UPDATE 1-Steel trader Kloeckner & Co decouples from economy
(Adds analyst comments, management, details, share)
FRANKFURT, Aug 13 (Reuters) - German metals trader Kloeckner & Co (KCOGn.DE) brushed off slower U.S. and European growth in the second quarter to deliver a strong set of results and raise its earnings guidance thanks to continued buoyant demand.
Quarterly earnings before interest, taxes, depreciation and amortisation (EBITDA) at Kloeckner & Co. doubled to 212 million euros ($317.5 million), exceeding the average estimate of 201 million euros from a Reuters poll of nine analysts.
Kloeckner & Co. forecast underlying EBITDA to rise above 500 million euros for the full year, after previously targeting in late June more than 470 million.
"During the first half of 2008, the steel and steel distribution industries were largely able to decouple themselves from the more or less pronounced downturn in various regions of the world," the company said in its quarterly report.
Shares in Kloeckner & Co rose 4.9 percent by 1132 GMT to easily outpace peers listed on the DJ Stoxx European basic resources index, as analysts were relieved by the outlook.
More information on the health of the German steel industry is due out on Thursday, when ThyssenKrupp (TKAG.DE) and Salzgitter (SZGG.DE) post interim reports.
Industry consolidation has increased price discipline while rising purchasing bills for iron ore, coking coal, steel scrap, energy and freight have reduced the relative advantages of emerging markets like China with low labour costs.
As a result, Kloeckner was able to benefit from steel price hikes in developed markets where its customer base is located.
"Europe and North America experienced strong, and at times even steep, price increases for both flat and long products, including tubes," it said, adding that steel distributors could profit over proportionately during the second quarter since the value of their inventories rose significantly.
During a conference call with management, the highly acquisitive company said it expected to buy metals distributors in 2008 that generate in total some 600 million euros in sales, a slightly higher level than revenue purchased last year.
Commerzbank kept its "buy" rating on the stock and said the new guidance is "reassuring given recent market concerns about material prices", while UniCredit said the company was clearly undervalued in view of its growth prospects.
Kloeckner & Co. trades at about 1.8 times book value, a slight premium to the 1.5 multiple of mid-cap steel producer Salzgitter, which also has a trading business. (Reporting by Christiaan Hetzner; Editing by Richard Hubbard)
