Price recovery benefits Klöckner in Q3

Germany-based distributor and service center operator Klöckner & Co continued to improve its net and operating income (EBIDTA) in Q3, driven by steel price upswings and margin improvements, despite lower sales and volumes, CEO Gisbert Rühl said in a press call on Thursday.

The company expects an increase in EBIDTA to €180-190 million for 2016, but expects seasonally lower sales in Q4 (see related article).

According to Klöckner, positive price effects of €46 million in Q3 resulted in an EBIDTA of €71 million in total compared to Q3 last year. The increase was supported by the increased use of market-sensitive digital pricing tools, the company said. Klöckner’s net income went up to €31 million in Q3 from a loss of €9 million last year.

The proportion of sales generated digitally grew to 11% in Q3. As reported, Klöckner aims to achieve 50% of its trading online by 2019.

Shipments went down by 8.3% to 1.5 million metric tons y-o-y in Q3 due to the exit of the low margin business, according to the financial report. There has also been a quarter-on-quarter decrease because of seasonal declines in Europe and weaker demand for industrial products in the US. While prices have recovered compared to the beginning of the year, lower average sales prices resulted nevertheless in a 10.5 y-o-y decrease in sales to €1.4 billion.

“After the market- and restructuring-driven impacts of the past few years, our improved operating line-up is now increasingly visible in the results. By systematically implementing our digitalization strategy and the extension of business involving higher value-added products and services, we are working all out to ensure that the upward trend continues,” said Rühl.

As reported, Klöckner is currently expanding its aluminium trading and processing as the distributor sees a demand increase in aluminium of 20% by 2020. “However, aluminium will not replace steel,” emphasised Rühl.

Aluminium currently accounts for 7% of the company’s sales, while steel products account for around 80%.

Laura Varriale, PLATTS