Although Klöckner & Co. SE will remain in a
cost-cutting mode through the end of 2013, including at U.S.
subsidiary Kloeckner Metals Corp., it expects to improve
profits in the region by revising its U.S. sales strategy.
Thirty-eight percent of the parent companys global sales
come from the United States.
Americas segment reported sales of 594 million ($797.7
million) during the third quarter, down 14.9 percent from the
same period a year ago, but earnings before interest, taxes,
depreciation and amortization (Ebitda) after restructuring
expenses grew 41.7 percent in the same comparison.
"Our Americas segment
volumes dropped by 4.2 percent, driven mainly by shifting focus
on greater margin business," Gisbert Rühl, chairman and
chief executive officer of the Duisburg, Germany-based company
said during a Nov. 6 earnings conference call.
"It makes sense to
increase market share by focusing on volume when the market is
in a trough because no one is earning money anyway. When taking
over Macsteel (Service Centers USA Inc., during the first
quarter of 2011), we increased market share because one of our
main competitors was focused on margin. We got a lot of new
customers and increased margins 11 percent and 15 percent,
(respectively), in 2011 and 2012," he said.
"Now, we have a much
larger customer base, combined with a reduction of low-margin
Asked how Roswell,
Ga.-based Kloeckner will retain market share, Rühl
explained that when the unnamed U.S. competitor focused on
margin growth, it "defined a minimum (but) didnt get the
margin and lost a lot of volume in the downturn. ... We took
over a significant share of that business and we wont
lose it because of the service we are providing," he said. This
is especially the case among monthly and quarterly contract
customers, he added, "where sometimes we are managing their
entire incoming material (sourcing). So they are not able to
easily switch back to another supplier."
Rühl said it is
possible the competitor could undercut prices to regain its
lost market share. "But if they do that aggressively, they
wont earn money." There is limited potential under that
scenario, he said, because then the competitor will lose margin
"even in a better market environment."
Theres also the
service difference, Rühl said. "The customer is not
switching for $10 a ton."
The upshot is that
Kloeckner "got a lot of new customers and has increased total
volume over the past two years. As markets improve, we will do
better because we have higher market share," Rühl