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Klockner & Co announces Q1 2012 results
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Thursday, 10 May 2012
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Turnover and sales sharply increased in Q1 2012, primarily due to the acquisition of Macsteel Service Centers USA. At EUR 45 million, operating income (EBITDA) was down on the strong first quarter of 2011, which was boosted by windfall profits, but EUR 31 million up on the preceding quarter and so within the forecast range of EUR 40 to EUR 50 million.

Klöckner & Co increased turnover in the first three months of fiscal 2012 by 24.0% to 1.9 million tonnes as compared with the prior year quarter (1.5 million tonnes), as a result of acquisitions. Compared with Q4 2011, turnover showed an increase of 13.5% due to the seasonal upturn in business.

The divergent trend in the turnover performance of the Europe and Americas segments experienced in 2011 continued in even more pronounced form in the first quarter. In the Europe segment, turnover was 5.1% down on the prior year owing to the difficult economic environment and portfolio streamlining. Germany was the only country where Klöckner & Co generated slight growth in turnover, whereas business conducted in Spain once again declined substantially.

In contrast, turnover in the Americas segment increased by 125.4% compared with Q1 2011, mainly due to the acquisition of Macsteel. Also on an organic basis, however, Americas segment turnover was well ahead of both, the market and the prior year period, with growth of 11.8%. Organic turnover for the Group as a whole showed a slight 1.4% decrease due to the ground lost in Europe.

Sales followed the trend in turnover, increasing by 22.6% relative to the prior year period to some EUR 1.9 billion in Q1 2012. Excluding acquisitions, Group sales were broadly on a par with the prior year (-0.5%).

EBITDA, at EUR 45 million, was below the prior year figure of EUR 104 million, which was boosted by large windfall profits, but tripled compared with the figure for Q4 2011. EBIT for the first three months of the fiscal year came to EUR 18 million (Q1 2011: EUR 86 million) and earnings before taxes (EBT) to EUR -6 million (Q1 2011: EUR 66 million). Net income accordingly dropped from EUR 44 million to EUR -10 million. Basic earnings per share came to EUR -0.10, compared with a EUR 0.65 in the prior year quarter.

Total assets increased reflecting the usual seasonal upturn in business activity following the winter. The main driver behind the increase was a rise in funds tied up in net working capital from EUR 1,534 million to EUR 1,656 million. The increased need for net working capital was also reflected in net financial debt, which rose as expected from EUR 471 million at the year end to EUR 573 million. Net financial debt was nonetheless kept low relative to equity, with gearing of 35%. The equity ratio stood at roughly 38% as of March 31st 2012, compared with 39% at the 2011 year end. Liquidity remains at a high level of EUR 937 million, compared with EUR 987 million as of December 31, 2011.

Back in September 2011, Klöckner & Co responded to the reduced growth forecasts as a result of the ongoing sovereign debt crisis in Europe by initiating a profitability action plan. Alongside cuts in administration costs and sales overheads, the plan centers on the discontinuation of insufficiently profitable business activities. The number of jobs in Europe is to be cut by 700 as a result. Some 400 jobs had been cut by the end of the first quarter. Initial steps were also completed in the first quarter to close unprofitable locations and business activities. Subsidiaries in Spain and Eastern Europe are particularly affected. The profitability improvement measures will be fully implemented by the middle of the year. Alongside implementation of the restructuring measures in Europe, an additional focus was on the further integration of Macsteel. To this end, the branding was standardized, management structures, administration and procurement brought together, and the groundwork laid for IT integration in the second quarter. In addition to the increased significance of the US business, the considerable synergies and cross selling effects resulting from completion of the integration are leading to an above average contribution to earnings from the Americas segment.

Mr Gisbert Rühl chairman of the management board of Klöckner & Co SE said that "The Macsteel acquisition meant we could particularly benefit from the robust economic trend in the USA. In Europe, as we expected, the environment remains difficult. With substantial overcapacity dominating the market, competition is very fierce. On top of this, customers continue to be unsettled by the ongoing sovereign debt crisis."

Source - Klöckner & Co

(www.steelguru.com)

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