Upload
kloeckner-co-se
View
110
Download
1
Embed Size (px)
Citation preview
2
Agenda
1.
Overview and market
Appendix
2.
Current market development and expectations for 2008
3.
Profitable growth initiatives
4.
Financials and outlook
3
Klöckner & Co at a glance
CustomerKlöckner & Co
Klöckner & Co highlights
Products:
Services:
Producer
Construction:Structural SteelworkBuilding and civil engineering
Machinery/MechanicalEngineering
Others:Durable goodsMetal productsInstallationetc.
Leading producer-independent steel and metal distributor in the European and North American markets combined
Network with more than 260 distribution locations in Europe and North America
More than 10,000 employees
Key financials FY 2007-
Sales:
€6,274 million-
EBITDA:
€371 million
4
Distributor in the sweet spot
Local customersGlobal suppliers
Suppliers Sourcing Products and services
Logistics/
Distribution Customers
Global Sourcing in competitive sizesStrategic partnershipsFrame contractsLeverage one supplier against the otherNo speculative trading
One-stop-shop with wide product range of high-quality productsValue added processing services Quality assurance
Efficient inventory managementLocal presenceTailor-made logistics including on-time delivery within 24 hours
> 200,000 customersNo customer with more than 1% of salesAverage order size of €2,000Wide range of industries and marketsService more important than price
Purchase volume p.a. of 6 million tonsDiversified set of worldwide approx. 70 suppliersExamples:
Klöckner & Co’s value chain
5
B D
F
E
CH ACZ
PL
LT
RO
NLCN
USA
GBIRL
More than 260 distribution locations in Europe and NA
USA 30 D/A 23 F/B 75 CH 35 E 54
GB 26 IRL 1 NL 5 Eastern Europe 13
BU
6
North America (2006)
Structure: 50-60% through distribution, service centersSize in value: ~€100bnCompanies: ~1,300 only independent distributors
Europe (2006)
Structure: 67% through distribution, service centersSize in value: ~€70–90bnCompanies: ~3,000 few mill-tied, most independent
Strong position in Europe and growing position in NA
Source: Purchasing Magazine (May 2007)Source: EuroMetal, company reports, own estimates
ArcelorMittal
(Distribution approx. 5%)
ThyssenKrupp
Corus
Other independents
Other mill-tied
distributors
Klöckner & Co
Olympic Steel
Namasco (Klöckner & Co)
Ryerson
Other
Reliance Steel
Samuel, Son & CoThyssenKrupp Materials NA
Russel
Metals
Worthington Steel
Metals USA
Carpenter Technology
PNA Group
McJunkin
O'Neal Steel
Mac-
Steel
AM Castle 72.5%
Namasco with Primary and Temtco
approx. 1.5%
11%
8%
7%
4%~ 45-
55%
~ 15-
25%
4.5%
2.5%
2.1%
1.8%
0.9%0.9%0.8%
1.4%
1.3%1.2%
1.3%
1.8%
1.4%
1.0%
4.7%
7
Broad industry, product and customer diversification
Other
GB
Construction
Machinery/Manufacturing
Auto-
motive
42%
25%
6%
27% 23%
21%
14%10%
5%
9%1%
13%
Germany/Austria
France/Belgium Spain
Nether-
lands
Eastern Europe
USA
Switzerland
Canada
4%Steel-flat Products
Steel-long Products
Tubes
Special and
Quality
Steel
Aluminum
Other Products
29%
30%10%
10%
7%
14%
Sales split by industry* Sales split by markets* Sales split by product*
*As of December
2007 *As of December
2007*As of December
2007
8
Agenda
1.
Overview and market
Appendix
2.
Current market development and expectations for 2008
3.
Profitable growth initiatives
4.
Financials and outlook
9
Ongoing
profitable growth
Highlights Q1 2008 and until today
Excellent results, supported by price increases
Further expansion through the acquisition of Temtco in the US and also Multitubesin the UK
Acquisition of remaining outside shareholdings in Swiss Company Debrunner Koenig Holding AG and as a consequence full integration into the Group
Sale of the automotive-related Canadian Namasco Ltd.
Business optimization program “STAR” fully on track
All preparatory steps to transform Klöckner & Co AG into a European company (SE – Societas Europaea) completed
Ulrich Becker joined the Management Board on April 1, 2008, responsible for Europe and Purchasing
10
Financial highlights Q1 2008
(€m) Q1 2008
Q1 2007 Δ%
Volume (Ttons) 1,720 1,629 5.6
Sales 1,660 1,550 7.1
EBITDA 109 92 18.3
EBIT 93 78 18.6
11
Steel market development in Q2 2008
Strong price increases despite a softer economic growth due to a favorable supply and demand relation especially in the US but also in Europe
Structural change due to the fact that steel prices are now driven primarily by raw material costsHigher discipline on the producer side due to consolidationHigh capacity utilizationLow stock levels and low import volumes
Further price increases already announced for the upcoming months
Strong steel market development expected to continue in Q3
12
80%
90%
100%
110%
120%
130%
140%
Jan06
Feb06
Mar06
Apr06
May06
Jun06
Jul06
Aug06
Sep06
Oct06
Nov06
Dec06
Jan07
Feb07
Mar07
Apr07
May07
Jun07
Jul07
Aug07
Sep07
Oct07
Nov07
Dec07
Jan08
Feb08
Mar08
Apr08
May08
Flat Products / HRC / N.Europe domestic Flat Products / CRC / N.Europe domestic Ex-Works /t
Flat Products / HDG / N.Europe domestic Ex-Works /t
Flat
prices
Northern Europe (SBB, Jan 2007 = 100)
13
90%
110%
130%
150%
170%
190%
210%
Jan06
Feb06
Mar06
Apr06
May06
Jun06
Jul06
Aug06
Sep06
Oct06
Nov06
Dec06
Jan07
Feb07
Mar07
Apr07
May07
Jun07
Jul07
Aug07
Sep07
Oct07
Nov07
Dec07
Jan08
Feb08
Mar08
Apr08
May08
Flat Products / HRC / N.America domestic FOB US Midwest mill $/tFlat Products / CRC / N.America domestic FOB US Midwest mill $/tFlat Products / HDG / N.America domestic FOB US Midwest mill $/tFlat Products / Plate (A36) / N.America domestic FOB US Midwest mill $/t
Flat
products
prices
North America (SBB, Jan 2007 = 100)
14
70%
80%
90%
100%
110%
120%
130%
140%
150%
160%
170%
Jan06
Feb06
Mar06
Apr06
May06
Jun06
Jul06
Aug06
Sep06
Oct06
Nov06
Dec06
Jan07
Feb07
Mar07
Apr07
May07
Jun07
Jul07
Aug07
Sep07
Oct07
Nov07
Dec07
Jan08
Feb08
Mar08
Apr08
May08
Long Products / Medium sections / Europe domestic delivered /t Long Products / Merchant Bar / Europe domestic delivered /tLong Products / Rebar / Europe domestic delivered /t
Long products
prices
Europe (SBB, Jan 2007 = 100)
15
Long products
prices
North America (SBB, Jan 2007 = 100)
80%
90%
100%
110%
120%
130%
140%
150%
160%
170%
180%
Jan06
Feb06
Mar06
Apr06
May06
Jun06
Jul06
Aug06
Sep06
Oct06
Nov06
Dec06
Jan07
Feb07
Mar07
Apr07
May07
Jun07
Jul07
Aug07
Sep07
Oct07
Nov07
Dec07
Jan08
Feb08
Mar08
Apr08
May08
Long Products / Rebar / N.America domestic FOB US Midwest mill $/tLong Products / Merchant Bar / N.America domestic FOB US Midwest mill $/tLong Products / WF beams (medium) / N.America domestic FOB US Midwest mill $/t
16
Agenda
1.
Overview and market
Appendix
2.
Current market development and expectations for 2008
3.
Profitable growth initiatives
4.
Financials and outlook
17
Profitable growth
Grow more thanthe market
Continuous businessoptimization
1 Acquisitions
driving market consolidation andOrganic growth
and
expansion
into new markets
2 STAR Program:-
Purchasing
-
Distribution network
Profitable growth through value-added distribution and services within multi metals to companies in Europe and North America
Profitable growth through value-added distribution and services within multi metals to companies in Europe and North America
18
Country Acquired Company Sales (FY)
Mar 2008 Temtco €226 millionJan 2008 Multitubes €5 million
2008 Ytd 2 acquisitions €231 millionSep 2007 Lehner
& Tonossi €9 millionSep 2007 Interpipe €14 millionSep 2007 ScanSteel €7 millionAug 2007 Metalsnab €36 millionJun
2007 Westok €26 millionMay 2007 Premier Steel €23 millionApr
2007 Zweygart €11 millionApr 2007 Max Carl €15 millionApr 2007 Edelstahlservice €17 millionApr 2007 Primary Steel €360 millionApr 2007 Teuling €14 millionJan 2007 Tournier €35 million
2007 12 acquisitions €567 million2006 4 acquisitions €108 million
12
42
2005 2006 2007
Acquisitions Sales
€141 million€108 million
€567 million
Continued expansion through acquisitions1
19
Acquisition of Temtco, a leading plate distributor
40% of the 2007-level of acquisition-related sales already achieved
Tacoma, WA
Chicago, IL
Apache Junction, AZ
Louisville, MS
York, PA
High quality product portfolio: High strength quenched & tempered steel, wear-resistant steels and security steels
Sales 2007: $310 million (€226 million) with 180 employees
More than 60% of sales are processed products
Excellent customer base in application sectors such as energy, machinery and mechanical engineering, mining and transport
CommentsNorth America/USA –
03/08: Temtco
20
Investment highlights
Complementary sales coverage combined with an additional productrange offers synergy potential
Namasco’s and Primary’s market coverage hugely expandedEnlarged purchasing power helps to counterweight the strong supplier consolidation (top 3 account for more than 80% of market)Additional (typical) synergies in admin, finance, IT, etc.
The acquisition of Temtco supports significantly the leading position of Primary and Namasco in the plate distribution segment
Securing continuing specialty plate supply through Temtco’s supplier relationsLeveraging Temtco’s customer base for sale of Namasco/Primary’s commodity plate and vice versaBroad geographic coverage with five locations
Leading position in
plate segment
Synergies
21
Strong acquisition criteriaFurther acquisitions in core markets and Eastern Europe:
●
Leverage existing structure in core markets with small-
and mid-size bolt-on acquisitions
●
Large scale acquisitions when appropriate●
Acquisitions in Eastern Europe to increase footprint
Focus on targets in 3 directions:●
Expansion of geographic reach●
Extension of customer base●
Extension of product portfolio
Focus on targets at attractive valuations:●
EV/EBITDA multiple between 4x and 6x
Focus on targets with significant synergy and scale effects:
●
Stronger purchasing power ●
Streamlining operations and processes, integrating IT●
Integration of STAR
Accretive growth
1
22
Organic growth and expansion into new markets
Closing of acquisition of Metalsnab in Bulgaria in January 2008Additional acquisitions and opening of new branches Evaluation of market entry in other countries (e.g. Turkey, Russia)
Concentrate product range and expand higher margin productsIncrease value-added services
Further expansion in Eastern Europe and into new markets
Expansion of strong market position in core markets
1
23
STAR: Status Quo
Extension of European sourcing Improvement of the European stock management
Ongoing SAP roll-out across European countriesImproving performance of distribution network
STAR program fully on track
Purchasing
Distribution network
2
24
Phase II (2008 onwards)
STAR: Phase I finalized in 2008, further potential in phase II2
Phase I (2005 -
2008)
Overall targets:Central purchasing on country level, especially in GermanyImprovement of distribution networkImprovement of inventory management
2006:
~ €20 million2007:
~ €40 million2008:
~ €20 million~ €80 million
Upside potential
Overall targets:European sourcingOngoing improvement of distribution network
Upside potential
2008
~ €10 million2009:
~ €30 million2010:
~ €20 million~ €60 million
25
Agenda
1.
Overview and market
Appendix
2.
Current market development and expectations for 2008
3.
Profitable growth initiatives
4.
Financials and outlook
26
Summary income statement Q1 2008
(€m) Q12008
Q12007 Δ%
Volume
(Ttons) 1,720 1,629 5.6Sales 1,660 1,550 7.1Gross profit% margin
34020.5
30719.8
10.83.5
EBITDA% margin
1096.6
925.9
18.311.9
EBITFinancial result
93-17
78-10
18.663.7
Income before
taxes 76 68 11.7Income taxes -24 -22 10.3
Minority interests 2 6 -74.9
Net income* 51 40 26.3EPS basic
(€) 1.09 0.86 26.7EPS
diluted (€) 1.06 0.86 23.3* Attributable to shareholders of Klöckner & Co AG
27
Again strong underlying EBITDA
Underlying EBITDA Q1 2008
(€m) Q12008
EBITDA as reported●
One-offs109,0
0,2
Operating EBITDA●
Windfall effects●
Exchange rate effects●
Special expense effects
109,2-8,04,1
-6,5
Underlying EBITDA 98,8
●
Acquisitions (LTM*) -13,5
Underlying EBITDA excluding Acquisitions 85,3* LTM: Last twelve months
28
Includes sales of M€40 for Q1 2008* in Europe andsales of M€101.4 for Q1 2008* in North America
Segment performance Q1 2008
Comments(€m) Europe North America
HQ/Consol. Total
Volume
(Ttons)Q1 2008 1,211 509 - 1,720Q1 2007 1,230 399 - 1,629Δ
% -1.5 27.5 - 5.6Sales
Q1 2008 1,358 301 - 1,660Q1 2007 1,339 211 - 1,550Δ
% 1.5 42.7 - 7.1EBITDA
Q1 2008 84 26 -1 109% margin 6.2 8.8 - 6.6Q1 2007 85 14 -7 92% margin 6.4 6.6 - 5.9Δ
% EBITDA -2.0 88.6 - 18.3* Sales of acquired companies for the first
twelve months of their consolidation
29
Balance sheet as of March 31, 2008
(€m) March 31, 2008
December 31, 2007
Long-term assets 753 735Inventories 1,020 956Trade receivables 1,083 930Cash & Cash equivalents 108 154Other assets 188 191Total assets 3,152 2,966Equity 771 845Total long-term liabilities 1,255 1,152
-
thereof financial liabilities 914 813Total short-term liabilities 1,126 969
-
thereof trade payables 740 610Total equity and liabilities 3,152 2,966Net working capital* 1,404 1,323Net financial debt* 904 746
Comments
Financial debt as of March 31, 2008:
•
Syndicated loan: €311million
•
ABS: €301 million•
Bilateral credits: €120 million
•
Convertible: €271 million
Net Working Capital:•
Seasonal effect; sales-, acquisition-
and price-driven
* Including
Namasco Ltd. / Canada
30
Statement of cash flow
Comments(€m) Q12008
Q12007
Operating CF 107 92
Changes in net working capital -88 -164
Others -29 -16
Cash flow from operating activities -10 -88
Inflow from disposals of fixed assets/others 3 1
Outflow from investments in fixed assets -144 -18
Cash flow from investing activities -141 -17
Changes in financial liabilities 111 51
Net interest payments -5 -3
Cash flow from financing activities 106 48
Total cash flow -45 -58
Operating CF more than fully covered the investments in net working capital
Investing CF mainly impacted by increased stake in Swiss Holding
CF from financing activities reflects the increased utilization of debt instruments
31
General financial targets/limits and guidance
Generaltarget/limit
ActualQ1 2008
Top line sales growth > 10% p.a. 7.1%
Underlying EBITDA margin* > 6% 5.94%
Leverage (Net financial debt/EBITDA LTM) < 3.0x 2.3x
Gearing (Net financial debt/Equity) < 150% 117%
Challenging financial targets throughout the cycle
* According to new definition
32
Outlook 2008Based on good Q1 results, Q2 and H1 EBITDA are expected to be higher than last year supported by an on-going favorable market environment for the steel distribution
Positive development expected to continue. Thus, we expect the 2008 results to exceed the 2007 results supported by
€30 million additional EBITDA from STAR program
Positive contribution of additional €25-30 million EBITDA from acquisitions made in 2007
Positive contribution of €15-20 million EBITDA from acquisitions made in 2008
High likelihood of further stock gains in the course of 2008
Raised outlook –
2008 results above 2007
33
Agenda
1.
Overview and market
Appendix
2.
Current market development and expectations for 2008
3.
Profitable growth initiatives
4.
Financials and outlook
34
Appendix
Table of contents
Quarterly results and FY results 2007/2006/2005
Steel cycle and EBITDA/cash flow relationship
Debt facilities
Current shareholder structure
Financial calendar 2008 and contact details
35
June 20: Annual General MeetingAugust 14: Q2 Interim ReportOctober 14/15: Capital Market DaysNovember 14: Q3 Interim Report
Financial calendar 2008 and contact details
Financial calendar 2008
Claudia Nickolaus, Head of IRPhone: +49 203 307 2050Fax: +49 203 307 5025E-mail: [email protected]: www.kloeckner.de
Contact details Investor Relations
36
(€m) Q1 2008
Q4 2007
Q3
2007
Q22007
Q12007
Q42006
Q32006
Q22006
Q12006
FY2007
FY2006
FY2005*
Volume (Ttons) 1,720 1,585 1,601 1,663 1,629 1,453 1,467 1,605 1,601 6,478 6,127 5,868
Sales 1,660 1,492 1,583 1,650 1,550 1,398 1,394 1,418 1,323 6,274 5,532 4,964
Gross profit 340 300 286 328 307 294 313 316 285 1,221 1,208 987
% margin 20.5 20.1 18.0 19.8 19.8 21.0 22.5 22.3 21.5 19.5 21.8 19.9
EBITDA 109 83 93 103 92 70 143 104 79 371 395 197
% margin 6.6 5.6 5.9 6.2 5.9 4.9 10.3 7.3 6.0 5.9 7.1 4.0
EBIT 93 65 76 87 78 55 128 89 64 307 337 135
Financial result -17 -17 -17 -52 -10 -12 -24 -14 -14 -97 -64 -54
Income before taxes 76 48 59 35 68 43 105 75 50 210 273 81
Income taxes -24 -6 -14 -12 -22 16 -20 -22 -13 -54 -39 -29
Minority interests 2 4 8 4 6 5 8 9 6 23 28 16
Net income 51 37 37 19 40 54 76 45 31 133 206 36
EPS basic (€) 1.09 0.80 0.79 0.41 0.86 1.16 1.64 0.97 - 2.87 4.44 -
EPS diluted (in €) 1.06 0.80 0.78 - - 1.16 - - - 2.87 4.44 -
Quarterly results and FY results 2007/2006/2005
*
Pro-forma consolidated figures for FY 2005, without release of negative goodwill of €139 million and without transaction costs of €39 million, without restructuring expenses of €17 million (incurred Q4) and without activity disposal of €1,9 million (incurred Q4).
37
Debt facilities
(€m) Old debtstructure
Change indebt structure
New debtstructure
ABS Europe 380 +40 420
ABS USA 60 +30 90
Total 440 +70 510
Syndicated loan - +600 600
Bilateral credit agreements 480 -100 380
Total senior bank facilities 480 +500 980
Convertible bond - +325 325
High yield bond 170 -170 -
Total facilities 1,090 +725 1,815
38
Steel cycle and EBITDA/cash flow relationship
Comments
Klöckner & Co buys and sells products at spot prices generallySales increase as a function of the steel price inflation environmentCost of material are based on an average cost method for inventory and therefore lag the steel price increaseThis time lag creates accounting windfall profits (windfall losses in a decreasing steel price environment) inflating (deflating) EBITDAAssuming stable inventory volume cash flow is impacted by higher NWC needsThe windfall profits (losses) are mirrored by inventory book value increases (decreases)
Theoretical relationship*
Windfall
profits
Windfall losses
(€m)
Margin
Margin
12
3
4
4
5
6 6
*Assuming stable inventory volumes
Steel price SalesCost of material EBITDACash flow
39
Geographical breakdown of identified institutional investors
Current shareholder structure
Comments
Identified institutional investors account for 74%
US based investors still dominate but share decreased in favor of UK (up from 14% as of Sept. 2007)
Top 10 individual shareholdings represent around 48%
Rest of World < 1% (geographical breakdown)
Retail share increased from 11% to almost 14%
Rest of Europe
US
United Kingdom
Germany
SpainSwitzerland
Source: Survey
Thomson Financial (as of Febr. 08)
20%
4%4%
24%
41%
7%
40
Our symbol
the earsattentive to customer needs
the eyeslooking forward to new developments
the nosesniffing out opportunities
to improve performance
the ballsymbolic of our role to fetch
and carry for our customers
the legsalways moving fast to keep up with
the demands of the customers
41
Disclaimer
This presentation contains forward-looking statements. These statements use words like "believes, "assumes," "expects" or similar formulations. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of our company and those either expressed or implied by these statements. These factors include, among other things:
Downturns in the business cycle of the industries in which we compete;Increases in the prices of our raw materials, especially if we are unable to pass these costs along to customers;Fluctuation in international currency exchange rates as well as changes in the general economic climate
and other factors identified in this presentation.In view of these uncertainties, we caution you not to place undue reliance on these forward-looking statements. We assume no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.