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Kloeckner Posts Loss as European Crisis Cuts Steel Demand

Kloeckner & Co. (KCO), the German steel trader part-owned by the Knauf family, posted a loss last year as Europe’s debt crisis eroded demand for the metal.

The net loss was 198 million euros ($259 million), compared with a profit of 10 million euros in 2011, the Duisburg-based company said today in a statement. Earnings before interest, taxes, depreciation and amortization including restructuring costs fell to 62 million euros from 217 million euros.

Dwindling demand for steel from the auto and construction industries in Europe and increased competition from China have curbed prices and squeezed profit margins as producers grapple with surplus capacity. ArcelorMittal (MT), the biggest steelmaker, last month posted the lowest quarterly profit in three years.

Kloeckner said it is ahead of plan with a restructuring program that involves eliminating more than 1,800 jobs, or 16 percent of its workforce. “We responded in a timely fashion to yet another steep drop in steel demand in Europe by significantly stepping up our restructuring program,” Chief Executive Officer Gisbert Ruehl said in the statement. “More than two-thirds of the measures are already implemented.”

Kloeckner closed up 0.7 percent to 11.50 euros in Frankfurt, the highest level for more than 11 months.

Full-year Ebitda excluding restructuring costs fell 39 percent to 139 million euros, meeting a forecast of 130 million euros to 140 million euros.

Americas Sales

The steel trader projects Ebitda of 30 million euros to 40 million euros in the first quarter and of about 200 million euros for the full year. It expects a net profit for 2013, Kloeckner said, without giving a figure.

Kloeckner reported 2012 sales of 7.4 billion euros, up from 7.1 billion euros. The company will continue to shift from Europe to the Americas, “with significantly more than 40 percent of turnover already to be generated in the Americas segment in 2013,” it said.

The net loss widened to 121 million euros in the fourth quarter from 27 million euros a year earlier. The loss on an Ebitda basis was 35 million euros, compared with a profit of 14 million euros a year earlier.

“The fourth quarter was better than expected, the outlook for the first quarter is worse than expected,” Ingo-Martin Schachel, an analyst at Commerzbank AG, said by phone from Frankfurt. The forecast for the full year is in line with his estimates, he said.

Interfer Holding GmbH, which owns competitor Knauf Interfer SE, said last month it bought a 7.82 percent stake in Kloeckner. Interfer, owned by Dortmund-based entrepreneur Albrecht Knauf, is now the company’s largest shareholder, according to data compiled by Bloomberg.

Interfer said in a meeting March 1 that it “supports the Kloeckner & Co. management board’s strategy of expanding activities in the USA in parallel with systematic restructuring in European markets,” according to Kloeckner. “Any other link- up with Kloeckner & Co was not a topic.”

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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