Klöckner & Co SE increases operating income to new record level and shows strong performance in third quarter of 2021

• Operating income (EBITDA) of €277 million (Q3 2020: €40 million) before material special effects at new record level since IPO
• Numerous initiatives successfully implemented under “Klöckner & Co 2025: Leveraging Strengths” strategy – taking on the pioneer role in sustainable steel industry
• Record EBITDA of around €800 million before material special effects expected for full year 2021
• Dividend proposal to Annual General Meeting planned in the extraordinary amount of between €0.90 and €1.10 per share
• Positive effect on operating cash flow of over €10 million per year from 2022 onwards from funding pension obligations

Duisburg, Germany, November 3, 2021 – Klöckner & Co has continued its strong year, with a third quarter in which it once again delivered the highest ever quarterly operating income since the IPO in 2006. Considerably higher prices again led to very significant sales growth of 59.3% to €2 billion in the third quarter of 2021 (Q3 2020: €1.3 billion). Against the backdrop of a substantially improved market environment, operating income (EBITDA) before material special effects increased from €40 million in the prior-year period to €277 million. This puts operating income at the upper end of the €260 million to €280 million revised guidance range. Contributing factors to the positive performance include resolute application of the margin-over-volume strategy and positive effects of the restructuring measures under the Surtsey Project. Net income was likewise extremely strong at €189 million (Q3 2020: net loss of €5 million). Earnings per share consequently came to €1.86 (Q3 2020: loss per share of €0.05). Due to the substantial rise in net working capital with the sharp rise in steel prices, cash flow from operating activities was a negative €15 million (Q3 2020: positive €68 million).

Guido Kerkhoff, CEO of Klöckner & Co SE: “The fact that we are once again able to present record earnings shows that we have set the right strategic course. Thanks to Surtsey Project, we have a strong operational base to successfully implement initial measures under our Klöckner & Co 2025: Leveraging Strengths strategy. We continue to work systematically to accommodate customer and societal needs. As a case in point, with our recent partnership with H2 Green Steel, we have secured early access to “green steel” for our customers and are developing into a pioneer of the sustainable steel industry.”

Consistent implementation of “Klöckner & Co 2025: Leveraging Strengths” strategy

The third quarter brought further progress in implementing the “Klöckner & Co 2025: Leveraging Strengths” strategy. With this strategy, the Group aims to become the leading digital one-stop-shop platform for steel, additional materials and processing services in Europe and the Americas. The new EU-Europe structure initiated in the second quarter has already been successfully implemented and key related measures have been launched. Klöckner & Co is strengthening cross-border and cross-functional collaboration in particular in order to improve its product and service portfolio. In this connection, the new Center of Excellence in Finance & Administration will better harmonize internal administrative processes and align structures more efficiently.

Pioneering a sustainable steel industry and expanding the partner network

As a key element of the Group strategy, Klöckner & Co has most recently focused on expanding its partner network and continues to drive ahead its sustainability activities in this context. The Company sees major opportunities here both societally and operationally. In order to exploit these opportunities, Klöckner & Co has entered into partnership with the Swedish start-up H2 Green Steel, thus becoming one of the first distributors to secure access to significant quantities of virtually CO2-emission-free “green steel”. Under the partnership, up to 250,000 tons of “green steel” is initially to be supplied from 2025 onwards, with the possibility of increasing the volume in future years. This cooperation has enabled Klöckner & Co to significantly expand its portfolio of sustainable products and services. At the same time, the Group is supporting customers in establishing an emission-free value chain and is leading the way as a pioneer of the sustainable steel industry.

In addition, the third quarter saw the Group accelerate digitalization and automation in the direction of “zero touch”. The reorganization of kloeckner.i has been successfully completed and a new kloeckner.i hub established in the USA. Further improvements have also been made to the AI-driven Kloeckner Assistant application, which with the measures initiated is expected in the future to be able to digitalize and automate 80% of sales processes. Kloeckner Assistant is also to be deployed in the future in other parts of Klöckner & Co’s value chain. The application has already handled sales of some €750 million over the course of the year. In total, the percentage of sales generated via digital channels rose in the third quarter to 46%, which is four percentage points higher than in the comparable prior-year period (Q3 2020: 42%).

Klöckner & Co anticipates a slight, seasonal decline in shipments and sales in the fourth quarter. For the full year 2021, the Company continues to expect EBITDA of around €800 million before material special effects. This would be the best operating income since the IPO in 2006. In light of the expected record earnings for fiscal year 2021, Klöckner & Co plans to propose a dividend of between €0.90 and €1.10 per share at the Annual General Meeting. Additionally, a project has been launched to improve the coverage of the Group’s pension obligations. For this purpose, the intention is for assets to be transferred to a trustee and thus tied to the purpose of servicing pension obligations. Funding the pension obligations will significantly reduce the pension provisions by over €200 million in the statement of financial position and thus substantially improve Klöckner & Co’s balance sheet structure. This measure also makes for a lasting improvement in the Group’s cash flow from operating activities by over €10 million a year from 2022.