klöckner & co se press conference presentation fy 2015 results
TRANSCRIPT
FY 2015 Results
Press Conference
March 1, 2016
Gisbert Rühl | CEO
Nr.2 FY 2015 Results | Press Conference | Klöckner & Co SE
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.
Nr.3
1. Highlights and financials
2. Update on strategy
3. Outlook
Agenda
FY 2015 Results | Press Conference | Klöckner & Co SE
Nr.4 FY 2015 Results | Press Conference | Klöckner & Co SE
Highlights01
• Sales of Klöckner & Co down by 0.9% to €6.4bn despite positive currency effects due to lower prices and volumes
• Gross profit before restructuring slightly down by 1.5% to €1.2bn, gross margin remained roughly stable at 19.3%
• EBITDA before restructuring of €86m slightly above guidance of up to €85m
• Net loss of €349 million impacted by restructuring expenses and goodwill impairments
• Free cash flow of €191m achieved compared to €-64m in 2014
• Net debt strongly decreased from €472m to €385m – despite negative FX-effects – primarily driven by NWC release
• Significant progress of digital transformation
• Go live of Service Platform Kloeckner Connect and new web shop in Germany
• Launch of Industry Platform via integration of first competitors already planed for next year
• Higher value-added strategy further advanced due to organic growth and acquisition of American Fabricators
• KCO WIN+ program progressing fully on schedule – incremental EBITDA contribution of €30m from 2017 onwards with
the majority thereof already in the current year
• For 2016 significant increase of EBITDA expected
• Return to positive net income anticipated supported by further reduced interest expenses
Nr.5 FY 2015 Results | Press Conference | Klöckner & Co SE
EBITDA in FY heavily impacted by adverse market effects01
CommentsEBITDA impact: Q4 yoyMarket related
GP effect of -€33m
86
191
9
OPEXKCO
WIN+
Effect
Net FX
Effect
1010
Price
Effect
-101
Volume
Effect
-33
FY
2014
24
Restruc-
turing
costs
FY
2015
(rep.)
-63
FY
2015
(bef. restr.)
Market related
GP effect of -€134m
• EBITDA under pressure due to adverse market
effects of -€33m in Q4 and in total -€134m in FY
• Volume effect of -€5m in Q4 and -€33m in FY due
to continuously weak demand
• Negative price effect of -€28m in Q4 and -€101m in
FY due to deteriorating prices
115
33
-9
Restruc-
turing
costs
2
Q4 2015
(rep.)
3
Q4 2015
(bef.
Restr.)
OPEX Net FX
Effect
-5
Q4 2014* Volume
Effect
-28
3
Price
Effect
KCO
WIN+
Effect
EBITDA impact: FY yoy
* Restated due to the initial application of IFRIC 21 (Levies)
Note: Columns are calculated w/o FX effects; translational FX effects shown in column “Net FX Effect”
Nr.6 FY 2015 Results | Press Conference | Klöckner & Co SE
Profit & Loss and Cash Flow FY 201501
(€m) FY 2015 FY 2014 Variance
Sales 6,444 6,504 -60
Gross profit 1,237 1,261 -24
Gross profit margin 19.2 19.4 -0.2%p
EBITDA 24 191 -167
EBITDA before restructuring 86 191 -105
EBITDA margin before restructuring 1.3 2.9 -1.6%p
EBIT -350 98 -448
Financial result -49 -59 +10
EBT -399 39 -438
Taxes 50 -17 +67
Net income -349 22 -371
Cash flow from operating activities 276 68 +208
Free cash flow 191 -64 +255
Nr.7
1. Highlights and financials
2. Update on strategy
3. Outlook
Agenda
FY 2015 Results | Press Conference | Klöckner & Co SE
Nr.8 FY 2015 Results | Press Conference | Klöckner & Co SE
Further progress in implementing “Klöckner & Co 2020” strategy02
G R O W T H A N D
O P T I M I Z A T I O N
D I F F E R E N T I A T I O N
D I G I T A L I Z A T I O N
K L Ö C K N E R & C O 2 0 2 0
P R O D U C T S A N D
S E R V I C E S
O P E R A T I O N S
E X T E R N A L &
I N T E R N A L G R O W T H
Launch of Service Platform Kloeckner Connect as central access
point for customers and new web shop
Further increase of share of higher value-added products and services
from 39% to 45% in 2017
Incremental KCO WIN+ effect of €30m until 2017
Evaluation of future acquisition opportunities in the fabrication segment
as logical next step after expansion of SSC activities in the US
Nr.9 FY 2015 Results | Press Conference | Klöckner & Co SE
Implementation of digitalization is progressing further02
• Contract Portal very well received by customers in Europe and the US
• New web shop developed with startup methods sets new industry
standards regarding customer focus and usability is getting live today
• kloeckner.i with own office in Berlin since January 2015
• More than 20 digital experts hired in the areas of Innovation & Product, Digital
Marketing & Sales and Business Intelligence & Analytics
• Entry into IoT business via participation in the AXOOM project by TRUMPF
• Collaboration with Contorion to enter the online business with private customers
• Development of Klöckner ERP version for SMEs with software company Sage
Internal
organization
Digital tools
• Service Platform Kloeckner Connect as central access point for customers
• Important milestone towards launch of Industry Platform planed for 2017
Digital
partnerships
Service
platform
Nr.10 FY 2015 Results | Press Conference | Klöckner & Co SE
Contract portal very well received by customers02
Achievements
• After 4 weeks first customers on test
environment
• After 3 months Minimum Viable Product finished
• Already more than 500 customers on-boarded
in Germany, Austria and Hungary
• Threshold of 3.5 million USD sales via the
platform already crossed with first pilot
customers in the US
• Integration into service platform well under way
Targets
• On-boarding off all contract customers in the US
and Germany until the end of the yearof 2016
• Rollout in all other countries
Nr.11 FY 2015 Results | Press Conference | Klöckner & Co SE
New B2B webshop and first version of Service Platform launched02
• New B2B webshop and first version of Service
Platform went live in Germany today
• Both solutions developed with startup methods
• B2B webshop:
• Offers full price and delivery time transparency –
even for customers without registration
• Integration of additonal features troughout the
year as well as enhancement of product portfolio
• Roll-out to further country organizations
• Service Platform:
• Central access point for data and tools
• Integration of B2B webshop and contract portal
in the first version
• Other tools will be integrated over the course of
the year
• Preliminary stage for Industry Platform
Nr.12 FY 2015 Results | Press Conference | Klöckner & Co SE
Joint ERP project with software company Sage02
ERPKlöckner & Co
Sage
• Klöckner & Co customer survey showed pent-up demand
for ERP systems – especially for SMEs
• Special Klöckner version of Sage ERP system pre-
configured for steel and metal processors
• Solution enables customers to manage their business
processes professionally including an automated order
process via online access to the extensive product
portfolio of Klöckner & Co
• High market potential due to big overlaps between Sage
and Klöckner & Co regarding customer base and
business regions
• System already in the implementation stage at test users
• Start of marketing together with Sage within the first half
of 2016
Customers
Nr.13 FY 2015 Results | Press Conference | Klöckner & Co SE
Ambitious digitalization targets to increase profitability and reduce debt02
Reduction of NWC by
more than one third*
Increase of digitally
managed revenue to
more than 50%
Development of digital tools
Service Platform Industry Platform
Progress
Current Focus From 2017 onwards
* Basis: December 31, 2014; excluding market-related changes
-10%-20%
10%
30%
>50%
-35%
201920182017
Nr.14 FY 2015 Results | Press Conference | Klöckner & Co SE
Klöckner will support customers to digitalize their business02
Co-working space betahouse
We are currently working on a concept of a co-working space for our customers and other SMEs
attached to kloeckner.i
Nr.15 FY 2015 Results | Press Conference | Klöckner & Co SE
Klöckner & Co is also supporting the integration of refugees02
• Free of charge programming training and networking
opportunities for refugees
• Provision of laptops and workstations in co-working spaces
across Berlin
• Volunteer teachers and mentors are all employed in
renowned IT companies
• Good prospects for Students due to staff shortages in the
IT industry
• Klöckner & Co as main sponsor of the first two courses
which started in February
• Intention to engage qualified graduates of ReDi School also
for kloeckner.i
ReDI School of Digital Integration
Nr.16 FY 2015 Results | Press Conference | Klöckner & Co SE
Cultural change goes hand in hand with digital transformation02
2.635Employees will be digitally enabled
Nr.17 FY 2015 Results | Press Conference | Klöckner & Co SE
Goal is an open Industry Platform02
S U P P L I E R S C U S T O M E R S
Transportation
3 R D P A R T Y L O G I S T I C
Aggregated
Demand
information
POS Data / Analytics
Application Programming
Interface
Incl. QR Code
Cumulative
quantities
I N D U S T R Y
P L A T F O R M
Aggregated
Supply
information
Other DistributorsKloeckner
S T O C K H O L D I N G
3 R D P A R T Y
P L A T F O R M S
Internet of things
Consistent flow of information from supplier to customer leads to
Lower inventory levels
Better product availability
Higher price transparency
More efficient processing
Nr.18 FY 2015 Results | Press Conference | Klöckner & Co SE
Higher value-added strategy further advanced 02
• Sales share of higher value-add products and services up from 34% in 2014 to 39% in 2015
• Further increase of higher margin business to 45% of sales planned until 2017
• Greater part of sales planned to be generated with higher value-add products and services by 2020
16% Higher value-add
products
23%Higher value-add
services
36% Standard products
25% Conventional
services
A C T U A L 2 0 1 5
20%
25%
35%
20%
T A R G E T 2 0 1 7
Higher value-add products
and services:
Expansion from now
39% to 45%
Nr.19 FY 2015 Results | Press Conference | Klöckner & Co SE
Significant KCO WIN+ effects expected02
• EBITDA effect
• Total one-off effects of €-63m
• Overall KCO WIN+ effect of up to €60m from 2017 onwards
• Original optimization program extended by restructuring measures in summer 2015 against the background of
deteriorating market conditions
• Incremental effect of €30m until 2017
• Significant share thereof already in 2016
• Cash effect
• Cash out to be overcompensated by working capital release
• Additional positive midterm effect through asset sales
2014/2015
2016/2017
already realized
€26m
approx. €30mTotal annual EBITDA impact of up to €60m from 2017 onwards
Nr.20
1. Highlights and financials
2. Update on strategy
3. Outlook
Agenda
FY 2015 Results | Press Conference | Klöckner & Co SE
Nr.21 FY 2015 Results | Press Conference | Klöckner & Co SE
Segment specific business outlook 201603
Energy
industry
Real steel
demand
Europe
~ +2%
Construction
industry
Manufacturing,
machinery and
mechanical
engineering, etc.
Automotive
industry
US
~ +2%
Nr.22 FY 2015 Results | Press Conference | Klöckner & Co SE
Outlook 03
• Q1 2016
• Sales to be sequentially up in Q1
• EBITDA expected in a range between €10m and €15m
• Start into the year as expected with weak volumes especially in the US
• Additional negative effect due to IFRIC 21 (recognition of levies for the full year in Q1)
• FY 2016
• Slightly lower sales anticipated despite market growth due to continued exit of low margin business
• EBITDA expected to rise significantly compared to previous year`s figure adjusted for restructuring expenses of €86m
• Slightly positive net income anticipated supported by lower financing expenses and the expected absence of further
goodwill impairments
Financial calendar 2016
Christian PokroppHead of Investor Relations & Corporate Communications
Phone: +49 203 307 2050
Fax: +49 203 307 5025
Email: [email protected]
Internet: www.kloeckner.com
March 1, 2016 Annual Financial Statement 2015
May 4, 2016 Q1 interim report 2016
May 13, 2016 Annual General Meeting 2016,Düsseldorf
August 4, 2016 Q2 interim report 2016
November 3, 2016 Q3 interim report 2016
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