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Q3 2016 Results
Analysts’ and Investors’ Conference
November 3, 2016
Gisbert Rühl | CEO
Marcus A. Ketter | CFO
No.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”, “endeavor”, “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.
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
No.3
1. Highlights and update on strategy
2. Financials
3. Outlook
4. Appendix
Agenda
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
No.4
Highlights Q3 201601
• Sales decreased yoy by 10.5% to €1.4bn mainly due to lower price level and site closures in Europe as
part of the finished restructuring program KCO WIN+
• Despite lower sales and volumes gross profit went up from €311m to €329m due to better price
environment and margin optimization supported by digital pricing tools
• Consequently gross profit margin went up significantly to 23.0% after 19.4% in Q3 2015
• EBITDA of €71m in line with guidance range of €65m to €75m
• Launch of order transparency tool as further milestone in the digital transformation process
• Go-ahead given for phase two of major investment in aluminum processing totaling €35m
• Organization for “One Europe” in place to integrate European distribution activities starting next year
• Well on track to strongly improved FY EBITDA and to return to positive net income
• EBITDA forecast for FY 2016 narrowed to between €180m and €190m
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
No.5
Significant increase of EBITDA in Q3 and first nine month of 201601
EBITDA impact: Q3 yoy
Market-related
GP effect of €29m
• Results favored by positive market effects on
EBITDA of overall €29m in Q3 and €81m in 9M
• Positive price effect of €46m in Q3 and €89m
in first nine months 2016 supported by
increased use of digital pricing tools
• Negative volume effect of €17m in Q3 and
€8m in first nine months 2016
• KCO WIN+ program with EBITDA contribution of
€9m in Q3 and in total €20m in 9M
• Effect mainly in Europe through KCO WIN+
related restructuring and optimization
measures
• Full year target already achieved after nine
months due to faster than expected
implementation of measures
71
28 30
46
9
17
Q3 2016OPEX
3
KCO
WIN+
Effect
Price
Effect
Volume
Effect
Q3 2015
(bef. restr.)
Restructuring
Costs
2
Q3 2015
89
20 18
7654
159
22
9M 2016OPEXKCO
WIN+
Effect
Price
Effect
Volume
Effect
8
9M 2015
(bef. restr.)
Restructuring
Costs
9M 2015
Market-related
GP effect of €81m
EBITDA impact: 9M yoy
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
No.6
01 Further progress of “Klöckner & Co 2020“ strategy
• Digital pricing tools contributed to
significant margin improvement
• Accelerated growth of sales via
webshops and contract portals
• Share of sales generated via digital
channels already at 11% in
Q3 2016
• Order transparency tool launched in
Germany as further digital solution to
make collaboration between
customers and Klöckner easier
• Finished KCO WIN+ restructuring
program with an incremental EBITDA
contribution of €20m this year
already achieved after nine months
and another €5m next year
• Management team for One Europe
optimization program appointed to
integrate European distribution
activities starting at the beginning of
2017
• One Europe with an additional
EBITDA impact of €30m from 2019
onwards thereof €10m already next
year
• Expansion of the business with 3D
laser processing of steel mainly in
the UK and Germany
• Further acquisitions in the
fabrication segment with focus on
the US intended
• Go-ahead given for phase two of
major investment in aluminum
processing, totaling some
€35m
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
Digitalization Operations Higher value-add
No.7
Becker Stahl‘s investment in processing of aluminum for automotive01
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
Slitting line (on track)
• Maximum capacity: 50-60Tto
• Material dimensions: thickness
0.5 - 5mm, width max. 2,150mm
• Products: for body in white – especially
sheets including trapezoid and round cut
Cut-to-length-line (recently approved)
• Maximum capacity: ~25Tto
• Material dimensions: thickness
0.5 - 5mm, width max. 2,150mm
• Products: interior construction –
especially strips
€35m
530
310
420
200
730
2015 2020
1,000
1,730
Tto
USA
China
Europe
~190 310+
Strict CO2 emissions requirements
• Reduction of CO2 emissions from
passenger vehicles from ~130g/km to
95g/km in 2020 in European Union
• Average increase in aluminum by
30-40kg to ca. 180kg per vehicle
necessary
Wheels, motor block, cylinders, gear
components already use aluminum
• Milled products for chassis, fittings,
bumpers and hinges with potential
Increasing electromobility
• Reduction of vehicle weights to
extend total driving range
• Compensate for heavy battery
Germany
Source: Drucker worldwide, own estimates.
Automotive aluminum demand Demand driver Service-Center investment
No.8
1. Highlights and update on strategy
2. Financials
3. Outlook
4. Appendix
Agenda
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
No.9
Shipments and sales02
• Shipments down yoy due to exit of low margin
business
• Qoq seasonal decrease in Europe and weaker
demand for industrial products in the US
• Sales decreased yoy signifcantly more pronounced
than shipments due to lower average sales prices
• Qoq disproportional decline compared to
shipments due to continued price recovery
Q4
2014
1,555
1,690
Q3
2016
Q3
2014
1,500
Q2
2016
1,643
Q1
2016
1,556
Q4
2015
1,535
Q3
2015
1,636
Q2
2015
1,645
Q1
2015
1,661
1,456
Q1
2016
1,386
Q1
2015
1,697
Q4
2014
1,577
1,517
1,675
Q3
2015
1,597
Q2
2015
Q4
2015
1,693
Q3
2016
Q2
2016
1,430
Q3
2014
-8.3%
-8.7%
-10.5%
-5.7%
Shipments (Tto) Sales (€m)
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
No.10
Gross profit and EBITDA02
* Before restructuring cost.
** 2014 amounts restated due to the initial application of IFRIC 21 (Levies).
7172
11
30
10
33
61
Q3
2016
Q2
2016
Q1
2016
16
Q4
2015
Q3
2015
Q2
2015
36
Q1
2015
Q4
2014
Q3
2014
5.04.8
1.20.7
1.92.1
0.6
2.1
3.6
Q2
2016
329
Q3
2016
304
Q1
2016
362
Q1
2015
Q3
2014
325 325
Q2
2015
311309
Q4
2014
297
Q3
2015
310
Q4
2015
19.4 19.6
18.2
19.2 19.4
23.8
20.4
22.023.0
• Margin stabilized with 23.0% well above
the 20 percent mark
• Qoq slight decline by 0.8%p
• EBITDA in Q3 improved yoy by €41m and remained virtually
stable qoq, benefitting from disposal gains of €12m
• EBITDA margin recovered by 3.1%p yoy to 5.0% (4.1% w/o
disposal gains)
Gross profit* (€m) / Gross margin* (%) EBITDA*,** (€m) / EBITDA margin*,** (%)
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
No.11
Segment performance Q302
• Europe
• EBITDA up from €21m before restructuring by €34m
to €55m
• Significant positive price effect (€19m)
• KCO WIN+ contributes €8m to EBITDA improvement
• OPEX includes additional non-recurring gain on sale
of €12m
Europe (€m)
Americas (€m)
22
14
Q3 2016
Actual
OPEX
-4
KCO
WIN+
Effect
1
Price
Effect
26
Volume
Effect
15
Q3 2015
Actual
19 21
5519
8
Volume
Effect
1
Q3 2015
Actual
(before
restruct.)
Restruct.
2015
2
Q3 2015
Actual
(reported)
OPEX
8
Q3 2016
Actual
KCO
WIN+
Effect
Price
Effect
• Americas
• EBITDA up by €8m to €22m
• Negative volume effect due to weaker demand for
industrial products and also by sale of pipe business
in Q2 2016
• Even stronger positive price effect (€26m) than in
Europe
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
Comments
No.12
Cash flow and net debt development02
36
• Limited seasonal NWC build-up of €32m
• “Other” mainly includes disposal gains of €12m as well
as changes in other provisions and other operating
assets/liabilities of €14m (mainly vendor bonuses)71
Cash
flow from
operating
activities
-5
Other
-27
Taxes
-11
Interest
-6
Change
in NWC
-32
EBITDA
Q3 2016
Free cash
flow Q3
2016
-5
CapexAsset
disposals
-1010
CommentsCash flow reconciliation in Q3 2016 (€m)
• Net financial debt almost stable
• Increase due to operating cash outflows and finance
leases incurred (€12m) compensated by equity
component of new convertible bond (€18m) issued in Q3
Net financial debt 09/2016 vs. 06/2016 (€m)
-4
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
2
Net financial
debt 09.2016
438
OtherCapex (net)
0
CF from operating
activities
-5
Net financial
debt 06.2016
435
No.13 Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
Maturity profile September 2016 – convertible bond successfully placed02
Facility Committed (€m)Drawn amount (€m, IFRS*)
Q3 2016 FY 2015
Syndicated Loan 360 0 0
ABS Europe 300 135 91
ABS/ABL USA 493 222 184
Promissory Notes 1) - - 135
Convertible 2010 2) - - 25
Convertible 2016 3) 148 130 -
Bilateral Facilities 4) 325 134 115
Total Debt 1,626 621 550
Cash 182 165
Net Debt 438 385
€m Q3 2016
Adjusted equity 1,047
Net debt 438
Gearing 5)42%
Maturity profile of committed facilities & drawn amounts (€m)
Left side: committed facilities Right side: drawn amounts (nominal amounts)
ABS/ABL USA BilateralsSyndicated Loan ABS Europe
*Including interest accrued, excluding deferred transaction costs.
1) Repaid on April 20, 2016 from existing cash reserves.
2) Original principal €186m, thereof €161m repaid on December 22, 2015 (investor put), € 25m repaid
on January 12, 2016 (issuer cleanup of all bonds that remained outstanding after investor put).
3) Principal €147m, equity component €18m at issuance on September 08, 2016.
4) Including finance lease.
5) Net debt/Equity attributable to shareholders of Klöckner & Co SE less goodwill from business
combinations subsequent to May 23, 2013.
552929
661853
235
1221
15
15
1873
620
305
300
370
148
221
1
642
148
493
1
150
135
2016 2017 2018 2019 2020 2021 Thereafter
Convertible Bond
No.14
1. Highlights and update on strategy
2. Financials
3. Outlook
4. Appendix
Agenda
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
No.15
Shipbuilding
Segment specific business outlook 201603
Energy
industry
Real steel
demand
Europe
~ +2%
Construction
industry
Manufacturing,
machinery and
mechanical
engineering, etc.
Automotive
industry
US
~ -3%
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
No.16
Outlook 03
Q4 2016
• Seasonally lower sales expected qoq
• EBITDA anticipated to be down qoq due to lower shipments and weakening prices in the US
FY 2016
• Lower sales anticipated due to continued exit of low margin business and on average lower price level
• EBITDA expected to rise significantly to between €180m and €190m
• Positive net income supported by lower financing expenses and the expected absence of further
goodwill impairments
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
No.17
1. Highlights and update on strategy
2. Financials
3. Outlook
4. Appendix
Agenda
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
No.18
Quarterly and FY results04
(€m)Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
Q1
2015
Q4
2014*
Q3
2014*
FY
2015
FY
2014
FY
2013
FY
2012**
Shipments (Tto) 1,500 1,643 1,556 1,535 1,636 1,645 1,661 1,555 1,690 6,476 6,598 6,445 7,068
Sales 1,430 1,517 1,386 1,456 1,597 1,693 1,697 1,577 1,675 6,444 6,504 6,378 7,388
Gross profit 329 362 304 297 311 320 310 309 325 1,237 1,261 1,188 1,288
% margin 23.0 23.8 22.0 20.4 19.4 18.9 18.2 19.6 19.4 19.2 19.4 18.6 17.4
EBITDA rep. 71 72 16 2 28 -17 10 33 61 24 191 124 60
% margin 5.0 4.8 1.2 0.2 1.8 -1.0 0.6 2.1 3.6 0.4 2.9 2.0 0.8
EBIT 48 49 -8 -297 5 -44 -15 8 38 -350 98 -6 -105
Financial result -8 -7 -8 -12 -12 -13 -12 -13 -14 -49 -59 -73 -80
Income before taxes 40 42 -16 -309 -7 -56 -27 -4 24 -399 39 -79 -185
Income taxes -9 -9 2 45 -2 1 6 1 -8 50 -17 -12 -18
Net income 31 33 -14 -263 -9 -55 -22 -4 16 -349 22 -90 -203
Minority interests 0 1 0 -1 0 -1 0 -1 0 -2 0 -6 -3
Net income KlöCo 31 32 -14 -263 -9 -54 -21 -4 16 -347 22 -85 -200
EPS basic (€) 0.31 0.32 -0.14 -2.63 -0.09 -0.54 -0.22 -0.04 0.16 -3.48 0.22 -0.85 -2.00
EPS diluted (€) 0.31 0.32 -0.14 -2.63 -0.09 -0.54 -0.22 -0.04 0.16 -3.48 0.22 -0.85 -2.00
* Restated due to initial application of IFRIC 21.
** Restated due to initial application IAS 19 revised 2011.
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
No.19
Segment performance04
* 2014 amounts restated due to the initial application of IFRIC 21 (Levies).
Q3
2014
893
Q4
2014
979
Q1
2015
970
Q2
2015
931
Q3
2015
891
Q4
2015
903
Q1
2016
957 950
Q2
2016
873
Q3
2016
1,054
Q1
2015
1,025
Q4
2014
973
919
Q4
2015
870
Q1
2016
963
Q2
2016
891
Q3
2016
1,040
Q3
2014
Q3
2015
986
Q2
2015
49
12
21
29
18
Q3
2016
55
Q2
2016
Q1
2016
11
Q4
2015
Q3
2015
Q2
2015
Q1
2015
7
Q4
2014
Q3
2014
34
Q1
2015
682
Q4
2014
662
Q3
2014
733
Q4
2015
644
Q3
2015
705
Q2
2015
675
Q3
2016
627
Q2
2016
693
Q1
2016
652
604
634
Q3
2014
Q3
2016
539
Q4
2014
Q2
2016
554
Q1
2016
516
Q4
2015
537
Q3
2015
611
Q2
2015
639
Q1
2015
672 30
14
20
30
Q3
2014
Q3
2016
22
Q2
2016
Q1
2016
11
Q4
2015
3
Q3
2015
Q2
2015
13
Q1
2015
7
Q4
2014
-6.2%
-11.0%
-9.6%
-11.9%
Euro
pe
Am
ericas
Restructuring costs (€m)** Q2 2015 Q3 2015 Q4 2015
Europe 52 2 2
Americas 2
Shipments (Tto) Sales (€m) EBITDA* before restructuring (€m)
Shipments (Tto) Sales (€m) EBITDA* before restructuring (€m)
** €4m are reported in HQ in Q4 2015.
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
No.20
Strong balance sheet04
• Equity ratio further healthy at 36%
• Net debt of €438m
• Gearing* at 42%
• NWC increased from €1,128m to €1,197m
* Gearing = Net debt/Equity attributable to shareholders of
Klöckner & Co SE less goodwill from business
combinations subsequent to May 23, 2013.
Comments
Assets Equity & liabilities
39% 39%
656 763
961998
945926
182114 106Liquidity
Other current assets
Trade receivables
Inventories
Non-current assets
Sep 30, 2016
2,975
Dec 31, 2015
2,841
165354
489 564
340 436
545613
285Other liabilities
Trade payables
Pensions
Financial liabilities
Equity
Sep 30, 2016
2,975
1,077
Dec 31, 2015
2,841
1,113
39% 36%
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
No.21
Sales by markets, products and industries04
As of December 31, 2015.
Sales by markets Sales by industry
Sales by product
5%UK
<1%Brazil/China
11%France/Belgium
16%Switzerland
24%Germany
38%USA
3%Netherlands
2%Spain
6%Tubes
7%Aluminum
9%Quality steel/
Stainless steel
22%Long products
43%Flat products
13%Others
12%Automotive
industry
5%Miscellaneous6%
Local dealers
33%Machinery/mechanical
engineering
37%Construction
industry
7%Household appl./Consumer goods
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
No.22
Current shareholder structure04
Geographical breakdown of identified
institutional investors• Identified institutional investors account for 72%
• German investors incl. retail dominate
• Top 10 shareholdings represent around 52%
• Retail shareholders represent 21%
Comments
As of July 2016.
6% Rest of EU
35% US
3% Rest of world
3% Switzerland
4% UK
3% France
46% Germany
Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE
Financial calendar
Christian Pokropp
Head of Investor Relations & Corporate Communications
Phone: +49 203 307 2050
Fax: +49 203 307 5025
Email: [email protected]
Internet: www.kloeckner.com
March 1, 2017 Annual Financial Statements 2016
April 26, 2017 Q1 interim statement 2017
May 12, 2017 Annual General Meeting 2017, Düsseldorf
July 26, 2017 Q2 interim report 2017
October 25, 2017 Q3 interim statement 2017
Contact details