Service Centers

Klöckner Sees Record Profits on Supply Squeeze, High Prices

Written by Michael Cowden

April 30, 2021

Klöckner & Co. SE posted its best quarterly results in more than 12 years thanks to high steel prices, short supplies and a strong showing from its digital operations.

The Duisburg, Germany-based service center, which has significant operations in the U.S., expects the good times to continue to roll in the second quarter.

Kloeckner“The overall economic situation and demand for steel are increasingly recovering,” Klöckner said in commentary released along with first quarter earnings figures.

Klöckner swung to a profit of €85 million ($102.2 million) in the first quarter of 2021 after losing €21 million ($25.3 million) in the year-ago quarter on sales that increased 5.3% to €1.53 billion ($1.84 billion).

Those gains came even as overall shipments slipped to 1.29 million tons in the first quarter of this year, down 5.8% from 1.37 million tons in the first quarter of 2020.

The reason: an “exceptionally positive price trend” in particular in the U.S., and in Europe as well, Klöckner said.

“A materials shortage combined with long delivery times has led to further price rises. Klöckner & Co therefore expects a significant increase in sales in the second quarter relative to the first quarter,” the company said.

Klöckner’s U.S. segment posted earnings before interest, taxes, depreciation and amortization of €75 million ($90.2 million) in the first quarter of 2021, up more than eightfold from EBITDA of €9 million ($10.8 million) in the year-ago quarter.

Those results broadly match a sharp upswing in the steel sheet prices tracked by Steel Market Update. SMU’s benchmark hot-rolled coil price was at $1,440 per ton ($72/cwt) when this article was filed, up 46.2% from $985 per ton at the beginning of the year and more than triple $460 per ton a year ago.

And it’s not just steel selling prices that are up; so too are digital sales. Approximately 45% of sales in the first quarter of 2021 came via digital channels, up from 35% in the same quarter last year, Klöckner said.

Klöckner Assistant, which is driven by artificial intelligence, processed approximately €200 million ($240.6 million) in sales in the first quarter. And XOM Materials, Klöckner’s electronic procurement platform, sold products worth €150 million ($180.4 million) in the quarter, the company said.

“The figures confirm our strategy and show that the digitalization and restructuring measures … are delivering results. This allows us to benefit even more strongly from the positive market environment,” Klöckner CEO Gisbert Rühl said.

By Michael Cowden, Michael@SteelMarketUpdate.com

Michael Cowden

Michael Cowden is editor-in-chief for Steel Market Update. Cowden has covered the steel industry since 2007. He specializes in flat-rolled steel but has also reported on steel long products, steel pipe and tube, and aluminum. Before joining SMU, Cowden held reporting jobs at Fastmarkets AMM in Chicago, the Associated Press in Pittsburgh, and the Cambodia Daily in Phnom Penh. He has also worked as a copy editor and in marketing at the University of Chicago Press. Cowden has a BA in English from the University of Chicago and an MSJ journalism from Northwestern University’s Medill School of Journalism. Contact him at michael@steelmarketupdate.com or 724-759-7872.

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