Klöckner & Co SE. Capital Market Days German operations and new warehouse structure. October 6, Dr. Oliver Falk CFO KSM

Transcription

1 Klöckner & Co SE Capital Market Days German operations and new warehouse structure October 6, 2009 Dr. Oliver Falk CFO KSM

2 Disclaimer This presentation contains forward-looking statements. These statements use words like believes, assumes, expects or similar formulations. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of our company and those either expressed or implied by these statements. These factors include, among other things: Downturns in the business cycle of the industries in which we compete; Increases in the prices of our raw materials, especially if we are unable to pass these costs along to customers; Fluctuation in international currency exchange rates as well as changes in the general economic climate and other factors identified in this presentation. In view of these uncertainties, we caution you not to place undue reliance on these forward-looking statements. We assume no liability whatsoever to update these forward-looking statements or to conform them to future events or developments. This presentation is not an offer for sale or a solicitation of an offer to purchase any securities of Klöckner & Co SE or any of its affiliates ("Klöckner & Co"). Securities of Klöckner & Co, including, but not limited to, rights, shares and bonds, may not be offered or sold in the United States or to or for the account or benefit of U.S. persons (as such term is defined in Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act")) unless registered under the Securities Act or pursuant to an exemption from such registration. 2

3 Agenda 1. German operations 2. New warehouse structure 3

4 Organizational structure Country organization Germany Sales branches managed by a regional sales manager Manager processing & services for all branches Product management separated from sales organization Centralized administration Managing Directors CEO / CFO Region North Region South Service & Processing Eastern Europe Product Management Central functions Bremen / Hamburg Mannheim SBZ Velten MSC Vienna Logistics / QM Kassel Zweygart Stahlhandel Edelstahlservice MSC Neumarkt Sales coordination Landsberg Würzburg SBZ Mágocs, Ungarn Czech Republic, Prague Personnel Osnabrück Nuremburg SBZ Stuttgart Poland Controlling Duisburg Regensburg S & P all warehouses Rumania Accounting Frechen Munich Bulgaria Taxes / Legal Affaires Hagen Zwickau IT coordination 4

5 Sales split by industry and product Klöckner Stahl- und Metallhandel GmbH Producer-independent steel and metal distributor in Germany Decentralized sales organization with strong connection in local markets Industry split KSM with less focus on construction and higher involvement in the machinery industry in comparison to KlöCo Logistic network with 18 warehouses in Germany Sales split by industry Klöckner & Co Group Sales split by product Other; 11% Other; 12% Automotive; 6% Appliances/ durable goods manufacturers; 7% On-sellers; 10% Construction; 42% Aluminum; 6% Quality steel/stainless steel; 9% Long products/ sectional steel; 32% Tubes; 10% Industrial machinery and equipment; 24% Flat products; 31% In 2008 In

6 Competition in Germany Market share by competitor 1) (steel distribution industry) Sales market shares in % Competitor 1 15% KSM 6% Competitor 2 6% Competition structure Two competitors are mainly represented in the big-volume business only Products are highly substitutable High customer loyalty in case of customized assortment, reliable delivery, good personal relationship and competitive prices Competitor 3 Competitor 4 5% 5% Others 1 63% Market in Germany is highly fragmented Consolidation of German market expected 1) % of sales in Germany, source: Company estimates 6

7 Strategic elements Klöckner Stahl- und Metallhandel GmbH Suppliers Sourcing Products and services Logistics/ Distribution Customers Business process analysis IT & communication High priority in 2008/ 2009 besides restructuring acc. to Wave 1 and 2: Implementation of a new SAP-System Optimization of warehouse structure 7

8 New SAP standard master template developed Implementation of completely new developed SAP ERP 6.0 system in a 12-month project Go Live on July 1, 2009 in Germany and Netherlands Go Live Blueprint Customizing Programming Testing Migration After Go Live Support 07/ / / /2009 International team of about 50 users (sales, logistics, purchasing, accounting, controlling) of the KlöCo Group designed best in class processes Customizing and programming done through Group IT with limited support from external consultants SAP template, developed from Germany and Netherlands for KlöCo Group 8

9 Advantage of new SAP International purchasing International product catalogue and unified supplier master data offer significant improvement for the KlöCo International Product Management: High data quality through centralized maintenance of material and supplier master data Strengthening of negotiation power through bundling of purchasing volumes Optimization of stocks - Distribution of purchasing volumes to the countries - Enforcement of intercompany business - Optimal stock level with minimum slow mover and stock-outs - Analysis, definition and controlling of quantity targets Supplier performance measurement Efficiency improvement for the KlöCo International Product Management 9

10 Advantage of new SAP International material exchange The new SAP system uses one article number for one article in all countries - international product catalogue The description of the articles is done in the respective languages, match codes are defined country specific as well easy search for sales people Regional or national stocks of the countries can be used for countries in the neighbourhood Potentials - Germany and Netherlands - Germany and France - Germany and Poland, Czech Republic and Austria International product catalogue offers international usage of warehouses 10

11 Advantage of new SAP Customer profitability Pilot for France and Spain using the Prodacapo tool - Independent from the ERP system in use - Ex post analysis of customer profitability for single or all orders SAP ERP Integrated order calculation with standard cost and PBT information, visible for all sales persons during sales process for each sales position - Cost accounting shows identical cost and PBT information monthly figures are accumulated figures generated out of previous sales processes - PBT information on profit center, product and customer level available - Analysis of all orders of the customer in SAP Business Intelligence Customer profitability on basis of standard costing during sales process available 11

12 IT-Projectmanagement SAP ERP 6.0 roll out map Germany/ Netherlands Bulgaria: end of 2009 Romania: end of 2009 Switzerland: first quarter 2011 Spain: end of second quarter 2010 UK: end of third quarter 2010 France: end of 2010 Belgium: first quarter

13 Agenda 1. German operations 2. New warehouse structure 13

14 Customer concentration Turnover Germany Remarks Turnover 2008: the darker the colour, the higher the turnover in the respective region Highest turnover in the area of Papenburg in north Germany, following the Ruhrgebiet area, then Kassel, Leipzig, Würzburg, Nuremberg until Regensburg Strongest volumes are achieved in Weser- Ems with shipyard business The south west and partially the north eastern parts of Germany offer additional market potential Basically, we need to know, where we sell in order to decide where to set up logistic facilities 14

15 Decentralized Setup in 2000 Year 2000 Summary 3 sales regions with 36 branches thereof - 20 multi metal distributors - 1 processing center - 15 specialized distributors No separation between sales and product management No material exchange between warehouses of one region Aggregation of highly independent profit centers 15

16 Regional material exchange 2004 Year 2004 Summary Tightening of the warehouse structure through closure of 12 locations No. of sales regions reduced to 2 with - 19 multi metal distributors - 2 processing centers - 3 specialized distributors Introduction of the star concept for a daily material exchange between the warehouses of one region HUBs are in Hanover and Nuremberg 16

17 Star concept Example: southern region Principles City 1 daily City 2 daily daily City 3 48 hours delivery time to customers Nuremberg warehouse used as HUB with unloading and loading of trucks during the night Direct deliveries to customers starting with an order level higher than 10to 4 x week Nuremberg daily Customer related material bundling with complete deliveries to the customer City 4 daily City 6 Cost allocation to the profit center City 5 17

18 New warehouse structure 2009 One layer distribution structure until 2008 Two layer distribution structure with satellites starting 2009 Steel mill Steel mill Full assortment warehouse Regional or central warehouse with A- and B-articles Cross- Dock Local warehouse with A-articles Customer Customer All warehouses offer a complete assortment to local customers Optimization of stock only possible on warehouse level Simple and direct delivery system Optimization of stock for all warehouses of one region A-articles (= fast mover) are available in local warehouses Regional or central stock offer a complete assortment Transport through intelligent logistic system 18

19 Warehouse network 2009 Year 2009 Summary Sales regions unchanged Further logistical improvements through shutdown of smaller warehouses in Coburg and Bamberg near the bigger plants in Würzburg and Nuremberg Remaining 18 locations - 13 multi metal distributors - 2 processing centers - 3 specialists Establishing of regional and central warehouses Implementation of a central product management organization 19

20 Assortment and warehouse usage ABC - classification Overall goal: High inventory turn rate with minimum one purchase order each quarter Product group (KTR) No. of sales positions per branch and year A-article Turnover in to per branch and year B-article No. of sales positions per region and year C-article No. of sales positions per region and year Pos. 100 to > 10 Pos. 10 Pos. Summary A-article, stored locally, e.g. KTR More than 40 sales positions per warehouse and year, broader customer structure assumed, limited slow mover risk - More than 100 to turnover per profit center and year, one purchase order in each quarter realistic, no risk of stock deprecation due to price declines B-articles are stored in regional warehouses, if the number of sales positions is higher than 10 in the case of KTR 450 C-articles are not part of the assortment, with exception of products with high gross margins and customer specific material 20

21 Locations with stainless assortments High number of warehouses with stainless steel assortment in Germany ABC analysis shows bundling possibilities, one of them is the setup of a regional warehouse in Frechen 21

22 Locations with aluminium assortments Lower number of warehouses with aluminium assortment in Germany in comparison to stainless steel assortment Due to similar product related logistical handling procedures, a regional warehouse for aluminium will also be located in Frechen 22

23 Our symbol the ears attentive to customer needs the eyes looking forward to new developments the nose sniffling out opportunities to improve performance the ball symbolic of our role to fetch and carry for our customers the legs always moving fast to keep up with the demands of the customers 23