Kloeckner Cuts Profit Forecast on Slumping European Steel Demand
Kloeckner & Co. (KCO), a German steel trader part-owned by the Knauf family, lowered its 2013 profit forecast by 30 percent because of slumping European demand.
The Duisburg, Germany-based company expects earnings before interest, taxes, depreciation and amortization, or Ebitda, and restructuring expenses to fall to 140 million euros ($186 million) from 200 million euros forecast previously, it said today in a statement.
Second-quarter Ebitda rose 30 percent to 43 million euros, while sales fell 14 percent to 1.7 billion euros. That beat the 35.7 million-euro average estimate of 14 analysts surveyed by Bloomberg.
“Even if we cannot expect any tailwind from the European steel market, we anticipate that, given the timely, radical restructuring measures, we will regain profitability under our own power next year,” Chief Executive Officer Gisbert Ruehl said in the statement. “Additional impetus can come from the generally expected recovery in the U.S., our growth market, and from the currently improving price environment.”
Dwindling demand for steel used in autos and construction in Europe and competition from China have squeezed producers’ profit margins as they grapple with surplus capacity. Germany’s second-largest steelmaker Salzgitter AG (SZG) lowered its profit forecast for the third time in nine months this week.
Interfer Holding GmbH, which owns Kloeckner’s rival Knauf Interfer SE, said in February it bought a 7.82 percent stake in Kloeckner. The unit of the holding company, owned by Dortmund-based entrepreneur Albrecht Knauf, 70, plans to expand and said the deal was a “strategic investment.”
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