klöckner & co - roadshow presentation april 2012
TRANSCRIPT
Klöckner & Co SEA Leading Multi Metal Distributor
Klöckner & Co SE
April 2012CEO / CFO
Gisbert Rühl
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
00
Highlights01
Update on “Klöckner & Co 2020”
Financials Q4/FY 2011
Outlook
Appendix
02
03
04
05
Agenda
3
Highlights FY 2011 and until today
• Turnover and sales significantly improved by 25.4% and 36.5% respectively
• EBITDA (€217m) below last year (€238m) leading to a slightly positive net income (€10m)not fully compensating the weight of economic downturn
• Delivering on “Klöckner & Co 2020” strategy exceeding first time €7bn sales
• Transforming deal with Macsteel catapulting us from #10 to #3 in the US
• Pilot acquisition in emerging markets with Frefer in Brazil
• First SSC in China opened
• Capital raising for further growth, €1bn growth capital available
• Immediate reaction with profitability action plan
• Expansion of the Board of Management to reflect importance of Americas segment to be more than one third
01
4
We delivered on what we promised01
Guidance for FY 2011 delivered
Turnover growth > 25% 25.4%
Sales growth > 35% 36.5%
Increase in EBITDA vs. €238m in 2010 €217m
Gearing < 75% 29.0%
Equity ratio > 30% 39.2%
Net debt < €500m €471m
5
Highlights01
Update on “Klöckner & Co 2020”
Financials Q4/FY 2011
Outlook
Appendix
02
03
04
05
Agenda
6
Strategy “Klöckner & Co 2020”: Progress in 201102
• Acquisition of Macsteel in the US and Frefer in Brazil contributed to increased annual turnover by 25% from 5.3m to to 6.7m to and sales by 37% from €5.2bn to €7.1bn
• Successful market entry in China
• Market out-performance in the US supported by continued investment in value added processing
• Market under-performance in Europe also because of product portfolio adjustments, esp. in Q4
• Structural measures across all country organizations• Headcount reduction by 6% vs. Q3 or ~700 employees• Targeting 1%p-EBITDA margin improvement, i.e. ~€70m p.a.• One-off costs low double digit fully offset with disposal proceeds • Status Q4: headcount reduction of ~200 already, €10m one-offs in Q4
• Management reviews completed
Organic growth strategy
Management & Personnel Development
Business optimization
External growth strategy
2010 2011
Turnover
5.3m to6.7m to
Market Klöckner Market Klöckner
KCO vs. market growth
+2.3%
Management Review
Level 1
Level 3
Level 2
25
70
165
Division Managers Holding
Direct Reports of Country CDepartment Managers Holding
Direct Reports of 2nd level with Mgmt. Functions
Level 1
Level 3
Level 2
25
70
165
C-Level of CountriesDivision Managers Holding
Direct Reports of Country C-Lev.Department Managers Holding
Direct Reports of 2nd level with Mgmt. Functions
Board
+25%
-3.8%
US EU
7
Headcount reduction
-196
Q3 2011 FY 2011
11,38111,577
Update on major acquisitions and their integration02
Frefer/Brazil
• Sales contribution since consolidation on June 1 €59m
• Turnover 75Tto since June 1• Structurally difficult market with longerlasting
overcapacities due to strong local currency which attracted imports and affected exports. As a consequence local mills are pushing more steel through their local distribution channels
• Changing the business model to add more value added processing and niche products to differentiate from mill tied distributors; i.e. through redundant equipment transfer from the US to Brazil
• Sharing best practices and knowledge transfer within the Americas segment
• Consolidation of locations to create efficiencies
Kloeckner Metals US (MSCUSA/Namasco)
• Sales contribution of €781m since consolidation in May 1, annualized segments‘ sales impact > 1/3
• Turnover 0.8 million Tons since consolidation in May 1• EBITDA not yet satisfactory but progressing well into 2012• Combined NWC significantly reduced by tighter inventory
management through central purchasing
Synergies: • Purchasing synergies realized in transaction prices and
rebates• Joint headquarters in Roswell, Georgia• Common sales force already realizing cross selling effects• Realignment of group operations along product lines
complete• Common brand since March 1 with Kloeckner Metals US• Conversion of Macsteel locations to common IT platform
by mid year
8
Strategy “Klöckner & Co 2020”: Targets for 201202
• At least no focus in H1
• Further market outperformance in the US after the integration of Macsteel through significant cross-selling effects
• Further reduction of highly commoditized businesses in Europe should be partially compensated by increasing sales of higher value products
• Full implementation of profitability action plan measures
• Full implementation of country specific projects and measures
• Implementation of a common performance management
Organic growth strategy
Management & Personnel Development
Business optimization
External growth strategy
9
Highlights01
Update on “Klöckner & Co 2020”
Financials Q4/FY 2011
Outlook
Appendix
02
03
04
05
Agenda
10
Financials FY 201103
EBITDA
Sales
Gross profit
Turnover
5,314 Tto
+25.4%
FY 2010 FY 2011
6,661 Tto
€5,198m
€7,095m+36.5%
FY 2011FY 2010
€238m€217m
-8.9%
FY 2011FY 2010
€1,136m
€1,315m+15.7%
FY 2011FY 2010
11
Financials Q4 201103
€1,332m
€1,739m+30.5%
Q4 2011Q4 2010
€48m €14m
-71.7%
Q4 2011Q4 2010
1,318 Tto
+24.1%
Q4 2010 Q4 2011
1,636 Tto
EBITDA
Sales
Gross profit
Turnover
€275m €307m
+11.6%
Q4 2011Q4 2010
12
8731,049
1,416 1,401 1,332
1,5871,885 1,885 1,739
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
+30.5%
-7.7%
Turnover and sales03
9661,180
1,448 1,368 1,3181,498
1,763 1,7651,636
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
-7.3%
+24.1%
Sales (€m)Turnover (Tto)
• qoq decline reflecting seasonal slowdown and destocking because of economic uncertainty
• Average prices per ton held up well qoq despite negative spot price development (Q3: €1,068 vs Q4: €1,063)
13
EBITDA (€m) / EBITDA-margin (%)
Gross profit and EBITDA03
Gross profit (€m) / Gross-margin (%)
• Gross profit margin recovering slightly since trough in Q3
• EBITDA in Q4 impacted by €10m restructuring charges for profitability action plan
198236
331294
275
353 337318 307
22.523.4
21.0 20.622.3
17.9 16.8 17.6
22.6
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
29
6148
104
62
37
14
83
100
2.8
7.1
4.33.6
6.6
3.3
1.90.8
9.5
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
14
Segment performance FY 201103
Turnover (Tto) Sales (€m) EBITDA (€m)
* consolidation of BSS as of March 1, 2010
Turnover (Tto) Sales (€m) EBITDA (€m)
Eur
ope
Am
eric
as
* *
730858
1,180 1,169 1,104
1,290 1,3651,251 1,137
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
+3.0%
*
*
730
909
1,1621,084 1,029
1,164 1,1921,067
990
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
* *
-3.8%
143191
236 232 228297
520
634 602
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
+163.9%/+27.3%**
236271 286 284 289
334
571
698 646
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
+123.5%/+7.8%**
143
25
93
6045
81
50
2412
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
3
913
57
30
23
1513
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
** Without acquisitions in 2011
15
Net income slightly positive in 201103
• Tax rate high i.a. to non-recognition of deferred tax assets on losses incurred in 2011
• FY net income affected by restructuring charges and ppa on intangibles driven D&A effects of €39m
Net income by quarter (€m) Comments
122
47
15 17
44
5
-12-27
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
Net income by full year (€m)
-21
-20
-12
-186
-17
10
Net IncomeFY 2009
Net IncomeFY 2010 EBITDA D&A
FinancialResult Taxes
Net IncomeFY 2011
80
16
Cash flow slightly positive before capex and acquisitions03
* exchange rate effects, interest
Cash flow reconciliation in FY 2011 (€m)
EBITDAChange in
NWC Taxes Other
CF fromoperatingactivities
Capexnet Acquisitions Free CF
-127
-37-47
-38
217
6
-444 -476
• Capex (net) with €38m below D&A ex ppa• Purchase prices paid for acquisitions (€444m)
mainly caused the negative free cashflow
Comments
17
Capital increase partly compensated acquisition related debt increase03
* exchange rate effects, interest
Development of net financial debt in FY 2011 (€m)
2010
CF fromoperatingactivities Capex Acquisitions
Capitalincrease Dividends
Assumeddebt Other* 2011
Development of net financial debt in Q4 2011(€m)
+6 -38
-444
-22-137
516
-236
-116
-471
Q3
CF fromoperatingactivities Capex Dividends Other* Q4
+154
-17 -2 -26
-580-471
• Debt reduction in Q4 mainly driven by NWC release
18
Strong balance sheet03
* Gearing = Net debt/Equity attributable to shareholders of Klöckner & Co SE less goodwill from businesscombinations subsequent to May 28, 2010
Comments
• Equity ratio of 39%
• Net debt of €471m
• Gearing* at 29%
• NWC decreased by €158m to €1,534m qoq
• NWC/sales structurally increased by 2%p due to MSCUSA acquisition, i.e.new normal ~22%
50%
27.5%
28.9%
19.6%
3.0%
21.0%
Balance sheet total 2011: €4,706m
39.2%
32.4%
28.4%
Non-currentassets1,295
Inventories1,362
Trade receivables922
Other currentassets 140
Liquidity987
Equity1,843
Non-current Liabilities1,526
Current liabilities1,337
100%
0%
19
Balanced maturity profile with first repayment in July 201203
€m Facility CommittedDrawn amount
FY 2011* FY 2010*
Bilateral Facilities1) 610 126 73
Other Bonds 20 20 0
ABS 575 175 88
Syndicated Loan 500 226 226
Promissory Note2) 343 349 147
Total Senior Debt 2,048 896 534
Convertible 20073) 325 319 306
Convertible 20093) 98 86 81
Convertible 20103) 186 157 151
Total Debt 2,657 1,458 1,072
Cash 987 935
Net Debt 471 137
€m Q4 2011
Adjusted equity 1,654
Net debt 471
Gearing4) 29%
*Including interest1) Including finance lease2) New promissory notes issued in Q2 2011 (€198)3) Drawn amount excludes equity component4) Net debt/Equity attributable to shareholders of Klöckner & Co SE less goodwill from business combinations subsequent to May 28, 2010
Maturity profile of committed facilities and drawn amounts (€m)
Committed facilities
Drawn amounts
667527
675
296
487
374
109
397
266 352
2012 2013 2014 2015 Thereafter
20
Highlights01
Update on “Klöckner & Co 2020”
Financials Q4/FY 2011
Outlook
Appendix
02
03
04
05
Agenda
21
Segment specific business outlooks04
Americas
• US: small growth in construction, funding forcommercial projects improving, government related sectors (i.e. hospitals, schools, highways) showing strengths ahead of the elections;industrial machinery and equipment growingstrongly, esp. in farming related businesses, construction equipment, telecom/IT, mining, energy; appliances and residential construction depending on consumer confidence trend; decreasing unemployment rate supportive
• Brazil: steel distribution highly competitive at the moment given mills enforcing local distribution, strong BRL favours imports and hindering exports, nevertheless market growth trend intact with hugeinfrastructure pent-up demand
Europe
• Germany: demand holding up well due to machinery andmechanical engineering, but VDMA reports backdrop in order entries of 27% last three months
• Switzerland: construction still strong, but first signs ofcooldown; mechanical engineering suffering fromhigh CHF
• France: construction is trending sidewards as fiscalsupports fading out and business confidence decreasingfor commercial construction
• UK: confidence in construction sector is improving slightly but overall activity to stay subdued due tobudgetary cuts, only commercial (esp. London) andpublic transportation related construction might grow
• Spain: construction still recessive with further declines not to be ruled out
22
Outlook
• H1 2012• Turnover to be sequentially up in Q1 and again in Q2 expected• EBITDA in Q1 expected to be €40-50m with further increase in Q2• Opposite to 2011, Q2 from todays’ perspective will be stronger than Q1, whereas H2 not yet
predictable• FY 2012
• In North- and South America we expect an increasing and in Europe a declining steel demand:• Americas: up by mid single digit percentage point plus consolidation effects• Europe: down by up to a mid single digit percentage point
Overall increasing turnover as well as sales expected for Klöckner & Co• EBITDA target-margin achievement of 6% for Americas reasonable but not for the group already
due to Europe• Profitability action plan targeting annualized contribution of 1%p EBITDA-margin improvement • All initiated measures in Europe and the robust growth in the US should support an increasing
EBITDA in 2012 compared to 2011
04
23
Highlights01
Update on “Klöckner & Co 2020”
Financials Q4/FY 2011
Outlook
Appendix
02
03
04
05
Agenda
24
Appendix05
25
Financial calendar 2012
May 9, 2012 Q1 interim report 2012
May 25, 2012 Annual General Meeting 2012
August 8, 2012 Q2 interim report 2012
November 7, 2012 Q3 interim report 2012
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.de
Quarterly results and FY results 2007-201105
26
(€m) Q42011
Q3 2011
Q2 2011
Q1 2011
Q4 2010
Q3 2010
Q2 2010
Q1 2010
Q42009
FY2011
FY 2010
FY2009
FY 2008
FY 2007
Turnover (Tto) 1,636 1,765 1,763 1,498 1,318 1,368 1,448 1,180 966 6,661 5,314 4,119 5,974 6,478
Sales 1,739 1,885 1,885 1,587 1,332 1,401 1,416 1,049 873 7,095 5,198 3,860 6,750 6,274
Gross profit 307 318 337 353 275 294 331 236 198 1,315 1,136 645 1,366 1,221
% margin 17.6 16.8 17.9 22.3 20.6 21.0 23.4 22.5 22.6 18.5 21.9 16.7 20.2 19.5
EBITDA 14 37 62 104 48 61 100 29 83 217 238 -68 601 371
% margin 0.8 1.9 3.3 6.6 3.6 4.3 7.1 2.8 9.5 3.1 4.6 -1.8 8.9 5.9
EBIT -18 8 36 86 24 39 78 11 26 111 152 -178 533 307
Financial result -21 -22 -21 -19 -19 -16 -17 -15 -16 -84 -67 -62 -70 -97
Income before taxes -39 -15 15 66 5 22 61 -4 9 27 84 -240 463 210
Income taxes 12 3 -9 -22 12 -7 -14 6 3 -17 -4 54 -79 -54
Net income -27 -12 5 44 17 15 47 2 12 10 80 -186 384 156
Minority interests -1 -1 0 1 1 1 1 1 3 -1 3 3 -14 23
Net income KlöCo -27 -11 5 43 16 14 46 1 9 12 78 -188 398 133
EPS basic (€) -0.27 -0.11 0.07 0.65 0.25 0.21 0.69 0.02 0.56 0.14 1.17 -3.61 8.56 2.87
EPS diluted (€) -0.27 -0.11 0.07 0.60 0.25 0.21 0.69 0.02 0.56 0.14 1.17 -3.61 8.11 2.87
Strong Growth: 24 acquisitions since the IPO, 2 in 201105
27
Acquisitions1) Acquired sales1),2)
€141m
€567m
€108m
24
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 €567m2006 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
Comments
Balance sheet as of December 31, 201105
28
(€m) December 31, 2011 December 31, 2010
Non-current assets 1,295 856
Inventories 1,362 899
Trade receivables 922 703
Cash & Cash equivalents 987 935
Other assets 140 98
Total assets 4,706 3,491
Equity 1,843 1,290
Total non-current liabilities 1,526 1,361
thereof financial liabilities 1,068 1,020
Total current liabilities 1,337 840
thereof trade payables 750 585
Total equity and liabilities 4,706 3,491
Net working capital 1,534 1,017
Net financial debt 471 137
Shareholders’ equity:• Stable at 39% despite
NWC and net financial debt increase, benefitting from capital increase
Financial debt:• Gearing at 29%• Gross debt of €1.5bn and
cash position of €1bn result in a net debt position of €471m
NWC:• Swing mainly driven by
acquisitions
Profit & loss 201105
(€m) FY 2011 FY 2010
Sales 7,095 5,198
Gross profit 1,315 1,136
Personnel costs -588 -487
Other operating expenses -562 -447
EBITDA 217 238
Depreciation & Amortization -106 -86
EBIT 111 152
Financial result -84 -68
EBT 27 84
Taxes -17 -4
Net income 10 80
Minorities -1 2
Net income attributable to KCO shareholders 12 78
29
Segment performance Q4 201105
30
(€m) Europe Americas* HQ/Consol. Total
Turnover (Tto)
Q4 2011 990 646 1,636
Q4 2010 1,029 289 1,318
Δ % -3.8 123.5 24.1
Sales
Q4 2011 1,137 602 1,739
Q4 2010 1,104 228 1,332
Δ % 3.0 163.9 30.5
EBITDA
Q4 2011 12 13 -11 14
% margin 1.0 2.1 0.8
Q4 2010 45 7 -4 48
%margin 4.1 2.8 3.6
Δ % EBITDA -74.3 99.8 -71.7
* in 2010 North America
• Excl. MSCUSA, Frefer and Lake Steel turnover increase in Americas was 7.8% and sales increase was 27.3% yoy
• Without acquisitions total volume decreased by 1.3% and total sales increased by 7.1% yoy
Comments
Acquisitions shift exposure towards more promising regions and products05
24% Long productsQuality steel/Stainless steel 8%
Aluminium 7%
Tubes 6%
42% Flat productsOthers 13%
Sales by product
28% USAFrance/Belgium 16%
Switzerland 13%
UK 6%
28% Germany/EECSpain 4%
Sales by markets
Netherlands 3%Brazil 1%
China <1%
31
Machinery and mechanical 24% engineering
Miscellaneous 11%
Local dealers 10%
Household appliances/Consumer goods 7%
37% Construction industry
Automotive industry 11%
Sales by industry
Current shareholder structure05
32
Geographical breakdown of identified institutional investors
Comments
• Identified institutional investors account for 50%
• German investors incl. retail dominate
• Top 10 shareholdings represent around 27%
• Retail shareholders represent 26%• 100% freefloat
Other World 1%
Germany 28%
Other EU 20%
Norway 9%
UK 15%
US 18%
Switzerland 9%
As of December 2011
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
33