Klöckner Sees Record Profits on Supply Squeeze, High Prices

“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