Klöckner & Co presents digital transformation strategy

Company
presentation
June 2017Company presentation | Klöckner & Co SE1
Klöckner & Co SE
Duisburg

Disclaimer
Company presentation | Klöckner & Co SE2
This presentation contains forward-looking statements which reflect the current views of the management of Klöckner & Co SE with respect to future events. They
generally are designated by the words “expect”, “assume”, “presume”, “intend”, “estimate”, “strive for”, “aim for”, “plan”, “will”, “strive”, “outlook” and comparable
expressions and generally contain information that relates to expectations or goals for economic conditions, sales proceeds or other yardsticks for the success of
the enterprise. Forward-looking statements are based on currently valid plans, estimates and expectations. You therefore should view them with caution. Such
statements are subject to risks and factors of uncertainty, most of which are difficult to assess and which generally are outside of the control of Klöckner & Co SE.
The relevant factors include the effects of significant strategic and operational initiatives, including the acquisition or disposition of companies. If these or other risks
and factors of uncertainty occur or if the assumptions on which the statements are based turn out to be incorrect, the actual results of Klöckner & Co SE can
deviate significantly from those that are expressed or implied in these statements. Klöckner & Co SE cannot give any guarantee that the expectations or goals will
be attained. Klöckner & Co SE – notwithstanding existing obligations under laws pertaining to capital markets – rejects any responsibility for updating the forward-
looking statements through taking into consideration new information or future events or other things.
In addition to the key data prepared in accordance with International Financial Reporting Standards, Klöckner & Co SE is presenting non-GAAP key data such as
EBITDA, EBIT, Net Working Capital and net financial liabilities that are not a component of the accounting regulations. These key data are to be viewed as
supplementary to, but not as a substitute for data prepared in accordance with International Financial Reporting Standards. Non-GAAP key data are not subject to
IFRS or any other generally applicable accounting regulations. Other companies may base these concepts upon other definitions.
June 2017

Agenda
June 2017Company presentation | Klöckner & Co SE3
1. Klöckner & Co SE – Overview
2. Steel distribution market and positioning of Klöckner & Co
3. “Klöckner & Co 2020“ strategy

Klöckner & Co SE at a glance
01
200,000 PRODUCTS
50
SUPPLIERS
6.1 million
tons
5.7 € billion
196 € million
12COUNTRIES
130,000
CUSTOMERS
170
LOCATIONS
SHIPMENTS
FY 2016
SALES
FY 2016
EBITDA
FY 2016
8,700EMPLOYEES
June 2017

Everything from one source
01
K L Ö C K N E R & C O V A L U E C H A I N
S U P P L I E R S C U S T O M E R S
June 2017

Global reach – local presence
01
Sales; As of December 2016
USA:
37%
D:
27%
F/BE:
10%
CH:
16%
NL:
3%
UK:
5%
ES*:
2%
Europe:
63%
Brazil:
<1%
June 2017
* Sold in January 2017

Solutions for companies of any kind
01
S A L E S B Y S E C T O R
• In addition to companies in the construction
industry as well as machinery and mechanical
engineering, we serve customers in the
automotive and chemical industry, ship-building
and in fields of household appliance, consumer
goods and energy
As of December 2016
June 2017

Full range
01
• Flat products and heavy plates, hollow sections,
merchant bars, precision tubes and seamless thick-
wall pipes, special profiles, high-alloy round steel
bars, stainless steel, aluminum sheets and
extrusions, as well as special products for
installation, roof and wall construction and water
supply, etc.
Tubes
Stainless / Aluminium /
Quality steel
Flat products
Long Products
Sales by product
As of December 2016
June 2017

Extensive services
01
• Flame/gas/oxygen cutting, autogenous and
plasma on CNC and optically controlled machines,
burning programs via CAD systems, conservation,
cutting and slitting, cutting and bending (routing on
demand), cutting to length and sawing (miter
cuts), other mechanical processing methods, like
drilling, punching, shearing, press breaking, flat
rolling, etc.
• Furthermore we provide our customers with
technical advice, storage facilities and just-in-time
delivery
Cutting to Length /
Miter Cutting / Bending
Laser cutting / Flame
cutting
Decoiling / Cutting /
Slitting
Surface treatment
June 2017

Current shareholder structure
01
Geographical breakdown of identified
institutional investors
As of February 2017
Shareholder structure of Klöckner & Co SE
5%
Other investors
17%
Private investors
78%
Identified institutional
investors
6% Rest of EU
36% US
3% Rest of world
2% Switzerland
5% UK
48% Germany
June 2017

Management
01
W i l l i a m A . P a r t a l i s
Member of the Board
• North American Operations
• South American Operations
G i s b e r t R ü h l
CEO
• Corporate Development*) /
M&A
• Legal & Compliance
• Investor Relations &
Corporate Communications
• Group HR
*) incl. kloeckner.i GmbH und
kloeckner.v GmbH
M a r c u s A . K e t t e r
CFO
• Corporate Accounting
• Corporate Controlling
• Corporate IT*)
• Corporate Taxes
• Corporate Treasury
• Internal Audit
*) incl. Klöckner Shared Services
GmbH
K a r s t e n L o r k
Member of the Board
• European Operations*)
*) incl. Kloeckner Metals Europe
GmbH
June 2017

Agenda
June 2017

Current situation
02
Source: Bank of America Merrill Lynch, own estimates; in million tons.
June 2017
NAFTA Steel demand (million to)
EU-28 Steel demand (million to)
Source: Worldsteel
Overcapacity of steel by region (2016)
NAFTA
~30
South-
america
~25
Europe
~90
India
~20
CIS
~30
Japan
~20
China
~280
Others:~115
World:~610

Europe vs. US
02
Steel producers Steel producers
End user End user
Source: WSA, MSCI, Eurometal, SBB
40%
Larger
independent
distributors /
SSC
Small /
midsize
distributors /
SSC
Producer
owned
distributors /
SSC
60% 60%
Larger
independent
distributors /
SSC
Small /
midsize
distributors /
SSC
40%
25% 15%
Europe US
June 2017

Market shares of Klöckner & Co
02
• Position in the US significantly improved whereas market share in Europe remained stable despite heavy
restructuring measures
1%
Reliance
Ryerson
TK
Samuel
O'Neal
Russel
Macsteel
Metals USA
PNA
Namasco
Others
Europe
US
2007 2016
5%
Arcelor Mittal
ThyssenKrupp
KCO
Salzgitter
Tata
Others
5%
Arcelor Mittal
ThyssenKrupp
KCO
Salzgitter
Tata
Others
4%
Reliance
Ryerson
KloecknerMetals
ThyssenKrupp
Others
ThyssenKrupp
~3,000
~1,200
Source: Eurometal, Purchasing Magazine, Service Center News
June 2017

Agenda
June 2017

Our strategy
03
G R O W T H A N D
O P T I M I Z A T I O N
D I F F E R E N T I A T I O N
D I G I T A L I Z A T I O N
K L Ö C K N E R & C O 2 0 2 0
P R O D U C T S A N D
S E R V I C E S
O P E R A T I O N S
E X T E R N A L &
I N T E R N A L G R O W T H
Digitalization of the supply chain and development of a industry platform
Accelerated expansion of higher value-added products and services
One Europe and further optimization
External growth with focus on higher value-added business,
internal growth with focus on the US market
June 2017

Current linear steel supply chain is highly inefficient and totally intransparent
03
S U P P L I E R S C U S T O M E R S
N O E F F E C T I V E I N F O R M A T I O N A N D D A T A E X C H A N G E
O N A V A I L A B L E I N V E N T O R Y , L E A D T I M E S E T C .
L O N G D E L I V E R Y T I M E S , I N C O R R E C T D E L I V E R I E S A N D H I G H I N V E N T O R Y L E V E L S
Other DistributorsKlöckner & Co
S T O C K H O L D I N G
June 2017

S U P P L I E R S C U S T O M E R SAggregated
Demand
information
POS Data / Analytics
Application Programming
Interface
Cumulative
quantities
I N D U S T R Y
P L A T F O R M
Aggregated
Supply
information
Other DistributorsKlöckner & Co
S T O C K H O L D I N G
3 R D P A R T Y S A L E S - /
S E R V I C E - / I O T P L A T F O R M S
Industry 4.0 and others
Klöckner & Co transforms the classic value-chain into a digital platform business
03
June 2017

The digital industry platform provides advantages for all participants
03
June 2017
Customers
Intransparent pricing, high process costs
and complex supplier management
Suppliers
Stockholders
Insufficient utilization of production assets
High inventories in order to provide product
availability towards customers
Broad material availability reduces order-to-
cash cycle time and higher price transparency
allows improved purchasing
Aggregation and early notification of demand
allows optimized production and utilization of
asset-intensive production assets
Online access to an enlarged customer base,
reduced process costs and improved prediction
of demand
I N D U S T R Y
P L A T F O R M

The digital transformation of Klöckner takes place in three essential steps
03
June 2017
Time
Increasing number of EDI-connections
Time
Industry platform
• Marketplace for
complementary
products
• Marketplace for steel
and metal products
• Marketplace for
additional industrial
products
• Regional expansion in
Europe and North
America
Service portal
Digital tools
• Contract portals
• Online shops
• Order transparency tools
• Kloeckner Connect
• Shop-in-shop
• Integration of third-
party providers
Suppliers CustomersKlöckner & Co
Value
Customer
side
I N D U S T R Y
P L A T F O R M

Higher value-added strategy further advanced
03
• Sales share of higher value-add products and services up from 39% in 2015 to 46% in 2016
• Further increase of higher margin business to a sales share of more than 50% planned by 2018
18%
Higher value-add
products
28%
Higher value-add
services
31%
Standard
products
23%
Conventional
services
A C T U A L 2 0 1 6
>20%
>30%
<30%
<20%
T A R G E T 2 0 1 8
Higher value-add products
and services:
Expansion from
46% to 50%
June 2017

Contact
Christian Pokropp
Spokesperson
Tel: 0203-307-2050
Fax: 0203-301-5025
Email: christian.pokropp@kloeckner.com
June 2017

Klöckner & Co presents digital transformation strategy

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