Klöckner & Co SE Press Conference Presentation FY 2015 Results

FY 2015 Results

Press Conference

March 1, 2016

Gisbert Rühl | CEO

Nr.2 FY 2015 Results | Press Conference | Klöckner & Co SE

Disclaimer

This presentation contains forward-looking statements which reflect the current views of the management of

Klöckner & Co SE with respect to future events. They generally are designated by the words “expect”, “assume”, “presume”, “intend”,

“estimate”, “strive for”, “aim for”, “plan”, “will”, “endeavor”, “outlook” and comparable expressions and generally contain information that relates

to expectations or goals for economic conditions, sales proceeds or other yardsticks for the success of the enterprise. Forward-looking

statements are based on currently valid plans, estimates and expectations. You therefore should view them with caution. Such statements are

subject to risks and factors of uncertainty, most of which are difficult to assess and which generally are outside of the control of Klöckner & Co

SE. The relevant factors include the effects of significant strategic and operational initiatives, including the acquisition or disposition of

companies. If these or other risks and factors of uncertainty occur or if the assumptions on which the statements are based turn out to be

incorrect, the actual results of Klöckner & Co SE can deviate significantly from those that are expressed or implied in these statements.

Klöckner & Co SE cannot give any guarantee that the expectations or goals will be attained. Klöckner & Co SE – notwithstanding existing

obligations under laws pertaining to capital markets – rejects any responsibility for updating the forward-looking statements through taking into

consideration new information or future events or other things.

In addition to the key data prepared in accordance with International Financial Reporting Standards, Klöckner & Co SE is presenting non-

GAAP key data such as EBITDA, EBIT, Net Working Capital and net financial liabilities that are not a component of the accounting

regulations. These key data are to be viewed as supplementary to, but not as a substitute for data prepared in accordance with International

Financial Reporting Standards. Non-GAAP key data are not subject to IFRS or any other generally applicable accounting regulations. Other

companies may base these concepts upon other definitions.

Nr.3

1. Highlights and financials

2. Update on strategy

3. Outlook

Agenda

FY 2015 Results | Press Conference | Klöckner & Co SE


Highlights01

• Sales of Klöckner & Co down by 0.9% to €6.4bn despite positive currency effects due to lower prices and volumes

• Gross profit before restructuring slightly down by 1.5% to €1.2bn, gross margin remained roughly stable at 19.3%

• EBITDA before restructuring of €86m slightly above guidance of up to €85m

• Net loss of €349 million impacted by restructuring expenses and goodwill impairments

• Free cash flow of €191m achieved compared to €-64m in 2014

• Net debt strongly decreased from €472m to €385m – despite negative FX-effects – primarily driven by NWC release

• Significant progress of digital transformation

• Go live of Service Platform Kloeckner Connect and new web shop in Germany

• Launch of Industry Platform via integration of first competitors already planed for next year

• Higher value-added strategy further advanced due to organic growth and acquisition of American Fabricators

• KCO WIN+ program progressing fully on schedule – incremental EBITDA contribution of €30m from 2017 onwards with

the majority thereof already in the current year

• For 2016 significant increase of EBITDA expected

• Return to positive net income anticipated supported by further reduced interest expenses


EBITDA in FY heavily impacted by adverse market effects01

CommentsEBITDA impact: Q4 yoyMarket related

GP effect of -€33m

86

191

9

OPEXKCO

WIN+

Effect

Net FX

Effect

1010

Price

Effect

-101

Volume

Effect

-33

FY

2014

24

Restruc-

turing

costs

FY

2015

(rep.)

-63

FY

2015

(bef. restr.)

Market related

GP effect of -€134m

• EBITDA under pressure due to adverse market

effects of -€33m in Q4 and in total -€134m in FY

• Volume effect of -€5m in Q4 and -€33m in FY due

to continuously weak demand

• Negative price effect of -€28m in Q4 and -€101m in

FY due to deteriorating prices

115

33

-9

Restruc-

turing

costs

2

Q4 2015

(rep.)

3

Q4 2015

(bef.

Restr.)

OPEX Net FX

Effect

-5

Q4 2014* Volume

Effect

-28

3

Price

Effect

KCO

WIN+

Effect

EBITDA impact: FY yoy

* Restated due to the initial application of IFRIC 21 (Levies)

Note: Columns are calculated w/o FX effects; translational FX effects shown in column “Net FX Effect”


Profit & Loss and Cash Flow FY 201501

(€m) FY 2015 FY 2014 Variance

Sales 6,444 6,504 -60

Gross profit 1,237 1,261 -24

Gross profit margin 19.2 19.4 -0.2%p

EBITDA 24 191 -167

EBITDA before restructuring 86 191 -105

EBITDA margin before restructuring 1.3 2.9 -1.6%p

EBIT -350 98 -448

Financial result -49 -59 +10

EBT -399 39 -438

Taxes 50 -17 +67

Net income -349 22 -371

Cash flow from operating activities 276 68 +208

Free cash flow 191 -64 +255

Nr.7



3. Outlook

Agenda



Further progress in implementing “Klöckner & Co 2020” strategy02

G R O W T H A N D

O P T I M I Z A T I O N

D I F F E R E N T I A T I O N

D I G I T A L I Z A T I O N

K L Ö C K N E R & C O 2 0 2 0

P R O D U C T S A N D

S E R V I C E S

O P E R A T I O N S

E X T E R N A L &

I N T E R N A L G R O W T H

Launch of Service Platform Kloeckner Connect as central access

point for customers and new web shop

Further increase of share of higher value-added products and services

from 39% to 45% in 2017

Incremental KCO WIN+ effect of €30m until 2017

Evaluation of future acquisition opportunities in the fabrication segment

as logical next step after expansion of SSC activities in the US


Implementation of digitalization is progressing further02

• Contract Portal very well received by customers in Europe and the US

• New web shop developed with startup methods sets new industry

standards regarding customer focus and usability is getting live today

• kloeckner.i with own office in Berlin since January 2015

• More than 20 digital experts hired in the areas of Innovation & Product, Digital

Marketing & Sales and Business Intelligence & Analytics

• Entry into IoT business via participation in the AXOOM project by TRUMPF

• Collaboration with Contorion to enter the online business with private customers

• Development of Klöckner ERP version for SMEs with software company Sage

Internal

organization

Digital tools

• Service Platform Kloeckner Connect as central access point for customers

• Important milestone towards launch of Industry Platform planed for 2017

Digital

partnerships

Service

platform


Contract portal very well received by customers02

Achievements

• After 4 weeks first customers on test

environment

• After 3 months Minimum Viable Product finished

• Already more than 500 customers on-boarded

in Germany, Austria and Hungary

• Threshold of 3.5 million USD sales via the

platform already crossed with first pilot

customers in the US

• Integration into service platform well under way

Targets

• On-boarding off all contract customers in the US

and Germany until the end of the yearof 2016

• Rollout in all other countries


New B2B webshop and first version of Service Platform launched02

• New B2B webshop and first version of Service

Platform went live in Germany today

• Both solutions developed with startup methods

• B2B webshop:

• Offers full price and delivery time transparency –

even for customers without registration

• Integration of additonal features troughout the

year as well as enhancement of product portfolio

• Roll-out to further country organizations

• Service Platform:

• Central access point for data and tools

• Integration of B2B webshop and contract portal

in the first version

• Other tools will be integrated over the course of

the year

• Preliminary stage for Industry Platform


Joint ERP project with software company Sage02

ERPKlöckner & Co

Sage

• Klöckner & Co customer survey showed pent-up demand

for ERP systems – especially for SMEs

• Special Klöckner version of Sage ERP system pre-

configured for steel and metal processors

• Solution enables customers to manage their business

processes professionally including an automated order

process via online access to the extensive product

portfolio of Klöckner & Co

• High market potential due to big overlaps between Sage

and Klöckner & Co regarding customer base and

business regions

• System already in the implementation stage at test users

• Start of marketing together with Sage within the first half

of 2016

Customers


Ambitious digitalization targets to increase profitability and reduce debt02

Reduction of NWC by

more than one third*

Increase of digitally

managed revenue to

more than 50%

Development of digital tools

Service Platform Industry Platform

Progress

Current Focus From 2017 onwards

* Basis: December 31, 2014; excluding market-related changes

-10%-20%

10%

30%

>50%

-35%

201920182017


Klöckner will support customers to digitalize their business02

Co-working space betahouse

We are currently working on a concept of a co-working space for our customers and other SMEs

attached to kloeckner.i


Klöckner & Co is also supporting the integration of refugees02

• Free of charge programming training and networking

opportunities for refugees

• Provision of laptops and workstations in co-working spaces

across Berlin

• Volunteer teachers and mentors are all employed in

renowned IT companies

• Good prospects for Students due to staff shortages in the

IT industry

• Klöckner & Co as main sponsor of the first two courses

which started in February

• Intention to engage qualified graduates of ReDi School also

for kloeckner.i

ReDI School of Digital Integration


Cultural change goes hand in hand with digital transformation02

2.635Employees will be digitally enabled


Goal is an open Industry Platform02

S U P P L I E R S C U S T O M E R S

Transportation

3 R D P A R T Y L O G I S T I C

Aggregated

Demand

information

POS Data / Analytics

Application Programming

Interface

Incl. QR Code

Cumulative

quantities

I N D U S T R Y

P L A T F O R M

Aggregated

Supply

information

Other DistributorsKloeckner

S T O C K H O L D I N G

3 R D P A R T Y

P L A T F O R M S

Internet of things

Consistent flow of information from supplier to customer leads to

Lower inventory levels

Better product availability

Higher price transparency

More efficient processing


Higher value-added strategy further advanced 02

• Sales share of higher value-add products and services up from 34% in 2014 to 39% in 2015

• Further increase of higher margin business to 45% of sales planned until 2017

• Greater part of sales planned to be generated with higher value-add products and services by 2020

16% Higher value-add

products

23%Higher value-add

services

36% Standard products

25% Conventional

services

A C T U A L 2 0 1 5

20%

25%

35%

20%

T A R G E T 2 0 1 7

Higher value-add products

and services:

Expansion from now

39% to 45%


Significant KCO WIN+ effects expected02

• EBITDA effect

• Total one-off effects of €-63m

• Overall KCO WIN+ effect of up to €60m from 2017 onwards

• Original optimization program extended by restructuring measures in summer 2015 against the background of

deteriorating market conditions

• Incremental effect of €30m until 2017

• Significant share thereof already in 2016

• Cash effect

• Cash out to be overcompensated by working capital release

• Additional positive midterm effect through asset sales

2014/2015

2016/2017

already realized

€26m

approx. €30mTotal annual EBITDA impact of up to €60m from 2017 onwards

Nr.20



3. Outlook

Agenda



Segment specific business outlook 201603

Energy

industry

Real steel

demand

Europe

~ +2%

Construction

industry

Manufacturing,

machinery and

mechanical

engineering, etc.

Automotive

industry

US

~ +2%


Outlook 03

• Q1 2016

• Sales to be sequentially up in Q1

• EBITDA expected in a range between €10m and €15m

• Start into the year as expected with weak volumes especially in the US

• Additional negative effect due to IFRIC 21 (recognition of levies for the full year in Q1)

• FY 2016

• Slightly lower sales anticipated despite market growth due to continued exit of low margin business

• EBITDA expected to rise significantly compared to previous year`s figure adjusted for restructuring expenses of €86m

• Slightly positive net income anticipated supported by lower financing expenses and the expected absence of further

goodwill impairments

Financial calendar 2016

Christian PokroppHead of Investor Relations & Corporate Communications

Phone: +49 203 307 2050

Fax: +49 203 307 5025

Email: [email protected]

Internet: www.kloeckner.com

March 1, 2016 Annual Financial Statement 2015

May 4, 2016 Q1 interim report 2016

May 13, 2016 Annual General Meeting 2016,Düsseldorf

August 4, 2016 Q2 interim report 2016

November 3, 2016 Q3 interim report 2016

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