Klöckner sees price dynamic, demand growth continuation

After excellent sales in the first half, German-based steel distribution group Klöckner & Co is extremely optimistic regarding the remainder of the year.

In the second quarter, higher prices and increased demand led to “a very considerable growth” in revenue, by 58% on-year to €1.8 billion ($2.1 billion). To a large part, this is attributable to steel prices, given that the tonnage sold grew more slowly, but also considerably, by 21% to 1.295 million tonnes, chief executive Guide Kerkhoff said during a conference call.

He noted that two pricing effects worked in parallel, pushing up profits. On the one hand, “we have had a return from an extremely low level” of prices and margins that prevailed last year, he observed. On the other, the company cashed in on windfall profits from the appreciation of inventories purchased at low prices, he told Kallanish. This effect alone accounted for €190 million, he detailed. Thirdly, the company also shifted further towards high-value products.

Ebitda improved from €11m in the prior-year period to €271m. Net income was extremely strong at €215m, against a net loss of €111m seen a year earlier.

Klöckner believes the rally is not over yet, and in the current quarter expects further rising revenue due to continued price dynamics, which will compensate for a seasonal drop in shipments.

Christian Koehl Germany