EANS-News: Klöckner & Co SE in 2011: turnover and sales rise sharply, net income slightly positive

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annual report

Duisburg (euro adhoc) - • Turnover rises sharply by 25.4% to
6.7 million tons and sales by 36.5% to EUR7.1 billion supported by
acquisitions

• EBITDA declines by EUR21 million, from EUR238 million to EUR217 million
• Net income at EUR10 million, down significantly on the prior-year figure
of EUR80 million due to depreciation, amortization and interest charges
increased by acquisitions and a higher tax rate
• Basic earnings per share at EUR0.14 compared with EUR1.17 a year earlier
• "Klöckner & Co 2020" strategy implemented systematically with two
significant acquisitions: Macsteel Service Centers USA and Frefer in Brazil
• Immediate response to the economic slowdown with an action plan
• Successful capital increase with net proceeds of EUR516 million
Outlook for 2012:
• Turnover and sales expected to rise despite adverse economic conditions
in Europe due to the expansion of activities in North America
• Although the uncertain economic environment means it is currently
impossible to issue a reliable earnings forecast, the comprehensive action plan
in Europe together with growth in the US should enable an improvement in
operating income

Duisburg, March 7, 2012 - Supported by the acquisitions of Macsteel
Service Centers USA and Frefer, turnover and sales rose sharply in
fiscal 2011, enabling the Company to lift sales above EUR7 billion
for the first time in its more recent history. Its earnings
development during the year was non-uniform, however. While
first-quarter operating income was significantly higher year on year,
earnings momentum then slowed noticeably in subsequent quarters as
the economy continued to cool. The worsening sovereign debt crisis in
Europe and the resulting uncertainty were primary contributors to the
economic slowdown.

Gisbert Rühl, Chairman of the Management Board of Klöckner & Co SE:
"While, in the first half of 2011, we systematically implemented our
`Klöckner & Co 2020´ growth strategy, acquiring Macsteel Service
Centers in the USA and Frefer in Brazil, the focus in the second half
of the year was on measures to increase profitability in response to
the cooling economy."

Turnover and sales rise sharply, net income slightly positive
Klöckner & Co lifted turnover by 25.4 % in fiscal 2011 to 6.7
million tons. This was due primarily to the acquisitions it
completed, although turnover in the USA also increased significantly
after adjustment for acquisitions. In Europe, turnover went up by
5.5%. In the Americas segment, it almost doubled due to the
acquisition of Macsteel Service Centers USA and Frefer in Brazil.
Adjusted for the acquisitions in 2010 and 2011, turnover was up year
on year by 1.3% in Europe, 14.6% in the Americas and 4.6% for the
Group as a whole. Overall, due to higher prices, sales grew at a
faster pace than turnover, climbing by 36.5% to EUR7.1 billion.
Without the acquisitions in 2010 and 2011, sales growth would have
been 17.1%. Operating income (EBITDA) was EUR21 million down on the
prior-year figure of EUR238 million at EUR217 million. EBIT and
earnings before taxes (EBT) were therefore EUR111 million (2010:
EUR152 million) and EUR27 million (2010: EUR84 million) respectively.
Net income dropped from EUR80 million to EUR10 million. In addition
to the decline in EBITDA, this was due primarily to depreciation,
amortization and interest charges increased by acquisitions and a
higher tax burden. Basic earnings per share were EUR0.14 compared
with EUR1.17 a year earlier.

Financial headroom further increased and fine-tuned The increase from
EUR1,017 million to EUR1,534 million in funds tied up in net working
capital was also driven primarily by the acquisitions. Net financial
debt increased from EUR137 million in 2010 to a total of EUR471
million. Expressed as a percentage of equity, however, net financial
debt remained at a low level, resulting in a gearing of 29%. The
Company strengthened its financing position and balance sheet through
a successful capital increase with net proceeds of EUR516 million. In
spite of the acquisitions and resulting increase in debt, the equity
ratio rose from 37% to 39%, while total assets climbed to EUR4,706
million. In addition, the Company once again increased its financial
headroom by issuing promissory notes and extended the term of central
financing instruments. The Group therefore has access to facilities
of EUR2.7 billion in total, only 55% of which have currently been
used.

"Klöckner & Co 2020" strategy: two major acquisitions in the first
half of the year, profitability action plan launched in second half
of the year In 2011, Klöckner & Co continued to systematically
implement "Klöckner & Co 2020", the long-term growth strategy
presented in the fall of 2010: By acquiring Macsteel Service Centers
USA and a majority interest in Frefer in Brazil as well as by opening
a first steel service center in China, it substantially increased the
proportion of service center business within the Group, significantly
expanded its market position in the USA and made its entry into
attractive emerging markets. The Company responded immediately to the
deteriorating economic environment in the second half of the year by
initiating a further action plan to increase profitability. Alongside
cuts in administration costs and sales overheads, which are to be
achieved primarily by reducing headcount by at least 6%, the plan
centers on structural changes, including the discontinuation of
insufficiently profitable business activities.

Outlook for 2012: increase in share of sales generated in North
America to have positive effects Klöckner & Co expects turnover and
sales to rise in 2012, particularly as a result of the expansion of
its activities in North America. In the Europe segment, turnover and
sales will be depressed by the generally anticipated decline in
economic output. For the Americas segment, the Company anticipates
further robust growth in gross domestic product, leading to a rise in
steel turnover. Earnings in the Americas segment are also expected to
show a significant improvement, while the measures to increase
profitability mainly in Europe are aimed at cushioning against the
negative impact of a decline in turnover. Gisbert Rühl: "2012 will be
no less challenging than 2011. Although it is currently impossible to
issue a reliable forecast for the full year in light of the uncertain
economic environment, the timely expansion of our activities in
Americas and our comprehensive profitability action plan should
enable us to increase turnover, sales and operating income in 2012."

Further inquiry note:
Dr. Thilo Theilen
Leiter Investor Relations
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