Klöckner maintains steady volumes amid ‘panic’ buying attempts

Klöckner & Co achieved very good sales and profit in the first quarter, and actually recorded some growth in customer business as a side-effect of the Ukraine war.

The steel distribution group is only minimally impaired directly by restrictions resulting from the war. Russia, as well as Ukraine, are neither source nor export markets for Klöckner’s steel, chief executive Guido Kerkhoff said during a conference call on Wednesday.

On the contrary, Klöckner was able to gain new customers among buyers who typically order in Russia. Kerkhoff told of cases of European companies that had so far relied on single sourcing from Russia and suddenly had to absorb a total loss of supplies. Such cases “suddenly had quite a problem when they had to complete a project,” he said on the call attended by Kallanish.

Another phenomenon in this crisis period is panic buying, which Klöckner had to appease in many cases. “Some customers quadrupled their order volume, but we did not comply with that,” Kerkhoff recounted. The firm assured customers of stable deliveries, but continued to adhere to its margin-before-volume philosophy, reassuring clients that delivery capability was guaranteed.

Although the share of digital sales rose slightly to around 46% (versus 45% in the first quarter 2021), Klöckner observed a detrimental effect brought about by the crisis. While the Covid-19 pandemic spurred online buying, the war-related crisis has many customers preferring to reach for the phone rather than ordering online. “If there is supply uncertainty, customers avoid digital channels, preferring to clarify over the phone whether there is any supply availability at all,” Kerkhoff said.

Christian Koehl Germany