Klöckner & Co SE - Analysts' and Investors' Conference

Q3 2016 Results

Analysts’ and Investors’ Conference

November 3, 2016

Gisbert Rühl | CEO

Marcus A. Ketter | CFO

No.2

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.

Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE

No.3

1. Highlights and update on strategy

2. Financials

3. Outlook

4. Appendix

Agenda


No.4

Highlights Q3 201601

• Sales decreased yoy by 10.5% to €1.4bn mainly due to lower price level and site closures in Europe as

part of the finished restructuring program KCO WIN+

• Despite lower sales and volumes gross profit went up from €311m to €329m due to better price

environment and margin optimization supported by digital pricing tools

• Consequently gross profit margin went up significantly to 23.0% after 19.4% in Q3 2015

• EBITDA of €71m in line with guidance range of €65m to €75m

• Launch of order transparency tool as further milestone in the digital transformation process

• Go-ahead given for phase two of major investment in aluminum processing totaling €35m

• Organization for “One Europe” in place to integrate European distribution activities starting next year

• Well on track to strongly improved FY EBITDA and to return to positive net income

• EBITDA forecast for FY 2016 narrowed to between €180m and €190m


No.5

Significant increase of EBITDA in Q3 and first nine month of 201601

EBITDA impact: Q3 yoy

Market-related

GP effect of €29m

• Results favored by positive market effects on

EBITDA of overall €29m in Q3 and €81m in 9M

• Positive price effect of €46m in Q3 and €89m

in first nine months 2016 supported by

increased use of digital pricing tools

• Negative volume effect of €17m in Q3 and

€8m in first nine months 2016

• KCO WIN+ program with EBITDA contribution of

€9m in Q3 and in total €20m in 9M

• Effect mainly in Europe through KCO WIN+

related restructuring and optimization

measures

• Full year target already achieved after nine

months due to faster than expected

implementation of measures

71

28 30

46

9

17

Q3 2016OPEX

3

KCO

WIN+

Effect

Price

Effect

Volume

Effect

Q3 2015

(bef. restr.)

Restructuring

Costs

2

Q3 2015

89

20 18

7654

159

22

9M 2016OPEXKCO

WIN+

Effect

Price

Effect

Volume

Effect

8

9M 2015

(bef. restr.)

Restructuring

Costs

9M 2015

Market-related

GP effect of €81m

EBITDA impact: 9M yoy


No.6

01 Further progress of “Klöckner & Co 2020“ strategy

• Digital pricing tools contributed to

significant margin improvement

• Accelerated growth of sales via

webshops and contract portals

• Share of sales generated via digital

channels already at 11% in

Q3 2016

• Order transparency tool launched in

Germany as further digital solution to

make collaboration between

customers and Klöckner easier

• Finished KCO WIN+ restructuring

program with an incremental EBITDA

contribution of €20m this year

already achieved after nine months

and another €5m next year

• Management team for One Europe

optimization program appointed to

integrate European distribution

activities starting at the beginning of

2017

• One Europe with an additional

EBITDA impact of €30m from 2019

onwards thereof €10m already next

year

• Expansion of the business with 3D

laser processing of steel mainly in

the UK and Germany

• Further acquisitions in the

fabrication segment with focus on

the US intended

• Go-ahead given for phase two of

major investment in aluminum

processing, totaling some

€35m


Digitalization Operations Higher value-add

No.7

Becker Stahl‘s investment in processing of aluminum for automotive01


Slitting line (on track)

• Maximum capacity: 50-60Tto

• Material dimensions: thickness

0.5 - 5mm, width max. 2,150mm

• Products: for body in white – especially

sheets including trapezoid and round cut

Cut-to-length-line (recently approved)

• Maximum capacity: ~25Tto

• Material dimensions: thickness

0.5 - 5mm, width max. 2,150mm

• Products: interior construction –

especially strips

€35m

530

310

420

200

730

2015 2020

1,000

1,730

Tto

USA

China

Europe

~190 310+

Strict CO2 emissions requirements

• Reduction of CO2 emissions from

passenger vehicles from ~130g/km to

95g/km in 2020 in European Union

• Average increase in aluminum by

30-40kg to ca. 180kg per vehicle

necessary

Wheels, motor block, cylinders, gear

components already use aluminum

• Milled products for chassis, fittings,

bumpers and hinges with potential

Increasing electromobility

• Reduction of vehicle weights to

extend total driving range

• Compensate for heavy battery

Germany

Source: Drucker worldwide, own estimates.

Automotive aluminum demand Demand driver Service-Center investment

No.8


2. Financials

3. Outlook

4. Appendix

Agenda


No.9

Shipments and sales02

• Shipments down yoy due to exit of low margin

business

• Qoq seasonal decrease in Europe and weaker

demand for industrial products in the US

• Sales decreased yoy signifcantly more pronounced

than shipments due to lower average sales prices

• Qoq disproportional decline compared to

shipments due to continued price recovery

Q4

2014

1,555

1,690

Q3

2016

Q3

2014

1,500

Q2

2016

1,643

Q1

2016

1,556

Q4

2015

1,535

Q3

2015

1,636

Q2

2015

1,645

Q1

2015

1,661

1,456

Q1

2016

1,386

Q1

2015

1,697

Q4

2014

1,577

1,517

1,675

Q3

2015

1,597

Q2

2015

Q4

2015

1,693

Q3

2016

Q2

2016

1,430

Q3

2014

-8.3%

-8.7%

-10.5%

-5.7%

Shipments (Tto) Sales (€m)


No.10

Gross profit and EBITDA02

* Before restructuring cost.

** 2014 amounts restated due to the initial application of IFRIC 21 (Levies).

7172

11

30

10

33

61

Q3

2016

Q2

2016

Q1

2016

16

Q4

2015

Q3

2015

Q2

2015

36

Q1

2015

Q4

2014

Q3

2014

5.04.8

1.20.7

1.92.1

0.6

2.1

3.6

Q2

2016

329

Q3

2016

304

Q1

2016

362

Q1

2015

Q3

2014

325 325

Q2

2015

311309

Q4

2014

297

Q3

2015

310

Q4

2015

19.4 19.6

18.2

19.2 19.4

23.8

20.4

22.023.0

• Margin stabilized with 23.0% well above

the 20 percent mark

• Qoq slight decline by 0.8%p

• EBITDA in Q3 improved yoy by €41m and remained virtually

stable qoq, benefitting from disposal gains of €12m

• EBITDA margin recovered by 3.1%p yoy to 5.0% (4.1% w/o

disposal gains)

Gross profit* (€m) / Gross margin* (%) EBITDA*,** (€m) / EBITDA margin*,** (%)


No.11

Segment performance Q302

• Europe

• EBITDA up from €21m before restructuring by €34m

to €55m

• Significant positive price effect (€19m)

• KCO WIN+ contributes €8m to EBITDA improvement

• OPEX includes additional non-recurring gain on sale

of €12m

Europe (€m)

Americas (€m)

22

14

Q3 2016

Actual

OPEX

-4

KCO

WIN+

Effect

1

Price

Effect

26

Volume

Effect

15

Q3 2015

Actual

19 21

5519

8

Volume

Effect

1

Q3 2015

Actual

(before

restruct.)

Restruct.

2015

2

Q3 2015

Actual

(reported)

OPEX

8

Q3 2016

Actual

KCO

WIN+

Effect

Price

Effect

• Americas

• EBITDA up by €8m to €22m

• Negative volume effect due to weaker demand for

industrial products and also by sale of pipe business

in Q2 2016

• Even stronger positive price effect (€26m) than in

Europe


Comments

No.12

Cash flow and net debt development02

36

• Limited seasonal NWC build-up of €32m

• “Other” mainly includes disposal gains of €12m as well

as changes in other provisions and other operating

assets/liabilities of €14m (mainly vendor bonuses)71

Cash

flow from

operating

activities

-5

Other

-27

Taxes

-11

Interest

-6

Change

in NWC

-32

EBITDA

Q3 2016

Free cash

flow Q3

2016

-5

CapexAsset

disposals

-1010

CommentsCash flow reconciliation in Q3 2016 (€m)

• Net financial debt almost stable

• Increase due to operating cash outflows and finance

leases incurred (€12m) compensated by equity

component of new convertible bond (€18m) issued in Q3

Net financial debt 09/2016 vs. 06/2016 (€m)

-4


2

Net financial

debt 09.2016

438

OtherCapex (net)

0

CF from operating

activities

-5

Net financial

debt 06.2016

435

No.13 Q3 2016 Results | Analysts’ and Investors’ Conference | Klöckner & Co SE

Maturity profile September 2016 – convertible bond successfully placed02

Facility Committed (€m)Drawn amount (€m, IFRS*)

Q3 2016 FY 2015

Syndicated Loan 360 0 0

ABS Europe 300 135 91

ABS/ABL USA 493 222 184

Promissory Notes 1) - - 135

Convertible 2010 2) - - 25

Convertible 2016 3) 148 130 -

Bilateral Facilities 4) 325 134 115

Total Debt 1,626 621 550

Cash 182 165

Net Debt 438 385

€m Q3 2016

Adjusted equity 1,047

Net debt 438

Gearing 5)42%

Maturity profile of committed facilities & drawn amounts (€m)

Left side: committed facilities Right side: drawn amounts (nominal amounts)

ABS/ABL USA BilateralsSyndicated Loan ABS Europe

*Including interest accrued, excluding deferred transaction costs.

1) Repaid on April 20, 2016 from existing cash reserves.

2) Original principal €186m, thereof €161m repaid on December 22, 2015 (investor put), € 25m repaid

on January 12, 2016 (issuer cleanup of all bonds that remained outstanding after investor put).

3) Principal €147m, equity component €18m at issuance on September 08, 2016.

4) Including finance lease.

5) Net debt/Equity attributable to shareholders of Klöckner & Co SE less goodwill from business

combinations subsequent to May 23, 2013.

552929

661853

235

1221

15

15

1873

620

305

300

370

148

221

1

642

148

493

1

150

135

2016 2017 2018 2019 2020 2021 Thereafter

Convertible Bond

No.14


2. Financials

3. Outlook

4. Appendix

Agenda


No.15

Shipbuilding

Segment specific business outlook 201603

Energy

industry

Real steel

demand

Europe

~ +2%

Construction

industry

Manufacturing,

machinery and

mechanical

engineering, etc.

Automotive

industry

US

~ -3%


No.16

Outlook 03

Q4 2016

• Seasonally lower sales expected qoq

• EBITDA anticipated to be down qoq due to lower shipments and weakening prices in the US

FY 2016

• Lower sales anticipated due to continued exit of low margin business and on average lower price level

• EBITDA expected to rise significantly to between €180m and €190m

• Positive net income supported by lower financing expenses and the expected absence of further

goodwill impairments


No.17


2. Financials

3. Outlook

4. Appendix

Agenda


No.18

Quarterly and FY results04

(€m)Q3

2016

Q2

2016

Q1

2016

Q4

2015

Q3

2015

Q2

2015

Q1

2015

Q4

2014*

Q3

2014*

FY

2015

FY

2014

FY

2013

FY

2012**

Shipments (Tto) 1,500 1,643 1,556 1,535 1,636 1,645 1,661 1,555 1,690 6,476 6,598 6,445 7,068

Sales 1,430 1,517 1,386 1,456 1,597 1,693 1,697 1,577 1,675 6,444 6,504 6,378 7,388

Gross profit 329 362 304 297 311 320 310 309 325 1,237 1,261 1,188 1,288

% margin 23.0 23.8 22.0 20.4 19.4 18.9 18.2 19.6 19.4 19.2 19.4 18.6 17.4

EBITDA rep. 71 72 16 2 28 -17 10 33 61 24 191 124 60

% margin 5.0 4.8 1.2 0.2 1.8 -1.0 0.6 2.1 3.6 0.4 2.9 2.0 0.8

EBIT 48 49 -8 -297 5 -44 -15 8 38 -350 98 -6 -105

Financial result -8 -7 -8 -12 -12 -13 -12 -13 -14 -49 -59 -73 -80

Income before taxes 40 42 -16 -309 -7 -56 -27 -4 24 -399 39 -79 -185

Income taxes -9 -9 2 45 -2 1 6 1 -8 50 -17 -12 -18

Net income 31 33 -14 -263 -9 -55 -22 -4 16 -349 22 -90 -203

Minority interests 0 1 0 -1 0 -1 0 -1 0 -2 0 -6 -3

Net income KlöCo 31 32 -14 -263 -9 -54 -21 -4 16 -347 22 -85 -200

EPS basic (€) 0.31 0.32 -0.14 -2.63 -0.09 -0.54 -0.22 -0.04 0.16 -3.48 0.22 -0.85 -2.00

EPS diluted (€) 0.31 0.32 -0.14 -2.63 -0.09 -0.54 -0.22 -0.04 0.16 -3.48 0.22 -0.85 -2.00

* Restated due to initial application of IFRIC 21.

** Restated due to initial application IAS 19 revised 2011.


No.19

Segment performance04

* 2014 amounts restated due to the initial application of IFRIC 21 (Levies).

Q3

2014

893

Q4

2014

979

Q1

2015

970

Q2

2015

931

Q3

2015

891

Q4

2015

903

Q1

2016

957 950

Q2

2016

873

Q3

2016

1,054

Q1

2015

1,025

Q4

2014

973

919

Q4

2015

870

Q1

2016

963

Q2

2016

891

Q3

2016

1,040

Q3

2014

Q3

2015

986

Q2

2015

49

12

21

29

18

Q3

2016

55

Q2

2016

Q1

2016

11

Q4

2015

Q3

2015

Q2

2015

Q1

2015

7

Q4

2014

Q3

2014

34

Q1

2015

682

Q4

2014

662

Q3

2014

733

Q4

2015

644

Q3

2015

705

Q2

2015

675

Q3

2016

627

Q2

2016

693

Q1

2016

652

604

634

Q3

2014

Q3

2016

539

Q4

2014

Q2

2016

554

Q1

2016

516

Q4

2015

537

Q3

2015

611

Q2

2015

639

Q1

2015

672 30

14

20

30

Q3

2014

Q3

2016

22

Q2

2016

Q1

2016

11

Q4

2015

3

Q3

2015

Q2

2015

13

Q1

2015

7

Q4

2014

-6.2%

-11.0%

-9.6%

-11.9%

Euro

pe

Am

ericas

Restructuring costs (€m)** Q2 2015 Q3 2015 Q4 2015

Europe 52 2 2

Americas 2

Shipments (Tto) Sales (€m) EBITDA* before restructuring (€m)

Shipments (Tto) Sales (€m) EBITDA* before restructuring (€m)

** €4m are reported in HQ in Q4 2015.


No.20

Strong balance sheet04

• Equity ratio further healthy at 36%

• Net debt of €438m

• Gearing* at 42%

• NWC increased from €1,128m to €1,197m

* Gearing = Net debt/Equity attributable to shareholders of

Klöckner & Co SE less goodwill from business

combinations subsequent to May 23, 2013.

Comments

Assets Equity & liabilities

39% 39%

656 763

961998

945926

182114 106Liquidity

Other current assets

Trade receivables

Inventories

Non-current assets

Sep 30, 2016

2,975

Dec 31, 2015

2,841

165354

489 564

340 436

545613

285Other liabilities

Trade payables

Pensions

Financial liabilities

Equity

Sep 30, 2016

2,975

1,077

Dec 31, 2015

2,841

1,113

39% 36%


No.21

Sales by markets, products and industries04

As of December 31, 2015.

Sales by markets Sales by industry

Sales by product

5%UK

<1%Brazil/China

11%France/Belgium

16%Switzerland

24%Germany

38%USA

3%Netherlands

2%Spain

6%Tubes

7%Aluminum

9%Quality steel/

Stainless steel

22%Long products

43%Flat products

13%Others

12%Automotive

industry

5%Miscellaneous6%

Local dealers

33%Machinery/mechanical

engineering

37%Construction

industry

7%Household appl./Consumer goods


No.22

Current shareholder structure04

Geographical breakdown of identified

institutional investors• Identified institutional investors account for 72%

• German investors incl. retail dominate

• Top 10 shareholdings represent around 52%

• Retail shareholders represent 21%

Comments

As of July 2016.

6% Rest of EU

35% US

3% Rest of world

3% Switzerland

4% UK

3% France

46% Germany


Financial calendar

Christian Pokropp

Head of Investor Relations & Corporate Communications

Phone: +49 203 307 2050

Fax: +49 203 307 5025

Email: [email protected]

Internet: www.kloeckner.com

March 1, 2017 Annual Financial Statements 2016

April 26, 2017 Q1 interim statement 2017

May 12, 2017 Annual General Meeting 2017, Düsseldorf

July 26, 2017 Q2 interim report 2017

October 25, 2017 Q3 interim statement 2017

Contact details

Klöckner & Co SE - Analysts' and Investors' Conference

Investor Relations

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