Steel Products

Klockner Expects Kloeckner Metals in U.S. to Boost Corporate Profitability

March 8, 2013

Written by: Sandy Williams

Klockner and Co. is undergoing a major restructuring program to shrink its European line to a profitable core by eliminating 60 sites, 40 of which have already been sold or closed. Klockner EBITDA before restructuring was €139 million in 2012 (down from €227 million in 2011) and €62 million after restructuring. The Company forecasts 2013 EBITDA of €200 million with €60 million coming from restructuring. Currently, the U.S. generates 40 percent of Klockner sales and expects that share to increase to 50 percent in the next year.

In the U.S., the company completed integration with Macsteel Service Centers USA under the umbrella of Kloeckner Metals and increased turnover by 30.8 percent 2012. Sales in the U.S. are expected to show organic growth of about 10 percent in 2013. Construction related sales account for about 40 percent of customers in the US, but with the start of the new service center in Alabama, Klockner expects automotive to increase from 4 percent to 10 percent. The acquisition of Macsteel was attributed to an 11 percent increase in U.S. flat steel sales in 2012. Alabama sales volume is expected to grow to €150 million in 2014.

CEO Gisbert Ruhl said, “With the three directions of thrust comprising growth in the USA, stabilization of profitable and restructuring of the remaining activities in Europe, we have adapted our strategy to the current challenges. As a result, despite the ongoing difficult environment, we are well equipped to increase our earnings power and to continue growing in the USA.”

Ruhl said there are no plans to make further investments in emerging markets and the company focus will be on the US market where opportunities are available in natural gas. No large acquisitions are expected in the near future.

“We are buying here and there a niche player that would support our exposure, for instance, to shale gas, to shale exploration and reshoring,” said Ruhl.

Klockner expects the U.S. market to be up +3 to +4 percent and expects to outgrow the market again this year. Ruhl says growth is not only in the contractual business but also in spot business which is very much related to cross selling effects. “We are providing every region in the U.S. all kinds of steel, flat, rolled, plate—it gave us an additional push last year and this is why we expect to grow the U.S. market again very significantly,” said Ruhl.