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Charts accompanying the HY 1 2014 Results Analysts' and Investors' Conference on August 7, 2014 Press Release: http://www.kloeckner.com/en/media/press-releases-5057.php
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Klöckner & Co SE
A Leading Multi Metal Distributor
Q2 2014 Results
Analysts’ and Investors’ Conference
CEO
Gisbert Rühl
August 7, 2014
CFO
Marcus A. Ketter
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
Highlights and update on strategy
CEO
Gisbert Rühl
Highlights Q2 01
4
• Steel distribution markets improved only slightly in Europe (+2.0%*) but significantly in
the US (+5.8%**)
• Our shipments went up less pronounced than market by 1.8% to 1.7m To yoy due to
restructuring measures and exit of low margin business
• Sales went down by 1.0% yoy to €1.7bn impacted by lower price level and weaker USD
• Gross profit improved despite lower sales by 6.4% to €325m due to gross margin expansion
by 1.3%p to 19.3% yoy
• EBITDA of €56m came in the upper half of guidance range of €50to 60m
• Positive quarterly net income of €10m achieved
• Leverage reduced from 4.4x to 3.2x EBITDA yoy
• Implementation of KCO WIN measures on track
• Swiss reinforcing steel specialist Riedo fully acquired and successfully integrated
• EBITDA in Q3 expected on the level of Q2 in a range between €50 and €60m
• Specified EBITDA guidance for full year 2014 of €190m to €210m
* Source: Eurometal; distribution shipments in Q2 in Europe yoy.
** Source: MSCI; distribution shipments/ SSC in Q2 in the US yoy.
Substantial yoy EBITDA-improvement mainly through self-help measures 01
EBITDA-bridge (€m)
• Self-help measures contributed
€13m to EBITDA against prior year
in Q2 and €27m ytd
• EBITDA contribution achieved
through KCO 6.0 amounted to
€8m in Q2 and €22m ytd
• KCO WIN on track with first
EBITDA contribution of €5m
in Q2
• EBITDA-margin improved by 0.8%p
to 3.3% in Q2 and by 0.9%p to 3.1%
ytd
Comments
Q2 yoy
5
Self-help measures:
€13m
12
56
43
-16
KCO WIN
Effect
OPEX** EBITDA
Q2 2014
5
KCO 6.0
Effect
Price
Effect
4
Volume
Effect*
EBITDA
Q2 2013
H1 yoy
15
22101
72
OPEX**
-16
KCO WIN
Effect
5
KCO 6.0
Effect
Price
Effect
3
EBITDA
H1 2014
Volume
Effect*
EBITDA
H1 2013
Self-help measures:
€27m
* Including Riedo impact of €10m
** Including -€7m pension adjustment NL in Q2/2013
and -€4.3m Riedo
8
5
KCO 6.0 successfully implemented, KCO WIN on track 01
6
2013
2014
€51m
€61m
€41m
Total annual EBITDA-impact of >€150m
from 2014 onwards
2011-2012
€22m
KCO 6.0
KCO WIN
2014
2015 €30m
Total annual EBITDA-impact of ~€50m
from 2015 onwards
€20m €5m
already realized
already realized
Comprehensive transformation initiated 01
7
Klöckner & Co 2020
Differentiation
Growth and
optimization
Sourcing
Products and
services
Digitalization
External & internal
growth
Operations
Stabilization Restructuring
Enabling
activities
Management &
pers. development
Controlling &
IT systems
Finished by successful implementation of KCO 6.0
Improvements through KCO WIN
External growth with focus on higher value-added business
Internal growth with focus on US market
Broad product range and accelerated expansion of higher value-
added processing and services
Digitalization of supply chain
Realization of higher scale-effects through expansion of partnerships
with specific suppliers
Increased effort in management capabilities and measurability
of people management
Deployment of most modern controlling and IT systems
Mid-term EBITDA-Margin-Target of >5% until 2017 01
8
Growth and optimization Differentiation Stabilization
2017
EBITDA-margin
Sourcing
Products and
Services
Digitalization
KCO WIN
0.8%
Riedo
Acquisition
0.2%
KCO 6.0
(remaining
effects)
0.6% 2.0%
>5% > 2.0%
2013
EBITDA-margin
before
restructuring and
one-offs
Klöckner & Co SE
A Leading Multi Metal Distributor
Financials CFO
Marcus A. Ketter
Shipments and sales 02
Sales (€m) Shipments (Tto)
• Shipments increased qoq following the usual
seasonal pattern and due to Riedo
• Sales growths qoq exceeded increase of
shipments due to higher prices per ton
• Yoy decline also a result of f/x variance
10
1,863 1,764
1,585 1,646 1,690 1,617 1,492
1,633 1,720
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
1,964 1,847
1,633 1,625 1,698
1,600 1,455
1,572 1,680
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
+1.8%
+5.3%
-1.0%
+6.9%
EBITDA* (€m) / EBITDA-margin* (%)
Gross profit and EBITDA-margin improvement is keeping momentum 02
Gross profit* (€m) / Gross-margin* (%)
• Gross-margin up in Q2 by 1.3%p from 18.0%
to 19.3% yoy
• EBITDA continues to benefit from KCO 6.0
measures and now additionally from KCO WIN
• EBITDA-margin improved in Q2 from 2.5%
to 3.3% yoy
* Before restructuring costs
11
344 344
306 302 303 305 296 288
302 325
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
18.7 FY
17.5 FY
19.3 H1
47
50
18 22
29
43
39 40
45
56
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
2.4 FY
1.8 FY
3.1 H1
Segment performance (shipments and sales) 02
• Shipments
• Europe up by 5.0% mainly due to Riedo acquisition
• Americas down by 2.3% due to consolidation of sites
and accelerated exit of low margin business (-4.4%)
12
Shipments (Tto)
+1.8%
Q2 2014
1,720
733
987
Q2 2013
1,690
749
941 +5.0%
-2.3% Americas
Europe
Sales (€m)
-1.0%
Q2 2014 Q2 2013
+1.1%
-4.6%
1,061 1,072
637 608
Europe
Americas
Comments
1,698 1,680 • Sales
• Only slightly up in Europe due to lower price level
• Americas segment additionally negatively impacted
by weaker USD
• Focus on higher margin business visible in both
segments
• Europe
• Gross-margin up by 1.4%p to 20.4%
• EBITDA-margin up by 0.4%p to 3.0%
• Americas
• Gross-margin up by 1.2%p to 17.5%
• EBITDA-margin up by 1.4%p to 4.6%
Segment performance (gross profit and EBITDA) 02
13
Q2 2014
325
Q2 2013
305
200
Q2 2014
56
Q2 2013
43
+8.4%
+2.4%
+18.2%
+36.7%
201
104 106
28
20 28
HQ
+29.6%
-5 -4
32
219
+6.4%
Gross profit (€m) Comments
EBITDA (€m)
Americas
Europe
Europe
Americas
Cash flow and net debt development 02
Cash flow reconciliation in Q2 2014 (€m)
• NWC build-up and acquisition of Riedo
reflected in free cash flow of -€168m
• “Other” include changes in other operating
assets and liabilities and non-cash items
• Capex of €86m includes Riedo acquisition
with €82m
Comments
36
Development of net financial debt in Q2 2014 (€m)
14
56
Free
cash flow
Q2 2014
-168
Capex/
Acquisition
-86
Cash
flow from
operating
activities
-82
Other
-11
Taxes
-4
Interest
-21
Change
in NWC
-102
EBITDA
Q2 2014
June 30, 2014
579
Other
-4
Capex (net)
-86
CF from
operating
activities
-82
March 31, 2014
407
• Net debt increased from €407m to €579m
following the usual seasonal pattern and
the acquisition of Riedo
• Equity ratio further solid at 40%
• Net debt of €579m
• Gearing* at 41%
• Leverage** 3.2x
• NWC increased from €1,330m to €1,463m qoq
Balance sheet remains strong 02
* Gearing = Net debt/Equity attributable to shareholders of
Klöckner & Co SE less goodwill from business
combinations subsequent to May 23, 2013.
Comments
15
Assets
687914
350595
3,595
1,147
1,166
Other assets
Liquidity
Trade receivables
Inventories
Jun 30, 2014
3,658
1,156
1,238
Dec 31, 2013
637 689
366
262
911
Pensions
Other liabilities
Trade payables
Equity 1,445
Financial liabilities
Jun 30, 2014
3,658
339
921
1,447
Dec 31, 2013
3,595
236
Equity & liabilities
40% 40%
** Leverage = Net debt/EBITDA before restructuring expenses
last twelve months.
Klöckner & Co SE
A Leading Multi Metal Distributor
Outlook CEO
Gisbert Rühl
US
Segment specific business outlook 03
17
Steel demand
Construction industry
Automotive industry
Machinery and mechanical
engineering
Europe
+2-3% +4-5%
Outlook
• Q3 2014
• Shipments to be seasonally slightly lower
• Increasing EBITDA contribution of KCO WIN measures
• EBITDA expected on the level of Q2 in a range between €50 and €60m
• FY 2014
• Shipments and sales to be slightly up also through Riedo acquisition
• EBITDA expected in a range between €190m to €210m
• Reduction of IDA expense by some €25m to €155m anticipated
• Expected positive net income should facilitate return to dividend payment for fiscal year 2014
03
18
Highlights and update on strategy 01
Financials
Outlook
Appendix
02
03
04
Agenda
19
Quarterly results and FY results 2011-2014 04
20
(€m) Q2
2014
Q1
2014
Q4
2013
Q3
2013
Q2
2013
Q1
2013
Q4
2012* Q3
2012*
Q2
2012*
FY
2013
FY
2012*
FY
2011
Shipments (Tto) 1,720 1,633 1,492 1,617 1,690 1,646 1,585 1,764 1,863 6,445 7,068 6,661
Sales 1,680 1,572 1,455 1,600 1,698 1,625 1,633 1,847 1,964 6,378 7,388 7,095
Gross profit 325 302 284 296 305 303 298 306 340 1,188 1,288 1,315
% margin 19.3 19.2 19.5 18.5 18.0 18.6 18.3 16.6 17.3 18.6 17.4 18.5
EBITDA 56 45 16 36 43 29 -35 18 33 124 60 217
% margin 3.3 2.9 1.1 2.3 2.5 1.8 -2.2 1.0 1.7 2.0 0.8 3.1
EBIT 33 23 -36 10 17 2 -89 -9 -24 -6 -105 111
Financial result -16 -17 -17 -19 -19 -19 -14 -22 -18 -73 -80 -84
Income before taxes 17 6 -52 -8 -2 -16 -103 -31 -42 -79 -185 27
Income taxes -7 -3 -7 -3 -2 1 -19 3 3 -12 -18 -17
Net income 10 3 -59 -11 -4 -16 -123 -29 -39 -90 -203 10
Minority interests 0 0 -5 0 0 0 -1 -1 0 -6 -3 -1
Net income KlöCo 10 3 -54 -11 -4 -16 -122 -28 -39 -85 -200 12
EPS basic (€) 0.10 0.03 -0.54 -0.11 -0.04 -0.16 -1.22 -0.28 -0.39 -0.85 -2.00 0.14
EPS diluted (€) 0.10 0.03 -0.54 -0.11 -0.04 -0.16 -1.22 -0.28 -0.39 -0.85 -2.00 0.14
* Restated due to initial application IAS 19 revised 2011.
Recovery continued in both segments 04 E
uro
pe
Am
ericas
21
Shipments (Tto) Sales (€m) EBITDA* before restructuring (€m)
Shipments (Tto) Sales (€m) EBITDA before restructuring (€m)
* 2012: as restated for the initial application of IAS19 revised 2011.
Restructuring costs (€m) Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q3 2013 Q4 2013
Europe 10 3 17 -1 57 13
Americas 1 2 11 ** Including pension release: Q2 2013 €7m, in Q3 2013 €6m and Q4 2013 €1m
and sale of French La Courneuve site €13m.
1.097
1.018
908 930 941 903
839
956 987
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
1.237
1.149
1.041 1.017 1.061
1.006 935
1.015 1.072
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
35
12
16 14
28 26
34
26
32
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2**
2013
Q3**
2013
Q4**
2013
Q1
2014
Q2
2014
766
746
677
716
749
714
653
677
733
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
727 698
592 608 637
594
520 557
608
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
22
12
16
21 20 20
13
24
28
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
+5.0% +1.1%
-2.3% -4.6%
Segment performance Q2 2014 04
22
Europe Americas HQ/Consol. Total
Shipments (Tto)
Q2 2014 987 733 1,720
Q2 2013 941 749 1,690
Δ % 5.0 -2.3 1.8
Sales (€m)
Q2 2014 1,072 608 1,680
Q2 2013 1,061 637 1,698
Δ % 1.1 -4.6 -1.0
EBITDA (€m)
Q2 2014 32 28 -4 56
% margin 3.0 4.6 3.3
Q2 2013 28 20 -5 43
% margin 2.6 3.2 2.5
Δ % EBITDA 18.2 36.7 29.6
Balance sheet as of June 30, 2014 04
23
(€m) June 30, 2014 December 31, 2013
Non-current assets 1,041 977
Inventories 1,238 1,166
Trade receivables 914 687
Other assets 115 170
Cash & Cash equivalents 350 595
Total assets 3,658 3,595
Equity 1,447 1,445
Total non-current liabilities 1,165 1,077
thereof financial liabilities 780 727
Total current liabilities 1,046 1,073
thereof trade payables 689 637
Total equity and liabilities 3,658 3,595
Net working capital 1,463 1,216
Net financial debt 579 325
Shareholders’ equity:
• Healthy at 40%
Financial debt:
• Gearing at 41%
• Gross debt of €0.9bn and
cash position of €0.3bn
result in a net debt position
of €579m
Comments
24
04 Improvement of maturity profile
32
197
16 16 38
52
133
561
238
360
186
0
200
400
600
800
1000
1200
2014 2015 2016 2017 Thereafter
Committed lines
Bilaterals Promissory Notes ABS
US ABL Syndicated Loan Convertibles
435
1,175
149
• 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
Q2 2014* FY 2013*
Bilateral Facilities 1) 537 164 62
ABS 561 241 191
Syndicated Loan 360 161 161
Promissory Note 185 186 238
Total Senior Debt 1,643 752 652
Convertible 2009 0 0 98
Convertible 2010 2) 186 177 171
Total Debt 1,829 929 921
Cash 350 595
Net Debt 579 325
*Including interest
1) Including finance lease
2) Drawn amount excludes equity component
Profit & loss Q2 2014 04
25
(€m) Q2 2014 Q2 2013
Sales 1,680 1,698
Gross profit 325 305
Personnel costs -146 -142
Other operating expenses (net) -123 -120
EBITDA 56 43
Depreciation & Amortization -23 -26
EBIT 33 17
Financial result -16 -19
EBT 17 -2
Taxes -7 -2
Net income 10 -4
Sales by markets, products and industries 04
26
As of December 31, 2013
Current shareholder structure 04
27
Geographical breakdown of identified
institutional investors
Comments
• Identified institutional investors
account for 55%
• German investors incl. retail
dominate
• Top 10 shareholdings represent
around 31%
• Retail shareholders represent 27%
As of July 2014
Appendix 04
28
Financial calendar 2014
October 1-2, 2014 Capital Market Days, Berlin
November 6, 2014 Q3 interim report 2014
Contact details Investor Relations
Christian Pokropp, Head of Investor Relations & Corporate Communications
Phone: +49 203 307 2050
Fax: +49 203 307 5025
E-mail: [email protected]
Internet: www.kloeckner.com
Our Symbol
the ears
attentive to customer needs
the eyes
looking forward to new developments
the nose
sniffing out opportunities
to improve performance
the ball
symbolic of our role to fetch
and carry for our customers
the legs
always moving fast to keep up with
the demands of the customers