Klöckner & Co SE Q1 Earnings Call Highlights

Key Points

• Q1 results were shaped by U.S. divestments: group shipments fell materially year‑over‑year due to the sale of eight U.S. sites, but on a like‑for‑like basis shipments and sales rose ~2.1%, and EBITDA before material special effects increased to €46m (from an adjusted €34m a year earlier) despite gross profit dropping to €298m with a steady margin of 19%.
• Cash flow weakened seasonally with net working capital up €279m, operating cash flow of -€270m, free cash flow of -€306m, and net financial debt rising to about €1.092bn.
• Strategic moves include a shift to higher value‑added products (HFP share rose to 87% in Q1 2026) and capacity investments, while Worthington Steel has secured roughly 61.87% of Klöckner’s shares with closing expected in H2 2026, subject to approvals.

Klöckner & Co SE ETR: KCO reported higher earnings in the first quarter of 2026, supported by a rising price environment in the U.S. and Europe and improved profitability in its European segment, while year-over-year comparisons were heavily influenced by the late-2025 sale of eight U.S. distribution sites.

Q1 results shaped by U.S. divestments and higher prices

CEO Guido Kerkhoff said group shipments declined “considerably” year-over-year, primarily due to the divestment of the eight U.S. distribution locations at the end of 2025. Excluding those sites, shipments increased 2.1% year-over-year, which management attributed to “positive momentum in Europe.” Sales also came in “considerably below” the prior-year quarter due to lower reported volumes, though on a divestment-adjusted basis, sales increased slightly by 2.1%.

Gross profit fell to EUR 298 million from EUR 370 million in the prior-year quarter, reflecting lower sales volumes. Gross profit margin held steady year-over-year at 19%. Kerkhoff added that on a like-for-like basis gross profit increased slightly, and the gross profit margin also rose.

Profitability improved on an EBITDA basis. Klöckner posted EBITDA before material special effects of EUR 46 million in Q1 2026, up from a divestment-adjusted EUR 34 million in Q1 2025. Kerkhoff said the quarter benefited from a “favorable pricing environment” after “pronounced volatility” a year earlier, with prices rising in both regions. He noted that in the U.S. the increase was “slow but steady,” producing “a rather limited positive windfall.”

Explaining the year-over-year EBITDA bridge on a like-for-like basis, Kerkhoff cited a positive price effect of EUR 20 million and a positive volume effect of EUR 6 million. These were partially offset by OpEx that was EUR 9 million higher, driven by higher personnel costs as well as higher expenses for shipments and operating supplies, plus negative foreign exchange effects of EUR 4 million tied mainly to the U.S. dollar. The company recorded negative material special effects of EUR 6 million, which Kerkhoff said were largely related to share-based payment expenses due to share-price gains since the start of the year.

Segment performance: Europe improves; Americas comparisons affected by restocking and divestment

In Klöckner Metals Americas, shipments were down sharply year-over-year due to the divestment, and sales declined accordingly. On an adjusted basis, shipments were flat compared with Q1 2025, while sales decreased “only slightly.” Kerkhoff highlighted that March 2025 benefited from restocking activity that provided a temporary uplift in volumes. EBITDA before material special effects in the Americas segment totaled EUR 37 million.

Klöckner Metals Europe delivered improved results. Shipments increased slightly, while sales rose “considerably” due to higher average price levels. Kerkhoff said this was supported by “continued and effective implementation of our optimization measures.” Segment EBITDA before material special effects increased to EUR 10 million, which he described as the highest level since Q1 2023.

Cash flow turns negative on seasonal working capital build; net debt rises

Operating cash flow was negative in the quarter, which management attributed to seasonal working capital patterns. Kerkhoff said net working capital increased by EUR 279 million in Q1, calling the build-up temporary and expected to reverse over the course of the year. After interest, taxes, and other items totaling EUR 32 million, cash flow from operating activities was -EUR 270 million.

With net CapEx of EUR 36 million, free cash flow was -EUR 306 million. Net financial debt increased from EUR 709 million to about EUR 1.092 billion during the quarter, which Kerkhoff said also reflected negative effects from foreign exchange, leasing, and other items totaling EUR 77 million.

Strategy update: portfolio actions, capacity investments, and more digital quoting

Kerkhoff said the company continues to reduce underlying volatility by focusing on higher value-added products and services and by reshaping its portfolio through acquisitions and divestments. He referenced acquisitions including Ambos Steel, Haley Tool & Stamping, Simfloc, and Lochaber Wire, and said the company divested distribution businesses in the U.S. and Brazil to sharpen strategic focus.

On investment initiatives, Kerkhoff highlighted:

• Groundbreaking for a new aluminum flat roll processing facility in Columbus, Mississippi
• Launch of a new heavy fabrication operation at the former Barber Manufacturing site in Paton, Iowa
• Investments to increase electrical steel capabilities
• Installation of a new Qualitrac Schuler laser blanking line in Querétaro, Mexico

Management also pointed to progress in sales mix, saying the share of higher value-added products (HFP) and service center sales increased from 63% (full year 2029 figure cited on the call) to 87% in Q1 2026. Kerkhoff said this shift is intended to reduce volatility while improving profitability.

Digitalization efforts continued, with Kerkhoff reporting that the number of digital quotes increased by about 7% year-over-year in Q1 2026, which he said helps free sales staff from manual quoting tasks.

Worthington Steel takeover: 61.87% stake secured; closing expected in H2 2026

Kerkhoff also provided an update on the voluntary public takeover by Worthington Steel. He said Worthington Steel and Klöckner & Co signed a business combination agreement on Jan. 15, after which Worthington Steel submitted a takeover offer for all outstanding Klöckner shares.

After meeting the minimum acceptance threshold, Kerkhoff said Worthington Steel secured approximately 61.87% of Klöckner’s outstanding shares by the end of the additional acceptance period. He added that on March 27, 2026, Worthington Steel informed Klöckner’s management board of its intention to enter into a domination and profit-and-loss transfer agreement between Worthington Steel GmbH (as controlling company) and Klöckner & Co SE (as controlled company).

Closing remains subject to regulatory approvals and is “currently expected to take place in the second half of 2026,” according to Kerkhoff, who said the takeover aligns with the company’s strategy in higher value-added products and services across North America and Europe.

During Q&A, Kerkhoff said customer sentiment in Europe had declined somewhat and described expected customer behavior as “a bit more cautious going forward,” while noting the year started more positively than expected. He said price and pre-stocking behavior existed but “not that big and not that strong.” Addressing a question on a slightly reduced operating cash flow outlook, he cited higher price levels and expected increases in volumes and shipments that would require “a little bit more” working capital.

Asked about Becker Group, Kerkhoff said the company was in a due diligence phase with “a couple of good offers,” but did not discuss pricing, adding that “there is more interest than we originally expected.” On a question regarding ThyssenKrupp’s Materials Services business, Kerkhoff said he did not know their plans and did not expect it to have a major impact on Klöckner.

Looking ahead, Kerkhoff guided for Q2 2026 shipments to increase slightly quarter-over-quarter and sales to rise considerably. The company expects EBITDA before material special effects between EUR 40 million and EUR 80 million for Q2 2026. For full-year 2026, management forecasts a slight decline in shipments due mainly to the U.S. divestment, slightly higher sales year-over-year, a “considerable” increase in EBITDA before material special effects, and positive operating cash flow, albeit below the prior year.

About Klöckner & Co SE ETR: KCO

Klöckner & Co SE, through its subsidiaries, distributes steel and metal products. The company operates through three segments: Kloeckner Metals US, Kloeckner Metals EU, and Kloeckner Metals Non-EU. It offers flat steel products; long steel products; tubes and hollow sections; stainless steel and high-grade steel; and aluminum products for building installations, roof and wall construction, and water supply. The company also provides various services, including cutting and splitting of steel strips; forming and manufacturing of pressed parts; CNC turning/milling; 2D/3D tube laser cutting; laser and water jet cutting; structural steel processing; plasma and oxy-fuel cutting; shot blasting and primer painting; and sawing/drilling/rounding off.

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