Stahlmarkt

However, in an interview with "stahlmarkt" the new head of the Group, Gisbert Rühl, expressed restrained optimism. He expects a slight rise in demand and prices in 2010.

Mr Rühl, how did you get into steel?

Only really through KlöCo. Although I was active at Coutinho Caro in Hamburg many years ago, that was mainly in a purely trading role. At Babcock I was involved with steel on the purchasing side. But I only got into the actual core business of steel through Klöckner & Co. In 2005 I found the prospect of getting the company listed on the stock exchange – as its CFO – very attractive.

The steel market has changed since the crisis. How do you view this in general?

There have been two basic changes that would anyway have taken place without this crisis: firstly consolidation, and then there is the shift in the steel trade towards the emerging markets, which have already had a higher world market share in production and demand for some years now.
The crisis showed that consolidation on the part of the producers, combined with disciplined capacity management, was able to prevent a complete collapse. This could well have been different if there had been a similar crisis ten years ago.
Regarding the second change, one can see that the world is now basically divided into two: on the one hand there are the emerging markets that still managed to achieve relatively good growth during the crisis – driven by China above all and, with reservations, India. This trend will continue in the future, but will become more marked. And then there are the developed markets that will have to live with, at best, relatively moderate growth rates during the coming years. Development of the steel markets will reflect this with only moderate growth in the developed nations and continuing strong growth in the threshold nations. The disparity will therefore become even greater.
For Klöckner & Co, we assume that there will be growth this year primarily driven by the warehouse stocks cycle, because stocks have been run down to an extremely low level throughout the entire value-creation chain. We expect that there will only be a very low increase on the real demand side. Most of the growth – we believe that it will total over 10% – will come from restocking. But even with growth of over 10% we would still remain well below the level of 2007/2008.
Overall, Klöckner & Co has had an incredibly ambivalent year. On the one hand, the mood at the end of the year was very good because we could say that: 

a) we made the right decisions early on,
b) we have considerably reduced our costs,
c) we have repaid all our debt,
d) we have assured financing, and
e) 
we have made our largest acquisition for many years.

On the other hand, we were badly affected by the crisis – with demand falling by over 30% – and made serious losses.

What are the risks and opportunities for KlöCo?

The risk for us is more to be found on the demand side and has less to do with prices. If the expected boost in demand failed to materialise, or it even fell somewhat, we would have to reduce capacities again. Opportunities are to be found in external growth – through acquisitions – as well as organic growth, i. e. when the competition fails to secure their financing and cannot achieve the necessary build-up of networking capital with increasing quantities and prices.

What advantages will the purchase of Becker Stahl-Service bring, or where can one earn any money at all?

Concerning earnings, it is important to make the most of the above-mentioned opportunities. Whereby one must note that price transparency in the steel market has increased considerably, which leads us to consider more acquisitions of companies that have a high value-creation level or are highly specialised like, for example, Becker Stahl-Service. In the flat segment, we have up to now mainly had to buy panelled material from third parties because of a lack of sufficient service centre capacities of our own. The purchase of Becker Stahl-Service means that, at least for the Benelux countries, Germany and France, we have our own supply and are much more independent from external service centres. In addition, in volume terms, we have gained a far better negotiating position and can now work more closely with the producers, and thus shorten the value-creation chain – to the benefit of our customers. Whereby Becker Stahl-Service will continue as a brand and will become an almost autonomous segment within the KlöCo Group. We will fully exploit the expected synergies.

What are your plans for running KlöCo?

Our plans are clearly formulated. We want to become by far the largest and most efficient independent multi-metal distributor in Europe and North America, and actively contribute towards shaping consolidation. Whereby in strategic terms we will remain on the path taken with our listing on the stock exchange, even if we are interested in acquiring rather larger or more highly specialised companies than on focusing on smaller distributors.

Are you also interested in foreign companies?

We are currently still concentrating on Europe and America. We will, however, in future take more interest in the emerging markets, even if we have currently come to the conclusion that it is still too early for us to expand in these regions. Their distribution structures are still too underdeveloped and cannot cope with large formats.

Is there anything that you have always wanted to say?

The only thing that I would want to say is that I have never felt so good at a company as I feel at Klöckner & Co – from the very first day onwards, and that has not changed at all. This is not, however, meant in a cuddly sense, but refers to the corporate culture, professional attitudes and the willingness to co-operate.
Among other contributing factors was the excellent collaboration with my predecessor Dr. Thomas Ludwig.

Here, at the company, co-operation is very direct. In the Holding there are no co-operation problems at any levels throughout the departments, for example. Klöckner and the facts are in the foreground, and not politics (which I have often experienced at other companies in the past). A Group like Klöckner & Co is not just successful because the Executive Board members get on well with one another, but above all because of its employees. We have an excellent workforce here, particularly on the second level, and it is only for this reason that we can run such a company with an Executive Board that consists of just two people. The employees identify themselves with the company to a very great extent. This has been proved on many occasions in the past. Even new staff are rapidly and eagerly integrated in the KlöCo workforce. I notice this here, as do my colleagues and employees at each of the other workplaces in our company.

(Source: Stahlmarkt - European Edition, Issue 01/2010, author Hans G. Diederichs)