EANS-News: Klöckner & Co SE: Double-digit improvement in turnover and sales versus previous year. Operating income (EBITDA) before restructuring expenses EUR50 million in the second quarter in line wi

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quarterly report

Duisburg (euro adhoc) - - Turnover raised by 14.1% to 3.7
million tons and sales by 12.6% to some EUR3.9 billion due to
acquisitions and strong growth in the USA - EBITDA EUR98
million (EUR78 million including restructuring expenses), compared
with EUR166 million in prior year - Net income EUR- 48 million
(before restructuring expenses and impairments: EUR-5 million),
compared with EUR50 million in prior year

- Earnings per share EUR- 0.48 as against EUR0.69 in prior year
- Profitability action plan pushed ahead and recently substantially
expanded
- EBITDA guidance for Q3 EUR25 million to EUR35 million before
restructuring expenses with a slight seasonal decrease in turnover

Figures relate to first six months relative to first six months of prior year

Duisburg, August 8, 2012 - Turnover and sales increased sharply in
the first six months of 2012, primarily from the acquisition of
Macsteel Service Centers USA and strong organic growth in the USA. At
EUR98 million, operating income (EBITDA) before restructuring
expenses, however, was down on the previous year, mainly on account
of the weaker economic trend in Europe. In spite of the downbeat
environment, EBITDA before restructuring expenses in the second
quarter amounted to EUR50 million and was thus within the guided
range. In light of the deteriorating economic conditions, above all
in Europe, the forecast achievement of last years' EBITDA during the
current fiscal year is rather unlikely. Gisbert Rühl, Chairman of the
Management Board of Klöckner & Co SE: "The situation in Europe is
becoming increasingly tense and we remain skeptical about what lies
ahead. We made arrangements for this situation early on and recently
substantially expanded our restructuring measures. The US market,
where we are ideally positioned thanks to the almost completed
integration of Macsteel, is and remains the growth driver for
Klöckner & Co."

Turnover and sales up, earnings significantly down on previous year
Klöckner & Co increased turnover in the first six months of fiscal
2012 - primarily through acquisitions but also thanks to organic
growth in the United States - by 14.1% to 3.7 million tons compared
with the prior-year period (3.3 million tons). In the Europe segment,
turnover was 6.5% down on the previous year owing to the difficult
economic environment as well as the discontinuation of business
activities generating low profitability. In contrast, turnover in the
Americas segment was 67.8% up on the first half of 2011, particularly
on account of acquisitions. Even after adjusting for the acquisitions
made in fiscal 2011, turnover in the United States showed organic
growth of 10.9% and thus rose notably against the market and the
prior-year level. Adjusted Group turnover fell by 2.7% due to the
weak development in Europe. Group sales in the first half-year of
2012 amounted to some EUR3.9 billion, which represents a 12.6%
increase as against the first six months of 2011 (excluding
acquisitions: a decrease of 2.7%). Due to increased competition, it
was not possible to match the prior-year period's gross profits,
which were marked by high inventory gains. This led to a gross profit
margin of 17.5%, which was significantly down on the previous year's
19.9%. As a result, EBITDA fell sharply from EUR166 million in the
first half of 2011 to EUR98 million (- 41.0%) before restructuring
expenses. In the second quarter, EBITDA amounted to EUR50 million
before restructuring expenses, which is 18.5% down on the previous
year's EUR62 million. Earnings were impacted during the past
half-year by an impairment charge on goodwill arising from the
Brazilian Frefer acquisition in the amount of EUR21 million, which
meant that EBIT for the first six months of 2012 was EUR- 5 million
(HY1 2011: EUR122 million). Earnings before taxes (EBT) came in at
EUR- 47 million after EUR81 million for the corresponding period of
the previous year. Overall, Klöckner & Co therefore posted a net loss
of EUR 48 million (before restructuring expenses and impairments:
EUR-5 million; HY1 2011: net income of EUR50 million). Basic earnings
per share came to EUR- 0.48, compared with EUR0.69 in the prior-year
period.

Strong balance sheet and financing structure retained The change in
the company's financial position particularly reflects the seasonal
build-up of net working capital. Accordingly, total assets rose by
4.9% to EUR4,938 million. In addition to consolidation effects,
higher turnover drove an increase in funds tied up in net working
capital to EUR1,685 million as against EUR1,534 million at the end of
the 2011 fiscal year. The equity ratio stood at around 37% as of June
30, 2012 and was thus roughly on a par with the end of the 2011
fiscal year. Due to the higher volume of funds tied up in net working
capital, net financial debt amounted to EUR582 million as against
EUR471 million at the end of the last fiscal year. Net financial debt
was kept low relative to equity, with gearing of 36%. Liquidity
remained at a high level of EUR974 million, compared with EUR987
million as of December 31, 2011. Some of the substantial liquidity
was used at the end of July to repay the EUR325 million convertible
bond when it matured.

Action plan pushed ahead and substantially expanded Back in September
2011, Klöckner & Co responded to the recessionary trend in the
European periphery with an action plan; in doing so, it assumed a 5%
decline in European steel consumption. This scenario was considered
to be too negative by many market participants at that time, but the
scale of the current downswing is in fact even more pronounced. In
addition to reductions in administration costs and sales overheads
and the discontinuation of insufficiently profitable business
activities, the action plan also centered on deep cuts to the site
network in Spain. The related restructuring expenses depressed
second-quarter EBITDA by EUR17 million. As economic conditions in
Europe worsened, Klöckner & Co once again responded immediately,
increasing the 700 jobs originally scheduled to be cut to 1,300, or
12% across the Group as a whole. By expanding the plan, Klöckner & Co
is currently seeking to add around EUR90 million to EBITDA after
EUR70 million on a comparable annualized basis. Implementation of the
measures is progressing according to plan, although the full effect
will not be seen until 2013. Of the 700 jobs originally affected in
Europe and recently increased to 1,300, some 520 have been cut since
the plan began. The increase in the headcount reduction relates
entirely to the country organizations in Spain, France and Eastern
Europe. The measures are scheduled to be largely implemented by the
end of the year. Furthermore, initial steps were also completed to
discontinue unprofitable locations and business activities. The
subsidiary in Spain is particularly affected, as is the beams
business with large customers in Germany and the Netherlands. At the
same time, the integration of Macsteel in the USA was all but
completed. This will lead to considerable synergy and cross-selling
effects, alongside the generally more upbeat growth forecasts in the
United States.

Expansion into US automotive business initiated By building a steel
service center at the ThyssenKrupp Steel USA site in Alabama/USA,
Klöckner & Co has continued the strategy that the Company is pursuing
with its acquisition of Macsteel to expand the service center
business, thereby rounding out its product portfolio in the United
States by adding automotive grades for premium manufacturers. The
plant is expected to launch operations in the fall of 2013.

Outlook As things stand at the moment, due to the adverse market
environment and the usual seasonal slowdown in business activities
during the summer, the company expects EBITDA before restructuring
expenses of EUR25 million to EUR35 million in the third quarter of
2012. This development will be supported not only by a more favorable
economic trend in the United States, but also by a stronger market
position following the complete integration of Macsteel and the
resulting economies of scope. From today's perspective, Klöckner & Co
continues to expect a rise in turnover and sales in fiscal 2012
compared with the prior year. The increase is expected to be
achieved, in spite of portfolio streamlining measures and the weak
market development in Europe, by last year's acquisitions and the
organic growth in the United States. Due to the escalating economic
situation in Europe overall and a possible slowdown in the US
economy, achieving the operating income (EBITDA) of the previous year
is rather unlikely from today's perspective.

About Klöckner & Co: Klöckner & Co is the largest
producer-independent distributor of steel and metal products and one
of the leading steel service center companies in the European and
American markets combined. The core business of Klöckner & Co is the
warehousing and distribution of steel and non-ferrous metals as well
as the operation of steel service centers. Based on the Group's
distribution and service network, more than 170,000 customers are
supplied through around 290 locations in more than 20 countries.
Currently Klöckner & Co employs around 11,200 employees. The Group
had sales of around EUR7.1 billion in fiscal 2011.

The shares of Klöckner & Co SE are admitted to trading on the
regulated market segment (Regulierter Markt) of the Frankfurt Stock
Exchange (Frankfurter Wertpapierbörse) with further post-admission
obligations (Prime Standard). Klöckner & Co shares are listed in the
MDAX®-Index of Deutsche Börse.

ISIN: DE000KC01000; WKN: KC0100; Common Code: 025808576.

Further inquiry note:
Dr. Thilo Theilen
Leiter Investor Relations & Corporate Communications
Telefon: +49 (0)203 307 2050
E-Mail: thilo.theilen@kloeckner.de

end of announcement euro adhoc
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company: Klöckner & Co SE
Am Silberpalais 1
D-47057 Duisburg
phone: +49(0)203-307-0
FAX: +49(0)203-307-5000
mail: info@kloeckner.de
WWW: http://www.kloeckner.de
sector: Metal Goods & Engineering
ISIN: DE000KC01000
indexes: CDAX, Classic All Share, Prime All Share
stockmarkets: free trade: Berlin, München, Hamburg, Düsseldorf, Stuttgart,
regulated dealing/prime standard: Frankfurt
language: English