Klöckner & Co expects a positive operating income in Q2 2020. The company which had previously announced a potential €10-20mn loss during the quarter now projects an EBITDA of €0-10mn in Q2 2020.
The company has also projected a positive cash flow from operating activities for the quarter. Klöckner attributed the improved results expectation on optimizing advanced digitization, implementing cost-saving measures, and consolidating strategic activities to headquarters and home offices.
The positive EBITDA will be especially influenced by the 15pc reduction in its workforce comprising 8,200 employees.
A spokesperson confirmed with Davis Index that aspects of the workforce reduction on the EBITDA will be reflected in Q2 and the detailed interim report for H1 2020 that will be made public on August 14. The exact layoff staging or sites affected were not disclosed.
In Q1 2020, Klöckner’s EBITDA was about €21mn with shipments down 8.9pc to 1.4mn mt compared to the same quarter last year, due to weak demand from automotive and machinery sectors. Sales revenue declined by near 15pc to €1.4bn in Q1 2020 compared to the same quarter last year because of lower global prices. In early May, the company warned of significant declines in shipments and sales in Q2 2020.
The German steel and metals distributor’s digital sales channels increased by 3pc points to 35pc in Q1 2020 from Q4 2019. Digitization in procurement applications was accelerated in Q2 2020 both internally and with products that service contracted distributors into Belgium, France, Austria, and UK. Operations in Germany, Netherland, and the US adopted new technology in Q1 2020 or the prior quarter.
Klöckner is present in 13 countries through 160 distribution and service facilities.