February 28, 2018 / 11:31 AM / 6 months ago

UPDATE 1-Kloeckner & Co hikes dividend by half on steel recovery

* Proposes div of 0.30 eur/shr for 2017, up 50 pct

* Confirms would look at Thyssenkrupp Materials Services

* Shares up 5 pct at top of small-cap index (Recasts, adds comments on Thyssenkrupp)

DUESSELDORF, Feb 28 (Reuters) - German steel distributor Kloeckner & Co pledged on Wednesday to raise its dividend by half, supported by recovering steel prices that have helped most players in the industry to report solid results in recent weeks.

The group proposed to pay out 0.30 euros per share for 2017, up 50 percent from 2016 and beating analysts’ forecast for a dividend of 0.21 euros apiece.

Shares in Kloeckner & Co, which competes with Thyssenkrupp , Salzgitter and U.S.-listed Reliance Steel & Aluminum, rose more than 5 percent to the top of Germany’s smallcap index, which was down 0.5 percent.

Volatile steel prices have triggered further consolidation in the industry, with Thyssenkrupp and Tata Steel planning to combine their European steel operations and ArcelorMittal in the process of buying Italy’s Ilva.

Kloeckner & Co Chief Executive Gisbert Ruehl reiterated the group would take a look at Thyssenkrupp’s materials trading division Materials Services should it be put up for sale.

However, he said Thyssenkrupp had not yet decided whether to sell and Kloeckner would likely require a partner to do a deal involving Materials Services, which is more than twice as big as Kloeckner when measured by sales.

Kloeckner expects earnings before interest, tax, depreciation and amortisation (EBITDA) to at least match the 220 million euros ($269 million) generated in 2017, and said they could be higher if steel prices continued to recover.

First-quarter EBITDA is expected to come in at 45 million-55 million euros, the group said in presentation slides, compared with a 47 million Thomson Reuters I/B/E/S estimate.

Full-year sales are forecast to rise slightly in 2018, helped by higher steel demand in Europe and the United States. Analysts expect sales to reach 6.19 billion euros in 2018, up from 6.14 billion in 2017. ($1 = 0.8185 euros) (Reporting by Christoph Steitz and Tom Kaeckenhoff; Editing by Maria Sheahan and Susan Fenton)

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