Like other companies in the sector, Kloeckner was hit by a slump in demand for steel in Europe as government spending cuts and tight credit conditions hurt demand for cars, buildings and household appliances.

It is cutting more than 2,200 jobs and shutting a quarter of its sites around the world to slash costs, which it has said means going down to "bare bones" in some areas.

Kloeckner said on Thursday its net loss narrowed to 85 million euros from 200 million last year and said it should turn to profit this year, thanks to cost cuts and the acquisition of Swiss reinforcing steel specialist Riedo Bau + Stahl, announced earlier this week.

That should allow the company to pay a dividend for 2014, Kloeckner said. Analysts expect Kloeckner to post a 2014 net profit of 27 million euros ($37.1 million) and pay a dividend of 0.10 euros.

"Likewise we are optimistic for the years beyond," Kloeckner aid.

In the current quarter through March, it said it saw its earnings before interest, tax, depreciation and amortisation improving to between 40 million euros and 50 million from 29 million a year earlier, but did not provide guidance for its quarterly net result.

($1 = 0.7278 euros)

(Editing by Christoph Steitz and David Holmes)

By Maria Sheahan