Klöckner & Co - Roadshow Presentation April 29, 2007

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Transcript of Klöckner & Co - Roadshow Presentation April 29, 2007

  1. 1. Klckner & Co - A Leading Multi Metal Distributor - April 2007 Gisbert Rhl CFO Dr. Thomas Ludwig CEO
  2. 2. 2 Agenda 1. Overview, Market and Strategy Appendix 2. Financials and Outlook
  3. 3. 3 Klckner & Co at a glance Klckner & Co highlights Leading producer-independent steel and metal distributor in the European and North American markets combined Distribution network with approx. 240 warehouses in Europe and North America About 10,000 employees Key financials FY 2006 - Sales: 5,532 million - EBITDA: 395 million - Net indebtedness 365 million DistributorProducer Customer Products: Services: Construction: Structural Steelwork Building and civil engineering Machinery/ Mechanical Engineering Others: Automotive Metal products/ goods, installation Durable goods etc. Overview
  4. 4. 4 Distributor in the sweet spot Suppliers Sourcing Products and services Logistics/ Distribution Customers Global Sourcing in competitive sizes Strategic partnerships Frame contracts Leverage one supplier against the other No speculative trading One-stop-shop with wide product range of high-quality products Value added processing services Quality assurance Efficient inventory management Local presence Tailor-made logistics including on- time delivery within 24 hours More than 200,000 customers No customer with more than 1% of sales Average order size of 2,000 Wide range of industries and markets Service more important than price Purchase volume p.a. of 6 million tones Diversified set of worldwide ca. 70 suppliers Examples: Klckner & Cos value chain Overview Global suppliers Local customers
  5. 5. 5 Global reach with broad product and customer diversification Germany/ Austria 23% France/ Belgium 21% Switzerland 15% Spain 10% UK 9% Nether- lands 6% Eastern Europe 1% USA 10% Canada 5% Steel-flat Products 28% Steel-long Products 31%Tubes 9% Special Steel/ Quality Steel 10% Aluminum 8% Other Products 14% Construc- tion 40% Machinery/ Manufacturing 20% Auto- motive 5% Metal Products 20% Other 15% USA CAD USA CAN G 25 Locations F 76 Locations CH 31 Locations E 48 Locations UK 24 Locations IE 1 Location NL 7 Locations Eastern Europe 4 Locations CAN 5 Locations USA 17 Locations Total 238 Locations Locations (Dec. 31, 2006) Country headquarters Sales split by markets (2006) Sales split by product (2006) Sales split by industry (2006) IE Overview
  6. 6. 6 Strong position in Europe; significantly improved position in NA after acquisition of Primary Europe (2005) North America (2005) Arcelor Mittal AM3S 12% (Sales Distribution 3.2m = 5%) ThyssenKrupp 8% Corus 6.5% Klckner & Co 5.9% Other Mill-Tied Distributors ~15- 25% Other Independents ~45-55% Klckner & Co 6% Corus 4% Source: EuroMetal, Company reports, Klckner & Co Other 72.5% Ryerson 5.0% Reliance Steel 4.4% Samuel, Son & Co. 2.3% ThyssenKrupp Materials NA 2.0% Russel Metals 1.9% Worthington Steel 1.6% Metals USA 1.3% Carpenter Technology 1.1% PNA Group 1.1% McJunkin 1.2% O'Neal Steel 1.4% MacSteel Service Centers 1.5% Olympic Steel 0.8% AM Castle 0.7% Klckner & Co 1 1.0% 1) Operates as Namasco in North America Source: Purchasing Magazine (May 2006) Market Structure: 67% through distribution, service centers Size in value: ~6580bn Companies: ~3,000 few mill-tied, most independent Structure: 50-60% through distribution, service centers Size in value: ~68-92bn Companies: ~1,300 only independent distributors Only independent in top tier
  7. 7. 7 Broad coverage of the US market and much stronger platform for further bolt-on acquisitions Geographical Scope Primary outlet Primary Sales office Oakland Houston Missouri Chicago Tampa Charlotte Arizona Arkansas Iowa Alabama Georgia South Carolina North Carolina Indiana Maryland Maine Connecticut Florida Louisiana Illinois Texas California Dubuque Louisville Indianapolis Atlanta Bham Charleston Dallas Austin New Orleans Jacksonville Orlando Pompano Phoenix Santa Fee Springs Tulare West Memphis Savannah Portland Middletown New Castle Namasco Gen. line Namasco Processing Sales: 2006: $467 million Leading market position in plate distribution Wide range of offered services Broad geographic coverage with seven locations Key Facts Primary Steel
  8. 8. 8 Investment highlights The plate market is attractive and has a good perspective Pricing has been relatively stable and less volatile than other segments (also supported by high supply side concentration) Low dependency on individual market segments Good growth perspective for main segments heavy equipment, oil & gas, transportation and railcar, shipbuilding, etc. Primary is a well respected and well managed major player in plate distribution segment Good quality based market reputation Decent profitability and relatively good operational performance also supported by PE environment Strong management team with good acquisition track record A combined Primary and Namasco company would create a leading position in plate distribution Estimated total market share of 10% in plate segment Broad geographic coverage Wide range of offered services Complementary sales coverage combined with strong product overlap offers synergy potential Namascos market coverage hugely enlarged More than doubled purchasing power helps to counterweight the strong supplier consolidation (top 3 account for more than 90% of market) Additional (typical) synergies in admin, finance, IT, etc. Growth in an attractive market segment Acquire respected and well managed business Synergies Leading position in plate segment Primary Steel
  9. 9. 9 High added value, low customer concentration with broad industry split and complementary product mix Product Mix (2006, $ mio.) (1) 0 50 100 150 200 250 Strip Mill As Rolled FR Pipe Merch. Bar Beams / struc. Tube others Primary Namasco Customer concentration Customer 1 Shipbuilding 4,2% Customer 2 Power Generation 3,1% Customer 3 Oil & Gas 1,9% Customer 4 Transp. Equipment 2,1% Customer 5 Service Center 1,9% Customer 6 Transp. Equipment 1,8% Customer 7 Oil & Gas 1,4% Customer 8 Oil & Gas 1,4% Customer 9 Ind. Equipment 1,3% Customer 10 Service Center 1,0% Segments Served Service Centres 33,5% Metal builders 2,9% Construction 2,6% Heavy in. Equip. 29,3% Transp. Equipment 4,5% Ship building 4,8% Oil & Gas 16,2% Power Generation 6,2% Sales split by type of value added Cut to length 45% Stock sales 34% Shearing 1% Slitting 3% Thermal cutting 13% Outside Processing 4% Primary Steel
  10. 10. 10 Steel industry trends Industry trends supporting Klckners strategy Globalization and consolidation resulted in large costs savings, higher and more flexible capacity utilization, much better supply discipline and higher pricing power, which will prevent the margin destroying behaviour from the past Capacity and export containment in China under the drive of central government Higher material costs especially of iron ore and decreasingly relevant fixed costs have flattened the global steel cost curve in favour of developed-market steel producers Stable global demand growth leads to far quicker destocking and eroded global overcapacity On-going consolidation favouring large scale distributors Higher prices with much shorter downturns support more stable earnings and cash flows for distributors Strategy
  11. 11. 11 Profitable growth Strategy Profitable growth through value- added distribution and services within multi metals to companies in Europe and North America Grow more than the market Continuous business optimization 1 Acquisitions driving market consolidation 2 Organic growth and expansion into new markets 3 STAR Program: - Purchasing - Distribution network - Inventory management
  12. 12. 12 Acquisitions driving market consolidation1 Next steps Further acquisitions in core markets at attractive valuations: Leverage existing structure with 10 to 12 smaller (local) bolt on acquisitions in 2007 Medium and large scale acquisitions when appropriate Include attractive industries, e.g. oil and gas Focus on targets in key markets at attractive valuations Strategy Benefits Significant synergy opportunities Streamlining operations, processes and sales force Integration of STAR Economies of scale Stronger purchasing power Strategy Status Quo Attractive valuations Proven acquisition integration capability 04/2007: Teuling 14 million sales; 16 employees 01/2007: Tournier 35 million sales; 41 employees 10/2006: Action Steel 55 million sales; 110 employees 10/2006: Gauss 10 million sales; 40 employees 07/2006: Aesga 18 million sales; 40 employees 02/2006: Targe 25 million sales; 50 employees 10/2005: Alu Menziken Service 33 million sales; 70 employees 07/2005: Reynolds 108 million sales; 150 employees 04/2007: Primary Steel 360 million sales; 389 employees
  13. 13. 13 Organic growth and expansion into new markets2 Status Quo Strong growth in core markets above GDP partly as a result of the outstanding development of the construction and machinery industries and steel prices Improved performance mainly in Germany and France due to organizational changes Eastern European facilities established in Poland, Czech Republic, Romania and Baltic States Extending activities of our Chinese representative office Next steps Expansion of strong market positions in core markets: STAR-Program supporting organic growth Selective extension of product range Increase value added services through investments in new processing capacity Extension of customer base Opening of new branches in Eastern Europe (Romania, Poland, Czech Republic and Baltic States) Leveraging existing distribution network Strategy Benefits Sustainable profitable growth Strategy
  14. 14. 14 Purchasing Status Quo Improved performance as a result of restructured distribution network: Close-down of warehouses in Northern Germany (3 0) Reduc