German steel distributor Kloeckner increased its full-year 2020 operating income (EBITDA) forecast before material effects from €75-95mn ($91-115mn) to €105-115mn ($128-140mn). The expected increase in earnings against the previous forecast was influenced by strong recovery in steel demand and pricing in late 2020. The improved steel demand level had a positive effect on the company’s recent quarterly sales volumes.
Steel recovery is expected to continue into early 2021. The recently strong market fundamentals, in conjunction with additional digitalization and restructuring projects under the project dubbed Surtsey, is expected to support operating income in the first three months in 2021 to achieve EBITDA close to that of the same quarter a year ago.
Surtsey was launched at the start of the pandemic and has allowed Kloeckner to improve automation in core processes including sales. The program is expected to improve earnings by more than €100 million by the end of 2021 by increasing digital sales to over 50pc of total sales. In Q2, digital channel sales climbed to 38pc from 29pc a year ago.