FRANKFURT (dpa-AFX) - Rising sales of steel trader Klockner & Co (KloCo) in the USA and a reduced exposure in Europe make Deutsche Bank Research confident about the Duisburg-based company's shares despite the current headwinds. Analyst Lars Vom-Cleff reiterated his "Buy" rating and set a price target of EUR 10 in a study published on Wednesday.

Although KloCo's annual report for 2023 is due on Wednesday, March 13, and little good can be expected, Vom-Cleff wrote that a lot has happened since his last assessment around a year ago. Last year, the fall in steel prices and the challenging macroeconomic environment are likely to have made themselves felt. This was already clear from the nine-month figures and is unlikely to have changed in the fourth quarter. He therefore expects the steel trader to report a 16 percent drop in sales for the year as a whole compared to the previous year and a decline in operating earnings (EBITDA) before special items of as much as 57 percent.

Nevertheless, the analyst remains positive for Klockner. He referred to the ongoing restructuring program of the SDax company, the sale of parts of the loss-making distribution business in Europe and three acquisitions in the United States. "The disposals should significantly reduce Klockner's dependence on volatile and cyclical commodity markets and steel prices," Vom-Cleff wrote. In addition, the proportion of sales generated in the USA will increase to around 60 percent of Group sales, which will have an additional positive impact on profitability. This is because margins are likely to increase and business development will become more stable.

In addition, the Deutsche Bank expert emphasized that Swoctem, the investment company of Klockner's major shareholder Friedhelm Loh, has now significantly increased its stake. With the voluntary public takeover offer to shareholders on March 13, 2023, Deutsche Bank was no longer allowed to value the share until last week. However, the transaction has now been completed and Swoctem owns 41.5% of the share capital and voting rights.

With a "buy" rating, Deutsche Bank recommends buying the share based on the expected total return for the next twelve months./ck/bek/he

Analyzing institute Deutsche Bank.

Publication of the original study: 20.02.2024 / 16:32 / GMT First dissemination of the original study: 21.02.2024 / 07:38 / CET