German-based independent steel and metals distributor Klockner & Co Aug. 3 reported its strongest first-half result since its IPO in 2006, mainly on a spate of high product prices, and said it expected significant sales growth in the full even despite recent price falls.
H1 shipments fell to 2.48 million mt, from 2.58 million mt in the 2021 period, but their value jumped 49 to Eur5.02 billion ($5.1 billion) from Eur3.37 billion a year earlier after a price surge following Russia’s invasion of Ukraine.
Operating income (EBITDA) before material special effects rose to Eur423 million from Eur401 million. Gross profit margin nonetheless fell to 19.7% from 27.1% a year earlier.
In Q2, shipments and gross profit margins also fell while sales revenue rose. EBITDA also fell as prices moved lower.
Q2 sales volumes fell to 1.23 million mt, from 1.29 million a year earlier, while sales rose to Eur2.58 billion (Eur1.85 billion), gross profit margins fell to 19.7% (28.4%) and EBITDA before special material effects fell to Eur222 million (Eur271 million).
Platts North European hot rolled coil steel domestic ex-works Ruhr assessment stood at Eur850/mt on Aug. 2, according to S&P Global Commodity Insights data. The product started the year at Eur922/mt and hit an all-time peak of Eur1,460/mt on March 18.
Partnership, M&A
Klockner & Co CEO Guido Kerkhoff said that during H1 the company had strengthened its partnership with steelmaker Nucor in the US, added to its stainless steel product and service portfolio via acquisitions through its subsidiary Becker Stahl-Service and expanded its advisory capabilities for green products and services, furthering group strategy.
The distributor and service center company is investing in a facility for plate processing on the site of the new Nucor steel mill in Brandenburg, Kentucky.
Nucor Steel Brandenburg will be an electric arc furnace mill that will recycle scrap metal into heavy plate steel for offshore wind towers and other infrastructure projects.
With the partnership, Klockner & Co says it aims to profit more strongly from the US government’s planned investment in renewable energy and infrastructure. The new heavy plate processing facility, scheduled to start up in Q3 2023, is subject to environmental approvals.
Klockner & Co’s German subsidiary Becker Stahl-Service has, meanwhile, acquired Hernandez Stainless GmbH and RSC Rostfrei Coilcenter GmbH, marking Becker’s entry into stainless steel processing, extending its product and service portfolio, it said.
Sales outlook ‘positive’
Due to the anticipated higher average steel price level, Klockner & Co said it expects significant sales growth and a “significantly positive” cash flow figure in full year 2022.
“After a significant intervening rise in the first half-year, prices have recently corrected. In light of this and of the challenging macroeconomic environment, the company forecasts operating income (EBITDA) of Eur50 million to Eur100 million before material special effects in the third quarter,” it said in a statement. “A figure of more than Eur500 million is expected for the full year, which would be the second-best result since the IPO in 2006.”
Klockner & Co describes itself as one of the largest producer-independent distributors of steel and metal products and one of the leading steel service companies worldwide..
— Diana Kinch
