3. 3
Klöckner & Co at a glance
Klöckner & Co
Leading producer-independent steel and metal distributor in the European and North American markets
combined
Network with more than 260 distribution locations in Europe and North America
More than 10,000 employees
Key financials FC 2008
- Sales: > €7 billion
- Operating EBITDA: > €500 million
GB
23%
21%
14%
10%
5%
9%
1%
13%
Germany/
Austria
France/
BelgiumSpain
Nether-
lands
Eastern
Europe
Switzerland
Canada
4%
Sales split by markets
As of December 2007
Steel-flat
Products
Steel-long
Products
Special
and
Quality
Steel
Aluminum
Other Products
30%
32%
10%
9%
6%
13%
Sales split by product
As of July 2008
Other
Machinery/
Manufacturing
Auto-
motive
42%
25%
6%
27%
Sales split by industry
As of December 2007
4. 4
Record results and ongoing profitable growth
Highlights 2008
Extraordinary Q2 and half year record results
Further expansion especially through the acquisition of Temtco in the US
Disposal of KVT (CH) with high tax free income and cash contribution completed
Sale of the automotive-related Canadian Namasco Ltd. concluded
Business optimization program “STAR” fully on track
Transformation of Klöckner & Co AG into a SE (Societas Europaea) completed
6. 6
Profitable growth
Grow more than
the market
Continuous
business
optimization
1 Accretive acquisitions
driving market
consolidation
2 STAR Program
to optimize
• Purchasing
• Logistics
• Distribution network
Profitable growth
through value-added
distribution and services
within multi metals to
companies in Europe
and North America
Profitable growth
through value-added
distribution and services
within multi metals to
companies in Europe
and North America
7. 7
Country Acquired Company Sales (FY)
Mar 2008 Temtco €226 million
Jan 2008 Multitubes €5 million
2008 Ytd 2 acquisitions €231 million
Sep 2007 Lehner & Tonossi €9 million
Sep 2007 Interpipe €14 million
Sep 2007 ScanSteel €7 million
Aug 2007 Metalsnab €36 million
Jun 2007 Westok €26 million
May 2007 Premier Steel €23 million
Apr 2007 Zweygart €11 million
Apr 2007 Max Carl €15 million
Apr 2007 Edelstahlservice €17 million
Apr 2007 Primary Steel €360 million
Apr 2007 Teuling €14 million
Jan 2007 Tournier €35 million
2007 12 acquisitions €567 million
2006 4 acquisitions €108 million
€141 million
€567 million
Continued expansion through accretive acquisitions1
12
4
2
2005 2006 2007
Acquisitions Sales
>€600 million
2008
€108 million
8. 8
Expected EBITDA contribution in 2008 from investments of about €260 million for
acquisitions made in 2007
€90 - €100 million
Expected EBITDA contribution in 2008 from investments of about €130 million for
acquisitions made in 2008 so far
€40 million (partially consolidated)
€55 million (annualized)
Continued expansion through accretive acquisitions1
9. 9
Phase II (2008 onwards)
STAR program fully on track2
Phase I (2005 - 2008)
Overall targets:
Central purchasing on country level
Improvement of distribution network
Improvement of inventory management
2006: ~ €20 million
2007: ~ €40 million
2008: ~ €20 million
~ €80 million
Upside potential
Overall targets:
European sourcing
Ongoing improvement of logistics and
distribution network
Upside potential
2008 ~ €10 million
2009: ~ €30 million
2010: ~ €20 million
~ €60 million
€16 million realized in H1
12. 12
Strong price development in North America
Very strong price increases
Growing underlying steel demand remains weak
SBB long prices - North America domestic USD/MT
400
500
600
700
800
900
1.000
1.100
CQ1
2005
CQ2
2005
CQ3
2005
CQ4
2005
CQ1
2006
CQ2
2006
CQ3
2006
CQ4
2006
CQ1
2007
CQ2
2007
CQ3
2007
CQ4
2007
CQ1
2008
CQ2
2008
Merchant Rebar Heavy sections
SBB long prices - North America domestic USD/MT
400
500
600
700
800
900
1.000
1.100
CQ1
2005
CQ2
2005
CQ3
2005
CQ4
2005
CQ1
2006
CQ2
2006
CQ3
2006
CQ4
2006
CQ1
2007
CQ2
2007
CQ3
2007
CQ4
2007
CQ1
2008
CQ2
2008
Merchant Rebar Heavy sections
13. 13
Short-term steel prices remain high despite slowing demand
Demand in the EU will be effected by further slowdown mainly in Spain and UK
US demand development will stay weak
Steel prices are expected to peak in Q3
Even if prices soften slightly in 2009 they will remain on a high level, supported by:
Normal inventory levels
Lower Chinese exports
High raw material costs which will keep cash costs on a high level supporting continuing
supply discipline
High capacity utilization driven by world wide slower but robust demand
Increased pricing power of producers due to higher consolidation in Europe and North
America
Steel market will remain supply constrained
14. 14
Long-term steel prices are still expected to rise
Long-term steel prices are still expected to rise based on robust demand as well as
higher cash and fixed costs for new capacities
Cash costs driven by iron ore and coking coal prices are expected to remain on a high level
Expected global steel demand growth of 5 to 6% p.a. requires 70 to 90 million tons of new
capacity each year, thereof 20 to 40 million tons ex China
Steel prices must rise to cover escalating fixed costs for new capacities
Steel market will remain supply constrained
19. 19
Includes acquisition-related
sales of M€63 for H1 2008* in
Europe and sales of M€226
for H1 2008* in North
America
Segment performance H1 2008
Comments(€m) Europe
North
America
HQ/
Consol.
Total
Volume (Ttons)
H1 2008 2,434 1,041 - 3,475
H1 2007 2,422 870 - 3,292
Δ % 0.4 19.7 - 5.5
Sales
H1 2008 2,882 700 - 3,582
H1 2007 2,713 486 - 3,199
Δ % 6.2 44.1 - 12.0
EBITDA
H1 2008 234 93 -6 321
% margin 8.1 13.3 - 9.0
H1 2007 178 33 -16 195
% margin 6.6 6.7 - 6.1
Δ % EBITDA 31.3 185.5 - 65.0
* Sales of acquired companies for the first
twelve months of their consolidation
20. 20
Balance sheet H1 2008
1,072
1,652
3,612
858
1,380
1,043
1,376
856
3,612
267
124
1,236
1,199
786
June
30, 2008
930Trade receivables
956Inventories
735Long-term assets
154Cash & cash equivalents
191Other assets
610- thereof trade payables
969Total short-term liabilities
1,152Total long-term liabilities
845Equity
2,966Total assets
813- thereof financial liabilities
December
31, 2007
(€m)
2,966Total equity and liabilities
746Net financial debt*
1,323Net working capital*
Comments
Financial debt:
• Syndicated loan: €404
million
• ABS: €322 million
• Bilateral credits: €195
million
• Convertible: €275 million
Net Working Capital:
• Sales-, acquisition- and
price-driven
* Including Canada and KVT
21. 21
Statement of cash flow
Comments(€m)
H1
2008
H1
2007
Operating CF 317 188
Changes in net working capital -274 -303
Others -40 -25
Cash flow from operating activities 3 -140
Inflow from disposals of fixed assets/others 8 15
Outflow from investments in fixed assets* -282 -366
Cash flow from investing activities -274 -351
Changes in financial liabilities 296 531
Net interest payments -16 -51
Dividends -38 -45
Cash flow from financing activities 242 435
Total cash flow -29 -56
Operating CF more than
fully covered the
investments in net working
capital
Investing CF mainly
impacted by increased
stake in Swiss Holding and
acquisition of Temtco
CF from financing activities
driven by acquisitions
*and acquisition of subsidiaries
23. 23
General financial targets/limits and guidance
125.2%< 150%Gearing (Net financial debt/Equity)
2.2x< 3.0xLeverage (Net financial debt/EBITDA LTM)
6.9%> 6%Underlying EBITDA margin
12.0%> 10% p.a.Top line sales growth
Actual
H1 2008
General
target/limit
Challenging financial targets throughout the cycle
24. 24
Outlook 2008
For the full year 2008, we expect the following key figures:
Sales of more than €7 billion
EBITDA before one-offs of more than €500 million
Reported EBITDA including divestments of more than €770 million
Net income of more than €500 million
The raised outlook is based on record half year results and still overall favorable market environment
for the steel distribution industry going forward despite a weaker global economic development and is
supported by the following effects:
Positive contribution from STAR program
Positive contribution from acquisitions made in 2007 and in 2008
Further stock gains in the course of H2 2008
Outlook raised again – 2008 results far above 2007
26. 26
November 14: Q3 Interim Report
Financial calendar 2008 and contact details
Financial calendar 2008
Claudia Nickolaus, Head of IR
Phone: +49 203 307 2050
Fax: +49 203 307 5025
E-mail: claudia.nickolaus@kloeckner.de
Internet: www.kloeckner.de
Contact details Investor Relations
27. 27
Distributor in the sweet spot
Local customersGlobal suppliers
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
> 210,000
customers
No customer with
more than 1% of
sales
Average order
size of €2,500
Wide range of
industries and
markets
Service more
important than
price
Purchase volume
p.a. of >6 million
tons
Diversified set of
worldwide approx.
70 suppliers
Klöckner & Co’s value chain
29. 29
Largest independent multi metal distributor
Europe (2007)
Source: company reports, own estimates
ArcelorMittal
(Distribution approx. 5%)
ThyssenKrupp
BE Group
Other mill-tied and independent
distributors
11.1%
9.8%
6.4%
1.0%71.7%
Klöckner & Co
Source: Purchasing Magazine (May 2008), own estimates
North America (2007)
Steel Technologies
Namasco
(Klöckner & Co)
Ryerson
Reliance Steel
Samuel, Son & Co
ThyssenKrupp
Materials NA
Worthington
Steel
Carpenter
Technology
McJunkin
O'Neal Steel
Mac-Steel
A.M. Castle
4.2%
2.8%
2.2%
2.2%
1.0%
1.0%
0.9%
1.3%
1.2%
1.1%
1.3%
1.8%
1.7%
1.0%
5.1%
Other
71.2%
Russel Metals
Metals USA
Structure: 50-60% through distribution, service centers
Size in value: ~€100bn
Companies: ~1,300 only independent distributors
Structure: 67% through distribution, service centers
Size in value: ~€71–91bn
Companies: ~3,000 few mill-tied, most independent
PNA Group
31. 31
Debt facilities
(€m)
Old debt
structure
Change in
debt structure
New debt
structure
ABS Europe 380 +40 420
ABS USA 60 +30 90
Total 440 +70 510
Syndicated loan - +600 600
Bilateral credit agreements 480 -100 380
Total senior bank facilities 480 +500 980
Convertible bond - +325 325
High yield bond 170 -170 -
Total facilities 1,090 +725 1,815
32. 32
Geographical breakdown of identified institutional investors
Current shareholder structure
Comments
Identified institutional
investors account for 74%
US based investors still
dominate but share
decreased in favor of UK (up
from 14% as of Sept. 2007)
Top 10 individual
shareholdings represent
around 48%
Rest of World < 1%
(geographical breakdown)
Retail share increased from
11% to almost 14%
Rest of
Europe
US
United
Kingdom
Germany
Spain
Switzerland
Source: Survey Thomson Financial (as of Febr. 08)
20%
4%
4%
24%
41%
7%
33. 33
Our symbol
the ears
attentive to customer needs
the eyes
looking forward to new developments
the nose
sniffing out opportunities
to improve performance
the ball
symbolic of our role to fetch
and carry for our customers
the legs
always moving fast to keep up with
the demands of the customers
34. 34
Disclaimer
This presentation contains forward-looking statements. These statements use words like "believes,
"assumes," "expects" or similar formulations. Various known and unknown risks, uncertainties and
other factors could lead to material differences between the actual future results, financial situation,
development or performance of our company and those either expressed or implied by these
statements. These factors include, among other things:
Downturns in the business cycle of the industries in which we compete;
Increases in the prices of our raw materials, especially if we are unable to pass these costs
along to customers;
Fluctuation in international currency exchange rates as well as changes in the general
economic climate
and other factors identified in this presentation.
In view of these uncertainties, we caution you not to place undue reliance on these forward-looking
statements. We assume no liability whatsoever to update these forward-looking statements or to
conform them to future events or developments.
