KlöCo optimistic despite lower earnings in first quarter of 2020

Sales at Klöckner & Co decreased by 14.9% to €1.4 billion in the first quarter of 2020 due to lower volumes and prices. Operating income (EBITDA), at €21 million, was within the guidance range of €20 million to €30 million but significantly below the €34 million prior-year figure. Net income was likewise lower, with a loss of €21 million compared to a loss of €10 million in the prior-year period. As a result, earnings per share came to a loss of €0.21 (Q1 2019: loss of €0.10).

Share of sales generated via digital channels increased at a rapidly accelerating rate by more than 3%-points relative to the fourth quarter of 2019, to 35% (Q1 2019: 27%). At the end of the first quarter, the Kloeckner Assistant, an application for automatically processing incoming quotation requests and orders, was already in deployment with more than 500 customers in Europe and the USA.

Klöckner & Co also made further progress with its open industry platform, XOM Materials. In April, the number of contracted vendors and customers on the platform increased to a total of around 70 and some 1,000, respectively. This represents more than a fourfold increase in both figures over the course of this year. In addition, the new XOM Materials eProcurement solution successfully began automating procurement for Klöckner & Co from the beginning of April. The application is to be marketed to other companies before the end of this year.

Gisbert Rühl, CEO of Klöckner & Co SE: “Thanks to our highly advanced digitalization, we are now better able to get through the crisis and accelerate the transformation process. Our goal is a business model in which all core processes run almost completely automatically on the basis of Artificial Intelligence.”

Klöckner & Co has already initiated a range of measures to surmount the crisis triggered by the COVID-19 pandemic and is further stepping up efforts in this regard. The company sees the crisis as an opportunity to expedite those restructuring measures that are still necessary and to benefit from the anticipated more rapid industry consolidation.

For the second quarter, Klöckner & Co expects a considerable decline in shipments and sales compared with the first quarter of 2020. Against this background, the company expects a negative EBITDA in the low double-digit million euro range, with cash flow from operating activities being positive due to the reduced net working capital requirement.
No quantitative outlook can currently be given for the fiscal year due to the uncertainties about the further development of the COVID-19 crisis. Nevertheless, depending on the duration of the crisis, a considerable burden on earnings and a positive cash flow from operating activities are to be expected. Due to the solid balance sheet structure, stable financing and extensive liquidity and financial reserves, Klöckner & Co is well positioned to face the crisis. Moreover, the initiated measures will enable the Company to emerge from it stronger. Given Klöckner & Co’s sound financial situation, there are no plans to claim state aid with the exception of short-time working.

Source: Klöckner & Co. SE                       Graphic: Fotolia