Kloeckner cuts Q3 outlook on weak steel prices

7 October 2015

German steel distributor Kloeckner & Co said on Tuesday it would not meet its third-quarter target, citing poor market conditions due to prices falling further and weak demand for steel and metal products.

Third-quarter earnings before interest, tax, depreciation and amortization (EBITDA) excluding restructuring expenses will be around 30 million euros ($33.79 million), Kloeckner said in a statement.

The company had earlier guided for EBITDA, excluding special items of between 45 million euros and 55 million euros. That outlook was based on the assumption of a slight recovery of prices and robust demand, Kloeckner said.

Kloeckner shares were down 6.9 percent in after-hours trading. The shares closed 0.5 percent higher after the regular trading session.

"Contrary to the general market expectation, steel prices continued to decline, mainly due to a further decrease in quotations for Chinese steel exports," the company said.

"As a result, margins came under pressure and inventory write-downs became necessary."

Kloeckner said that this situation was expected to continue in the fourth quarter and that as a result 2015 EBITDA excluding restructuring cost would remain "substantially" below last year's, though a positive cash flow is still expected.

In 2016 EBITDA is expected to rise again, while net income should be "noticeably positive again," Kloeckner said.