Steel group Kloeckner writes down N.American operations to zero
10 December 2015
German steel distributor Kloeckner & Co has completely written off the goodwill on its North American operations amid worse-than-expected market conditions, it said on Wednesday.
Kloeckner said it was writing down 270 million euros ($297 million) of goodwill, leaving just an expected 30 million on the group's balance sheet by the end of the year.
The company, which makes almost two-fifths of its sales in the Americas, said it now expected a group net loss of 350 to 380 million euros this year. It made a net loss of 85 million euros in the first nine months of 2015.
"After the market environment for steel and metal products in the U.S. has once again developed worse than generally expected in the current year, Kloeckner & Co SE recognises impairments on the complete goodwill of the North American activities," it said in a statement.
Frankfurt-traded shares in Kloeckner fell 3.2 percent after hours.
Kloeckner reiterated its forecast for earnings before interest, tax, depreciation and amortisation (EBITDA) of 85 million euros and positive free cash flow in 2015.
Chief Executive Gisbert Ruehl told Reuters in an interview earlier this year that he still viewed North America as the company's most attractive market, despite intense price pressure caused mainly by cheap imports from China.
German steel and industrial goods maker ThyssenKrupp said last week the situation on steel markets had not stabilised as hoped but had worsened considerably in recent months.