EANS-News: Klöckner & Co SE / Half-year operating income (EBITDA) shaped by contrary steel cycles during first and second quarter. Major boost in sales volumes and sales. Capital increase successful.

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quarterly report

Duisburg (euro adhoc) - • Sales volumes increased compared with first
half of 2010 by 24.1% to 3.3 million tons (Q2: 1.8 million tons
compared with 1.4 million tons in Q2 2010) • Sales up by 40.8%
compared with the prior-year period to approximately EUR3.5 billion
(Q2: EUR1.9 billion compared with EUR1.4 billion in Q2 2010) •
Operating income (EBITDA) improved from EUR129 million in prior-year
period to EUR166 million; however, second-quarter EBITDA, at EUR62
million, down on EUR100 million prior-year figure • Net income at
EUR50 million, compared with EUR49 million in prior-year period •
Earnings per share at EUR0.69, compared with EUR0.71 in comparative
prior-year period • Successful capital increase with net proceeds of
EUR517 million lays foundation for further growth All figures for
first six months compared with same period of prior year

Duisburg, August 10, 2011: After healthy growth in operating income
(EBITDA) in the first quarter of 2011, the second quarter brought a
visible decrease in earnings momentum with EBITDA of EUR62 million.
This development largely reflected the downtrend in steel prices,
which after a sharp rise in the first quarter came under pressure in
the second. However, the second quarter also brought a further major
boost to sales volumes and sales, notably from the acquisition of
Macsteel Service Centers USA ("MSCUSA"). Gisbert Rühl, Chairman of
the Management Board of Klöckner & Co SE: "After a first quarter that
saw us start the year with a tailwind, the economic recovery visibly
lost speed in the second quarter and even slowed right down toward
the end, with prices in part dropping sharply. Our customers showed a
certain reluctance to make purchases because they expected prices to
continue downwards. This also put increasing pressure on margins.
Although there is once more considerably greater uncertainty, we
confirm our outlook of more than 25% growth in sales volumes and
sales in 2011, provided that current developments on the global
capital markets do not lead back into a recession."

Strong growth in sales volumes and sales Sustained robust demand from
year to year and notably the two acquisitions enabled Klöckner & Co
to generate sales volumes of 3.3 million tons in the first six months
of 2011, a substantial 24.1% more than in the prior-year period (2.6
million tons). Sales volumes gained 13.8% in Europe and 62.3% in the
Americas segment compared with the prior-year figures. Adjusted for
the acquisitions in 2010 and 2011, sales volumes in the Americas
segment were up 16.1% on the prior-year period, while adjusted sales
volumes for the Group as a whole rose by 8.6%. With a year-on-year
rise in average prices despite the current falling price trend, sales
grew more strongly than sales volumes. Group sales totaled some
EUR3.5 billion in the first half of 2011, an increase of 40.8% -
excluding acquisitions, 26.1% - compared with the first half of 2010.
During the second quarter, falling prices and associated customer
reluctance to purchase exerted noticeable pressure on margins.
Combined with mainly price-related inventory writedowns toward the
end of the reporting period, this led to a gross profit margin that
at 19.9% was significantly down on the 23.0% in the prior-year
period. Operating income (EBITDA) was increased - mainly as a result
of the good business situation in the first quarter of 2011 - from
EUR129 million in the first half of 2010 to EUR166 million (an
increase of 28.5%) in the first half of 2011. This corresponds to an
EBITDA margin of 4.8% (HY1/2010: 5.3%). In the second quarter,
however, EBITDA was down at EUR62 million compared with EUR100
million in the prior-year period, due to a significant extent to
EUR15 million in inventory writedowns. EBIT in the first six months
of 2011 came to EUR122 million (HY1/2010: EUR89 million) and tracked
the trend in EBITDA. Earnings before taxes (EBT) came to EUR81
million, compared with EUR57 million in the prior-year period.
Klöckner & Co generated net income of EUR50 million (HY1/2010: EUR49
million). Basic earnings per share stood at EUR0.69, compared with
EUR0.71 in the prior-year period.

Strong balance sheet and financing structure maintained The changes
in the statement of financial position are mainly shaped by the
acquisitions of MSCUSA and Frefer completed in the second quarter and
by the capital increase. Total assets increased as a result by 41.4%
to EUR4,936 million. Acquisition accounting and higher sales volumes
increased resources tied up in net working capital to EUR1,713
million, compared with EUR1,017 million at the end of fiscal 2010.
The inflow of resources from the capital increase was a key factor in
maintaining liquid funds at the high level of EUR1,035 million,
compared with EUR935 million as of December 31, 2010, despite the
cash outflow on payment of the purchase price for MSCUSA and Frefer
and the higher net working capital. The equity ratio came to some 37%
as of June 30, 2011, on a par with the 2010 fiscal year-end. After
payment of the purchase price for the two acquisitions and after the
share issue, net financial debt stood at EUR600 million, compared
with EUR137 million at the end of the prior fiscal year.

Milestones in the first half of 2011 in implementation of the
strategy "Klöckner & Co 2020" The second quarter saw Klöckner & Co
attain three milestones in the strategy "Klöckner & Co 2020"
presented in October last year: 1. The acquisition of Macsteel
Service Centers USA ("MSCUSA") was completed at the end of April.
MSCUSA is one of the leading flat steel service center companies in
the USA, with sales of some USD 1.3 billion in 2010. The acquisition
doubles Klöckner & Co´s sales and number of locations in North
America. It adds flat products to a product range previously focused
on long products and heavy plate. Klöckner & Co is now among the
market leaders in all three product segments in the USA and has moved
up to become the third largest steel and metal distributor in North
America. Integration of the company into the existing US country
organization proceeds apace. The potential synergies are estimated to
be significantly bigger than initially expected. The US country
organization will operate in the future under a single brand and is
now the largest in the Group, with 30% of sales. 2. At the end of
May, Klöckner & Co acquired a 70% share in the Frefer Group, Brazil
("Frefer"). With approximately 360 employees at 14 locations, the
group generated sales of some BRL 340 million (about EUR150 million)
in 2010. The move marks Klöckner & Co´s entry into the fast-growing
emerging economies of South America. 3. The 50% capital increase was
successfully carried out in June and generated net proceeds of EUR517
million, which will mainly be used to continue the "Klöckner & Co
2020" growth strategy.

Outlook Regarding business performance in 2011, despite the global
economic slowdown and provided that the current developments on
global capital markets do not lead back into a recession, Klöckner &
Co continues to anticipate growth of more than 25% in sales volumes
and sales, with acquisitions contributing significantly to the
increase. The Company projects a slight seasonal reduction in demand
in the third quarter. Earnings are consequently expected to be below
the second quarter for seasonal reasons. For the fourth quarter, and
accordingly for the full year, an earnings forecast is currently
subject to great uncertainty. Against this background Klöckner & Co
does not further expect to reach its medium-term target EBITDA margin
of 6% already for the current year. Gisbert Rühl: "In acquiring
MSCUSA and Frefer in Brazil, we have systematically pushed ahead our
long-term growth strategy "Klöckner & Co 2020" and laid key
groundwork for the onward development of Klöckner & Co. The capital
increase successfully completed in June additionally lays the
foundation for us to continue pursuing our "Klöckner & Co 2020"
growth strategy with ambitious targets."

Further inquiry note:
Dr. Thilo Theilen
Leiter Investor Relations
Telefon: +49 (0)203 307 2050
E-Mail: thilo.theilen@kloeckner.de

end of announcement euro adhoc
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company: Klöckner & Co SE
Am Silberpalais 1
D-47057 Duisburg
phone: +49(0)203-307-0
FAX: +49(0)203-307-5000
mail: info@kloeckner.de
WWW: http://www.kloeckner.de
sector: Metal Goods & Engineering
ISIN: DE000KC01000
indexes: CDAX, Classic All Share, Prime All Share
stockmarkets: regulated dealing/prime standard: Frankfurt, free trade: Berlin,
Hamburg, Stuttgart, Düsseldorf, München
language: English