Externalgrowth

strategy

• Network streamlining by significantly extended restructuring program• Reduction of 60 sites, efficiency measures in remaining sites• Workforce reduction of >1,800 (16% of total workforce)• Discontinuation of unprofitable business/ clients• Streamlining of central functions

• Increasing share of value added services and higher margin products aroundcore business

• Re-shoring driven by low energy costs should provide additional growthopportunities in the US

• Acquisition of distributors and SSC with higher margin products and value-added services

• Shale gas opportunities• Niche suppliers

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Page 7: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Implementation of restructuring measures ahead of plan

• EEC activities in Czech, Bulgaria, Romania, Poland* and Lithuania* already sold in 2012

• >1,200 out of 1,800 employees reduced

• 40 out of 60 sites closed or sold

• EBITDA contribution of €51m since program start, €46m in 2012

01

Business optimization

Organicgrowthstrategy

• Commodity business already reduced laying solid foundation for future organic growth: • Machinery and mechanical engineering increased by 2% to 26%**• Automotive exposure increased by 4% to 10%**, to be additionally promoted by SSC in

Alabama starting in 2013• Share in construction industry down from 43% to 36%**

• US serviced sales within flat division increased by 11% through common sales force with Macsteel

• Swiss subsidiary expands spezialized and highly profitable bending services, market leader

7

* signed; closing expected in Q1 2013** 2012 compared to 2009

Page 8: Klöckner & Co - Roadshow Presentation March 13-14, 2013

01 2/3 of restructuring already completed

250

290

8

Employees

Sites

UK

ESP

EEC GER BR

Q3 2011 FY 2012

UKESP F

EEC10,595

11,577

GER

HoldingUS

BR

Q3 2011

Europe

-713

Americas

FY 2012

-23

-246

10,495

Jan 2013

Reduced by 1,200** incl. temps

• Personnel expenses reduced by 6% or about €10m in Q4 yoy lfl

• EEC completely sold, remaining business expected to be closed in due course

Comments

5 sold, but not

yet closed

Page 9: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Next steps restructuring01

France

Germany

UK

• Complete re-arrangement of logistic network with formation of five big regions, decentralization of central warehouses, closure of ten sites, exit of low margin large accountbeam business

• Negotiations with works councils, trade unions and labor administration finalized, implementation has started already to be completed by mid of the year

• Enhanced restructuring measures with closure of five sites and reduction of commoditybusiness to be implemented by new management

• All measures are already in implementation according to plan and will be finalized mainly byend of Q1

• Three sites already closed

• Closure of totally five sites will be finalized by the end of Q1

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Page 10: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Highlights and update on strategy01

Financials Q4/FY 2012

Outlook

Appendix

02

03

04

Agenda

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Page 11: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Financials FY 201202

EBITDA

Sales

Gross profit

Turnover

* Before restructuring costs Restructuring costs

11

6,661 Tto

+6.1%

FY 2011 FY 2012

7,068 Tto €7,095m €7,388m

+4.1%

FY 2012FY 2011

-38.6%*

FY 2012

139 Mio. €*

€227m*

€62m

€217m

FY 2011

€139m*€1,315m €1,288m

-1.5%*

FY 2012FY 2011

€1,295m*

Page 12: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Financials Q4 201202

EBITDA

Sales

Gross profit

Turnover

* Before restructuring costs Restructuring costs

12

€1,739m €1,633m

-6.1%

Q4 2012Q4 2011

1,636 Tto

-3.1%

Q4 2011 Q4 2012

1,585 Tto

€14m

-4.5%*

Q4 2011

€-35mQ4 2012

€22m*€24m*€307m €298m

-1.6%*

Q4 2012Q4 2011

€302m*

Page 13: Klöckner & Co - Roadshow Presentation March 13-14, 2013

1,3321,587

1,885 1,8851,739

1,945 1,9641,847

1,633

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

+30.5%

Turnover and sales02

Sales (€m)Turnover (Tto)

• qoq decline reflecting seasonal slowdown andrestructuring measures

• Average prices per ton further decreased into Q4(Q4: €1,030 vs. Q3: €1,047) but started to turn

1,318 1,498

1,763 1,765 1,636

1,857 1,863 1,764

1,585

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

-3.1%

-10.1%

-6.1%

-11.6%

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275

353337

318 307

344 344*

306 302*20.6

22.3

17.916.8 17.6 17.7 17.5* 16.6

18.5*

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

EBITDA (€m) / EBITDA-margin (%)

Gross profit and EBITDA02

Gross profit (€m) / Gross-margin (%)

• Gross profit margin already significantly improved • EBITDA in Q4 impacted by €57m charges forrestructuring program

* Before restructuring costs

14

48

104

62

37

24*

48* 50*

1922*

3.6

6.6

3.3

1.91.3

2.5*2.6*

1.01.3*

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

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45

81

50

24 22* 23*

36*

14*18*

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

Both regions recovering from their profitability lows02

Turnover (Tto) Sales (€m) EBITDA (€m)

* Restructuring costs of €3m in Q1 and €17m in Q2 and €-1m in Q3 and €57m in Q4; Q4 2011: €10m.

Turnover (Tto) Sales (€m) EBITDA (€m)

Eur

ope

Am

eric

as

1,0291,164 1,192

1,067990

1,105 1,0971,018

908

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

1,104

1,2901,365

1,2511,137

1,223 1,2371,149

1,041

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

289334

571

698646

752 766 746677

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

228297

520

634602

722 727 698

592

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

7

30

23

1513

29

21

1115*

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

-8.3%

+4.9% -1.6%

-8.5%

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Page 16: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Net income in 2012 heavily impacted by one-offs02

569

657

19

Taxes

-198

Net incomeFinancial result

76

D&A

165

EBITDAreported

Opex(net)

Personnel Costs

Gross Profit

1,288

62

Restructuring

€28m

Restructuring

€41m

Impairments

€55m

165-198

If adjusted for one-offs • EBITDA at €139m• Net income at -€83m

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Frefer

€17m

Cash taxes

US and CH

Restructuring

€8m

in €m

Page 17: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Free cash flow strongly positive02

Cash flow reconciliation in FY 2012 (€m)

EBITDAreported

Change inNWC

Taxes Other CF fromoperatingactivities

Capexnet

Free CF

• NWC efficiency increased significantly• Reduced reinvestment needs: Capex (net) with

-€34m below D&A ex ppa and ex impairments• Cash interests are only 2/3 of P&L interest

charges due to accretion of debt component for outstanding convertibles and interest costs on pensions

• Most of restructuring charges become cash effective in 2013, but compensated by NWC reduction of closed sites

Comments

62

7

67

34

101

54

5

91

Interest

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Page 18: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Net debt significantly reduced by tight NWC management02

* exchange rate effects, interest

Development of net financial debt in FY 2012 (€m)

2011

CF fromoperatingactivities Capex

(net)Dividends/other*

2012

Development of net financial debt in Q4 2012(€m)

Q3

CF fromoperatingactivities Capex

(net)Dividends/other*

Q4

• Debt reduction in Q4 mainly driven by NWC release of €222m

34101

422

18

471

187

422

417

596

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Page 19: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Strong balance sheet despite challenging year and impairments02

* Gearing = Net debt/Equity attributable to shareholders of Klöckner & Co SE less goodwill from businesscombinations subsequent to May 28, 2010

Comments

• Equity ratio of ~42%

• Net debt of €422m

• Gearing* at 28%

• NWC decreased by €127m to €1,407m yoy

50%

29.0%

32.1%

20.2%

3.1%

15.6%

Balance sheet total 2012: €3,905m

41.9%

32.7%

25.4%

Non- currentassets1,132

Inventories1,254

Trade receivables787

Other currentassets 122

Liquidity610

Equity1,635

Non- current liabilities1,276

Current liabilities994

100%

0%

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Page 20: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Balanced maturity profile December 201202

Maturity profile of committed facilities and drawn amounts (€m)

€m Facility CommittedDrawn amount

FY 2012* FY 2011*

Bilateral Facilities1) 583 98 126

Other Bonds 9 9 20

ABS 568 161 175

Syndicated Loan 500 161 226

Promissory Note 343 348 349

Total Senior Debt 2,003 777 896

Convertible 20072) 0 0 319

Convertible 20092) 98 92 86

Convertible 20102) 186 164 157

Total Debt 2,287 1,033 1,458

Cash4) 611 987

Net Debt 422 471

€m Q4 2012

Adjusted equity 1,491

Net debt 422

Gearing3) 28%

*Including interest1) Including finance lease2) Drawn amount excludes equity component3) Net debt/Equity attributable to shareholders of Klöckner & Co SE less goodwill from business combinations subsequent to May 28, 20104) Incl. cash in assets held for sale

20

Committed facilities

Drawn amounts

355

1,036

297

142

457

100

358

267142 188

2013 2014 2015 2016 Thereafter

Page 21: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Outlook

• Q1 2013• Turnover to be sequentially up in Q1 • EBITDA in Q1 expected to be between €30-40m with further improvement in Q2

• FY 2013• Turnover and sales to be stable due to growth in the US compensating decline in Europe also

driven by restructuring• EBITDA to be increased to ~€200m especially driven by €60m restructuring contribution• Net income and free cash flow expected to be positive• Net debt again to be reduced yoy despite restructuring cash-outs

03

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Page 22: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Highlights and update on strategy01

Financials Q4/FY 2012

Outlook

Appendix

02

03

04

Agenda

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Page 23: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Quarterly results and FY results 2008-201204

23

(€m)Q4

2012Q3

2012Q2

2012Q1

2012Q4

2011Q3

2011Q2

2011Q1

2011Q4

2010FY

2012FY

2011FY

2010FY

2009FY

2008

Turnover (Tto) 1,585 1,764 1,863 1,857 1,636 1,765 1,763 1,4 98 1,318 7,068 6,661 5,314 4,119 5,974

Sales 1,633 1,847 1,964 1,945 1,739 1,885 1,885 1,587 1,332 7,388 7,095 5,198 3,860 6,750

Gross profit 298 306 340 344 307 318 337 353 275 1,288 1,315 1,136 645 1,366

% margin 18.3 16.6 17.3 17.7 17.6 16.8 17.9 22.3 20.6 17.4 18.5 21.9 16.7 20.2

EBITDA -35 19 33 45 14 37 62 104 48 62 217 238 -68 601

% margin -2.1 1.0 1.7 2.3 0.8 1.9 3.3 6.6 3.6 0.8 3.1 4.6 -1.8 8.9

EBIT -89 -9 -23 18 -18 8 36 86 24 -103 111 152 -178 533

Financial result -12 -21 -18 -24 -21 -22 -21 -19 -19 -76 -84 -67 -62 -70

Income before taxes -101 -30 -41 -6 -39 -15 15 66 5 -179 27 84 -240 463

Income taxes -20 2 3 -4 12 3 -9 -22 12 -19 -17 -4 54 -79

Net income -121 -28 -38 -10 -27 -12 5 44 17 -198 10 80 -186 384

Minority interests -1 -1 0 0 -1 -1 0 1 1 -3 -1 3 3 -14

Net income KlöCo -120 -27 -38 -10 -27 -11 5 43 16 -195 12 78 -188 398

EPS basic (€) -1.20 -0.27 -0.38 -0.10 -0.27 -0.11 0.07 0.65 0.25 -1.95 0.14 1.17 -3.61 8.56

EPS diluted (€) -1.20 -0.27 -0.38 -0.10 -0.27 -0.11 0.07 0.60 0.25 -1.95 0.14 1.17 -3.61 8.11

Page 24: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Strong Growth: 24 acquisitions since the IPO04

24

Acquisitions1) Acquired sales1),2)

€141m

€567m

€108m

2

4

12

2

2005 2006 2007 2008 2009 2010

4

€231m

€712m

2011

2

€1.15bn

¹ Date of announcement 2 Sales in the year prior to acquisitions

Country Acquired 1) Company Sales (FY)2)

GER Mar 2010 Becker Stahl-Service €600m

CH Jan 2010 Bläsi €32m

2010 4 acquisitions €712m

US Mar 2008 Temtco €226m

UK Jan 2008 Multitubes €5m

2008 2 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

2007 12 acquisitions €567m

2006 4 acquisitions €108m

USA Dec 2010 Lake Steel €50m

USA Sep 2010 Angeles Welding €30m

Brazil May 2011 Frefer €150m

USA April 2011 Macsteel €1bn

2011 2 acquisitions €1,150m

Page 25: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Comments

Balance sheet as of December 31, 201204

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(€m) December 31, 2012 December 31, 2011

Non-current assets 1,132 1,295

Inventories 1,254 1,362

Trade receivables 787 922

Cash & Cash equivalents 610 987

Other assets 122 140

Total assets 3,905 4,706

Equity 1,635 1,843

Total non-current liabilities 1,276 1,526

thereof financial liabilities 914 1,068

Total current liabilities 994 1,337

thereof trade payables 634 750

Total equity and liabilities 3,905 4,706

Net working capital 1,407 1,534

Net financial debt 422 471

Shareholders’ equity:• Increase to 42% mainly

caused by repayment of convertible bonds

Financial debt:• Gearing at 28%• Gross debt of €1.0bn and

cash position of €0.6bn result in a net debt position of €422m

Page 26: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Profit & loss 201204

(€m) FY 2012 FY 2011

Sales 7,388 7,095

Gross profit 1,288 1,315

Personnel costs -657 -588

Other operating expenses (net) -569 -510

EBITDA 62 217

Depreciation & Amortization -165 -106

EBIT -103 111

Financial result -76 -84

EBT -179 27

Taxes -19 -17

Net income -198 10

Minorities -3 -1

Net income attributable to KCO shareholders -195 12

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Page 27: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Segment performance Q4 201204

27

(€m) Europe Americas HQ/Consol. Total

Turnover (Tto)

Q4 2012 908 677 1,585

Q4 2011 990 646 1,636

∆ % -8.3 4.9 -3.1

Sales

Q4 2012 1,041 592 1,633

Q4 2011 1,137 602 1,739

∆ % -8.5 -1.6 -6.1

EBITDA

Q4 2012 -37 14 -12 -35

% margin -3.6 2.4 -2.1

Q4 2011 12 13 -11 14

%margin 1.0 2.1 0.8

∆ % EBITDA -425.7 10.4 -358.6

Page 28: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Acquisitions shift exposure towards more promising regions and products04

28

Machinery and mechanical26% engineering

Miscellaneous 10%

Local dealers 12%

Household appliances/Consumer goods 6%

36% Construction industry

Automotive industry 10%

Sales by industry

Sales by markets

38% USAFrance/Belgium 13%

Switzerland 10%

UK 6%

25% Germany/EECSpain 3%Netherlands 3%

Brazil 1%China <1%

21% Long productsQuality steel/Stainless steel 8%

Aluminium 7%

Tubes 7%

46% Flat productsOthers 11%

Sales by product

Page 29: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Current shareholder structure04

29

Geographical breakdown of identified institutional investors

Comments

• Identified institutional investors account for 46%

• German investors incl. retail dominate

• Top 10 shareholdings represent around 27%

• Retail shareholders represent 33%

As of February 2013

Other EU 15%

US 34%

Other World 8%

Switzerland 5%

Germany 24%

France 11%

UK 3%

Page 30: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Appendix04

30

Financial calendar 2013

May 8, 2013 Q1 interim report 2013

May 24, 2013 Annual General Meeting 2013

August 7, 2013 Q2 interim report 2013

November 6, 2013 Q3 interim report 2013

Contact details Investor Relations

Dr. Thilo Theilen, Head of Investor Relations & Corporate Communications

Phone: +49 203 307 2050

Fax: +49 203 307 5025

E-mail: [email protected]

Internet: www.kloeckner.com

Page 31: Klöckner & Co - Roadshow Presentation March 13-14, 2013

Our Symbol

the earsattentive to customer needs

the eyeslooking forward to new developments

the nosesniffing out opportunitiesto improve performance

the ballsymbolic of our role to fetchand carry for our customers

the legsalways moving fast to keep up withthe demands of the customers