Kloeckner & Co SE said profit doubled in the third quarter, beating analyst estimates, as the German steel trader countered weak demand in Europe by cutting costs.
Earnings before interest, taxes, depreciation and amortization rose to 36 million euros ($49 million) from 18 million euros a year earlier, the Duisburg-based company, part owned by the Knauf family, said in a statement. It compares with the 34.7 million-euro average of 10 analyst estimates compiled by Bloomberg. Sales fell 14 percent to 1.6 billion euros.
Kloeckner closed down 0.5 percent at 10.45 euros in Frankfurt where volumes were three times the three-month daily average. Earlier today it gained as much as 4.7 percent.
“Labor costs decreased; for the coming year I expect increasing earnings,” Rochus Brauneiser, an analyst at Kepler Cheuvreux, said by phone. “The performance in Europe wasn’t bad, it wasn’t so good in the U.S.”
Kloeckner lowered costs by 43 million euros in the first nine months and plans 65 million euros of cuts this year. While falling steel prices in the first half hurt Ebitda for the nine months in the Americas, third-quarter earnings before restructuring expenses rose to 20 million euros, from 12 million euros a year earlier, the company said.
Weak demand for steel from carmakers and builders in Europe and competition from China has cut prices and squeezed margins as producers grapple with surplus capacity. ThyssenKrupp AG and Salzgitter AG, Germany’s largest steelmakers, have said that they will cut a combined 2,800 jobs until 2018.
Kloeckner plans to boost Ebitda 20 million euros in 2014 and another 30 million euros in 2015 with further cost cuts, Chief Executive Officer Gisbert Ruehl told reporters on a call.
The company reiterated its Ebitda forecast of 140 million euros for 2013, after lowering it in August from 200 million euros. Its third-quarter net loss narrowed to 11 million euros from a loss of 28 million euros a year earlier.
“The third quarter shows that we have made the turnaround by our own means, bucking the market trend,” Ruehl said in the statement. He expects to post positive net income for 2014 and to pay a dividend for next year.
Ruehl said there have been no further talks or contacts with Interfer Holding GmbH, which owns Kloeckner’s rival Knauf Interfer SE and said in February it bought a 7.82 percent stake in Kloeckner in a “strategic investment.” In August, he said talks moved away from integrating with Knauf Interfer because of “significant restructuring costs” and a lack of benefits for Kloeckner’s shareholders.