Klöckner & Co (KCO) Q2 2024 earnings summary

Executive summary

• Shipments increased year-over-year, with Q2 2024 up 11.5% to 1,164 Tto and HY1 2024 up 8.1% to 2.3 million tons, mainly driven by strong Americas performance and acquisitions in Mexico and the US.

• Sales remained flat in Q2 2024 at €1,765 million, but declined 2.6% to €3.5 billion in HY1 2024 due to lower average prices.

• EBITDA before material special effects was €42 million in Q2 2024 and €83 million in HY1 2024, both within guidance but down from prior year.

• Strategic focus shifted to higher value-added and HVAC business, now comprising about half of EBITDA, with divestment of parts of the European distribution business completed.

• Acquisitions in North America, including Amerinox Processing, and investments in advanced laser systems in Germany, further strengthened the high value-added business.

Financial highlights

• Gross profit for Q2 2024 was €294 million, with gross margin at 16.6%; gross profit held steady year-over-year despite steel price corrections.

• Net financial debt increased to €779 million, mainly due to acquisitions, but improved sequentially from Q1 2024.

• Operating cash flow for Q2 2024 was €61 million, with HY1 2024 at €18 million, both up year-over-year; free cash flow in Q2 2024 was €41 million.

• EPS for Q2 2024 was -€0.18, and HY1 2024 basic EPS from continuing operations was -€0.27.

• Dividend of €0.20 per share for 2023 and €20 million paid in May 2024.

Outlook and guidance

• Full-year 2024 EBITDA before material special effects expected between €120 million and €180 million.

• Shipments forecast to slightly increase, but sales expected to decrease year-over-year due to lower prices.

• Operating cash flow for 2024 expected to remain significantly positive, but below 2023.

• Q3 2024 EBITDA expected between €20–60 million before material special effects.