Kloeckner Sees Second-Half Loss as Crisis Hurts Steel Demand

Kloeckner & Co SE (KCO), Europe’s largest independent steel trader, forecast a second-half loss and almost doubled the number of planned job cuts after the sovereign debt crisis hurt demand.

A net loss of 38 million euros ($47 million) in the second quarter compared with profit of 5 million euros a year earlier, the Duisburg, Germany-based company said today in a statement. Analysts had expected a loss of 10.1 million euros, according to the average of six estimates compiled by Bloomberg.

Europe’s steel companies have seen profit margins squeezed as the region’s debt woes curb demand from the car, appliance and construction industries, weighing on prices. Austria’s Voestalpine AG (VOE) reported a 34 percent slump in net income yesterday, and ArcelorMittal (MT) posted a 28 percent drop in earnings last month.

Kloeckner forecast a net loss in the second half after the company lost money in each of the past four quarters, Chief Executive Officer Gisbert Ruehl told journalists on a conference call. It may cut 12 percent of jobs, or about 1,300, instead of the 700 previously announced.

The shares slid as much as 6.1 percent, the most since July 5, and traded at 7.258 euros as of 12:10 p.m. in Frankfurt.

Earnings before interest, tax, depreciation and amortization fell to 33 million euros, missing the 48.9 million- euro average analyst estimate.

Achieving Ebitda at the previous year’s level “is rather unlikely from today’s perspective,” Kloeckner said in the statement, after previously forecasting at least stable earnings on this basis.

The company expects full-year Ebitda in the region of 170 million euros, minus restructuring costs, compared with 217 million euros a year earlier, Ruehl said on the call.

While Kloeckner reiterated its outlook for a gain in annual revenue, sales volumes will also increase but “presumably” not by the previously forecast 5 percent rate, Ruehl said.

To contact the reporter on this story: Tino Andresen in Dusseldorf at tandresen1@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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