Kloeckner & Co SE

Quarterly Report • Nov 5, 2015

Klöckner & Co SE

A Leading Multi Metal Distributor

Interim Report as of September 30, 2015

KLÖCKNER & CO GROUP FIGURES	2
INTERIM GROUP MANAGEMENT REPORT	3
KLÖCKNER & CO SHARE	19
CONSOLIDATED STATEMENT OF INCOME FOR THE NINE-MONTH PERIOD ENDING
SEPTEMBER 30, 2015	21
STATEMENT OF COMPREHENSIVE INCOME FOR THE NINE-MONTH PERIOD ENDING
SEPTEMBER 30, 2015	22
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF SEPTEMBER 30, 2015	23
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE NINE-MONTH PERIOD ENDING
SEPTEMBER 30, 2015	25
SUMMARY OF CHANGES IN EQUITY	26
SELECTED EXPLANATORY NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL
STATEMENTS OF KLÖCKNER & CO SE FOR THE NINE-MONTH PERIOD ENDING SEPTEMBER 30, 2015 28

Shipments and income statement	Q3 2015	Q3 2014*)	Variance	Jan. 1 – Sep. 30, 2015	Jan. 1 – Sep. 30, 2014*)	Variance
	1,636			4,941
	1,597			4,988
	311			940
	19.4			18.9
	28			22
	30			76
	1.8			0.4
	1.9			1.5
	5			– 54
	– 7			– 91
	– 9			– 85
	– 9			– 84
	– 0.09			– 0.84
	– 0.09			– 0.84

Cash flow statement/Cash flow	Q3 2015	Q3 2014*)	Variance	Jan. 1 – Sep. 30, 2015	Jan. 1 – Sep. 30, 2014*)	Variance
	75			60
	– 24			– 18
	50			42

Balance sheet	Sep. 30, 2015	Dec. 31, 2014	Variance	Sep. 30, 2015	Sep. 30, 2014*)	Variance
	1,369			1,369
	517			517
	1,376			1,376
	39.3			39.3
	3,499			3,499

Employees	Sep.30, 2015	Dec. 31, 2014	Variance	Sep.30, 2015	Sep. 30, 2014	Variance
	9,560			9,560

Key developments in the first nine months and outlook

• •
• •
• •
• •
• •
• •
• •

Corporate strategy

Business model transformation

It is expected that the cash outflows resulting from the additional restructuring and optimization measures will be more than offset by the amount of working capital freed up in 2016. In the medium term, further cash inflows are anticipated from sales of land not needed for operating purposes.

The additional restructuring measures in France* became necessary largely due to further deterioration in the situation of the French construction industry, which is by far our most important customer group in this region. In the coming years as well, we expect only a moderate improvement in the market there at best. We therefore plan to further consolidate our network down from the 63 locations we have today, largely pulling out of notably the lowmargin key account business with standard grade. This will entail the closure of eleven locations and a significant downsizing of the country headquarters. The size of the workforce will decrease as a result by 310 to 1,360.

Structural improvements are planned or already in the process of being implemented also at the other European country organizations. These include downsizing the country organizations' headquarters as well as closing persistently unprofitable sites and non-core activities. A total of five further sites will be closed and the number of employees reduced by around 260 as a result of the measures.

Due to the poor economic trend and the subdued outlook for the local steel market, we are closing our service center in China, which had a headcount of initially 35.

In all, 17 sites are thus set to be closed and the workforce is expected to be reduced by about 600 in 2015 and 2016.

Return to growth path through external and internal growth

Our key organic growth drivers are expanding our higher value-added products and processing services on the one hand and digitalization on the other.

In terms of regional growth opportunities, we see the USA as our most attractive market over the medium and long term, despite the slump in steel prices this year. This market is also especially attractive for us because steel supply and demand are far better matched than in Europe and because of the strict separation of producers and distributors. We aim to increase the US share of shipments from 42% in 2014 to more than 50% in the medium term.

When it comes to strengthening higher-margin business, we target a mix of internal and external growth. Consequently, alongside a marked increase in capital expenditure in this area - and following the acquisition of American Fabricators in the USA - we are planning further acquisitions of companies that offer a wide range of higher value-added products and processing services.

* Planned measures that in accordance with French law have been communicated to the works council requesting its opinion.

Economic environment

Macroeconomic situation

The growth trend in global GDP continued in the reporting period. While GDP growth in most developed industrialized economies continued to accelerate, many emerging and developing economies showed a slowdown in growth.

In the euro area, the relatively weak euro lent stimulus and a competitive boost to the European economy. GDP in the region grew in the third quarter by 1.7% in total compared with the prior-year quarter.

The USA saw a continuation of the upturn in evidence since 2009. A resilient labor market and low energy costs made for rising consumer spending. With extra stimulus from the construction sector, the US economy showed a year-onyear gain of 2.0%.

In China, GDP growth was down to 6.9% in the third quarter, thus continuing the falling growth rate trend. Brazil remained in recession through the third quarter. Rising inflation and a high base rate did nothing to ease the economic situation. GDP consequently fell by 3.6% compared with the prior-year quarter.

Development of GDP (in percent)	Q3 2015 vs. Q3 2014
Europe *)	1.7
Germany	1.9
United Kingdom	0.6
France	1.1
Spain	3.4
Switzerland	0.7
China	6.9
Americas
United States	2.0
Brazil	$-3.6$

Source: Bloomberg; experts' estimates (in some cases provisional). *) Eurozone.

Industry-specific situation

Although overall economic conditions are good, the market environment in the steel industry remains challenging. According to the World Steel Association, global production of raw steel declined by 2.4% year-on-year to 1,212 million tons in the first nine months of 2015. The EU saw a small (0.3%) decrease in production volumes, while in the USA steel production dropped by 8.6%. Production was also down by 2.1% in China and 1.2% in Brazil.

In Europe, Eurometal reports that shipments in steel distribution fell by 2% in the first nine months of this year. Shipments in the USA were down by 6.3%, according to the Metals Service Center Institute (MSCI).

The steel industry still faces the problem of massive excess capacity, notably in China and Europe, with the current level of demand continuing to result in structural underutilization. At the end of September 2015, steel producers in Europe and the USA were operating at about 73% of capacity. There is also considerable surplus capacity at distribution level, with competition remaining fierce as a result.

Trend in key customer industries

Construction industry

As the largest processor of steel worldwide, the construction industry plays a key role in determining steel demand. After a weak first quarter in Europe due to weather conditions, construction activity picked up in the second and third quarters according to estimates from the steel association Eurofer, for an overall increase of 1.1% in the first nine months. In the USA, the construction industry primarily benefited from rising demand in the residential construction segment. The US Census Bureau put the growth in construction spending at 11% compared with the first nine months of 2014.

Machinery and mechanical engineering

Demand in machinery and mechanical engineering showed a checkered picture in the first nine months of 2015. In Europe, the sector was slightly down relative to the prior year according to Eurofer, due to the weakness of investments and falling demand from China. On the other hand, the USA saw moderate growth driven by rising demand in machine tools and construction machinery.

Automotive industry

The situation in the international automotive industry was mainly positive in the first nine months of 2015. In Europe, demand increased by around 9% year-on-year, according to the German Association of the Automotive Industry (VDA). The USA saw shipment volumes increase by about 5%. Only Brazil recorded a sharp decline of some 22%.

Results of operations, financial position and net assets

The key figures for the results of operations, financial position and net assets in the third quarter and the first nine months of fiscal year 2015 are as follows:

$\sim$ $\sim$ $\sim$ .
$(e \text{ million})$	O3 2015	O3 2014*)	Jan. $1 - \overline{Sep. 30}$ , 2015	Jan. 1 - Sep. 30, $2014^{\circ}$
Shipments (Tto)	1,636	1.690	4,941	5,043
Sales	1,597	1,675	4,988	4,927
Gross profit	311	325	940	952
Gross profit margin	19.4 %	19.4 %	18.9 %	19.3 %
EBITDA	28	61	22	158
EBITDA before restructuring expenses	30	61	76	158
EBITDA margin	1.8 %	3.6%	0.4%	3.2%
EBITDA margin before restructuring	1.9 %	3.6%	1.5%	3.2%

Key figures results of operations

*) Comparative amounts for 2014 adjusted due to the initial application of IFRIC 21 (Levies).

The key figures for the financial position changed as follows:

Key figures net assets

$(\epsilon$ million)	September 30, 2015	September 30, 2014	December 31, 2014
Net working capital	1.369	1.479	1,321
Net financial debt	517	557	472

Other key figures

$\epsilon$ million)	September 30, 2015	September 30, $2014^{*}$	December 31. 2014
Gearing (Net financial debt/shareholders' equity**))	38 %	39%	34 %
Leverage (Net financial debt/EBITDA***))	4.8x	2.8x	2.5x

*) Comparative amounts for 2014 adjusted due to the initial application of IFRIC 21 (Levies).

Consolidated shareholders' equity less non-controlling interests and less goodwill from business combinations subsequent to May 23, 2013. ***) EBITDA before restructuring is calculated on the basis of the last twelve months prior to the reporting date.

Discussion of the key figures in detail:

Shipments and sales

Group shipments in the first nine months of 2015, at 4.9 million tons, were down on the prior-year period (-2.0%). Performance in our two operating segments, Europe and Americas, was disappointing.

In the Europe segment, shipments dropped by 0.7% relative to the first three quarters of 2014. Only Becker Stahl-Service GmbH (BSS) and - as a result of the Riedo acquisition - the Swiss country organization were able to increase shipments. All other European country organizations recorded a sharp drop in shipments due to the ongoing difficult market environment.

Shipments in the Americas segment decreased by 3.8% year-on-year. This affected both, the USA and Brazil. While shipments in Brazil were depressed by structural problems in the reporting period, the decline in shipments in the USA was mainly attributable to our customers still - and in some cases increasingly - holding back from buying in anticipation of further falls in prices.

In contrast to the trend in shipments, Group sales climbed by 1.2% to €5.0 billion due to the rise in exchange rates and most notably in the value of the US dollar and the Swiss franc relative to the euro. Despite the positive exchange rate movements and the inclusion of Riedo, sales in the Europe segment declined by 2.0% throughout the reporting period due to low price levels. At constant exchange rates, sales were down by 6.2%. While prices likewise fell in the Americas segment, and notably in the flat steel business important to Klöckner, this was more than offset by the sharp rise in the US dollar-euro exchange rate. In total, the segment saw sales rise by 6.9%; based on the exchange rate in the prior-year period, sales were 11.7% down on the first nine months of 2014.

Results

$\sqrt{(\epsilon \text{ million})}$	Q3 2015	Q3 2014*)	Jan. 1 - Sep. 30, 2015	Jan. 1 - Sep. 30, $2014^{*}$
Sales	1,597	1,675	4,988	4,927
Gross profit	311	325	940	952
$OPEX^{**}$	$-282$	$-264$	$-919$	$-794$
EBITDA	28	61	22	158
EBITDA before restructuring expenses	30	61	76	158
EBIT	5	38	$-54$	90
EBT	$-7$	24	$-91$	43
Net income	$-9$	16	$-85$	26

*) Comparative amounts for 2014 adjusted due to the initial application of IFRIC 21 (Levies).

**) Personnel expenses plus other operating expenses less other operating income and less income from investments.

Due to the lower prices, notably in the USA, and strong price pressure in Switzerland as a result of the Swiss franc appreciation, the gross profit margin dropped from 19.3% in the prior-year period to 18.9% in the first nine months of 2015. Impacted by restructuring expenses of €5 million, gross profit was down slightly year-on-year (-1.2%) to €940 million. Without the €88 million positive impact of exchange rate movements mentioned above, however, the decrease would have been 10.5%.

Other operating income and expenses (OPEX) changed as follows:

$(\epsilon$ million)	Jan. 1 - Sep. 30, 2015	Jan. 1 - Sep. 30, $2014^{*}$
Other operating income	24	27
Personnel expenses	$-509$	$-430$
Other operating expenses	$-434$	$-391$
Income from investments		$\Omega$
OPEX	$-919$	$-794$

*) Comparative amounts for 2014 adjusted due to the initial application of IFRIC 21 (Levies).

The increase in OPEX by €125 million from €794 million to €919 million is attributable in the amount of €81 million to exchange rate changes and in a total amount of €49 million to restructuring expenses, meaning that in operating terms there was a $\epsilon$ 4 million improvement.

At €24 million, other operating income was slightly down on the prior-year figure of €27 million.

The €79 million increase in personnel expenses relates in the amount of €46 million to exchange rates and in the amount of €31 million to restructuring. Full inclusion of Riedo for the entire reporting period also accounted for €4 million of the increase, meaning that in operating terms there was a slight decrease.

Similarly, the $\epsilon$ 43 million increase in other operating expenses is attributable to restructuring expenses ( $\epsilon$ 19 million) and the aforementioned exchange rate changes (€34 million).

Taking the above-mentioned effects into account, EBITDA was down to €22 million, compared with €158 million in the prior-year period. Adjusted for €54 million in restructuring expenses, EBITDA stood at €76 million.

EBITDA by segment developed as follows:

EBITDA before restructuring expenses by segments

$(\epsilon$ million)	. O3 2015	$Q3 2014$ *)	Jan. 1 - Sep. 30, 2015	Jan. 1 - Sep. 30, $2014^{*}$
Europe	21	34	57	91
Americas	14	30	34	80
Headquarters	$-5$	$-3$	$-15$	$-13$
Klöckner & Co Group	30	61	76	158

*) Comparative amounts for 2014 adjusted due to the initial application of IFRIC 21 (Levies).

EBITDA in the Europe segment decreased significantly to €57 million in the first nine months of 2015, compared with €91 million a year earlier. With the exception of BSS and the Netherlands, earnings performance was unsatisfactory at all country organizations. The most severe impact on earnings came from the price pressure (euro discount) induced by the removal of the cap on the Swiss franc exchange rate early in the year as well as from the very weak business situation in France and the United Kingdom. While the end of the euro discount effect and a seasonal recovery in the further course of the reporting period made for a marked rise in operating income in Switzerland, the operating environment remained difficult, notably in France and the United Kingdom.

The price- and volume-related fall in gross profit meant that EBITDA in the Americas segment, at €34 million, was likewise well under the €80 million prior-year comparative figure. In particular, the significantly lower market prices for heavy plate at the beginning of the first quarter of 2015 resulted in inventory effects and pressure on margins, whereas the first quarter of the prior year still saw prices rising. The negative price trend flattened out in the course of the second quarter but there was as yet no sign of any appreciable recovery.

Headquarter's EBITDA, at a negative €15 million (9M 2014: negative €13 million), exceeded the prior-year figure also due to the start of the kloeckner.i operations.

$\epsilon$ million)	Jan. 1 - Sep. 30, 2015	Jan. 1 - Sep. 30, $2014^{*}$
EBITDA	22	158
Depreciation, amortization and impairments	$-75$	$-68$
EBIT	$-54$	90
Financial result	$-37$	$-47$
EBT	$-91$	43
Income taxes		$-17$
Net income	$-85$	26

Reconciliation to net income

*) Comparative amounts for 2014 adjusted due to the initial application of IFRIC 21 (Levies).

After deducting depreciation and amortization, which was swelled by exchange rate effects (in the amount of €9 million) and impairments (€4 million), EBIT came out at a negative €54 million, compared with a positive €90 million in the prior-year period. Conversely, the financial result improved significantly, from a negative €47 million to a negative €37 million. The main alleviating factor here lay in interest expense following the redemption of promissory notes and convertible bonds in the prior year. Accordingly, EBT was a negative €91 million as against a positive €43 million in the prior-year period.

The first nine months show an income tax benefit of €5 million (9M 2014: income tax expense of €17 million). Based on the nine-month EBT of -€91 million an income of €28 million would be expected. Reasons for the difference are the inability to offset tax losses between countries combined with restrictions on the recognition of deferred tax assets for current losses.

All in all, net income was thus a negative €85 million (9M 2014: positive €26 million). Basic earnings per share amounted to a negative €0.84 compared with a positive €0.26 in the prior-year period.

(€ million)	September 30, 2015	December 31, 2014
Non-current assets	1,151	1,103
Current assets
Inventories	1,104	1,318
Trade receivables	828	746
Other current assets	111	146
Liquid funds	305	316
Total assets	3,499	3,629
Equity	1,376	1,429
Non-current liabilities
Financial liabilities	395	522
Other non-current liabilities	500	479
Current liabilities
Financial liabilities	421	259
Trade payables	563	743
Other current liabilities	244	197
Total equity and liabilities	3,499	3,629

Consolidated balance sheet

Compared with December 31, 2014, total assets decreased by €130 million or 3.6% to €3,499 million. Despite substantial currency translation effects, the decrease is mostly due to strict working capital management.

Non-current assets rose by €48 million to €1,151 million. €16 million of the increase was in intangible assets and €28 million in property, plant and equipment. On a constant exchange rate basis, however, there was a decrease both in intangible assets (by €20 million) and in property, plant and equipment (by €10 million).

The reduction in other current assets is due to lower supplier bonus receivables during the year as well as the disposal of assets held for sale.

Cash and cash equivalents amounted to €305 million, more or less on a par with the end of the past fiscal year (€316 million).

The equity ratio of nearly 39% as of September 30, 2015 continues to reflect the solid balance sheet and remained at the level of the prior year-end (39%).

The $E$ 21 million rise in other non-current liabilities mainly relates to the fair value measurement of derivatives used for hedging purposes.

Other current liabilities went up from €197 million to €244 million, €44 million of which comprised changes in restructuring provisions.

Net working capital

$\in$ (E million)	September 30, 2015	September 30, 2014	December 31, 2014
Inventories	1,104	1.296	1.318
Trade receivables	828	883	746
Trade payables	$-563$	$-700$	$-743$
Net working capital	1,369	1.479	1,321

At €1,369 million, net working capital showed an increase on the end of fiscal year 2014 (€1,321 million). However, it was significantly below the level at the end of the prior-year quarter (€1,479 million). Exchange rate effects accounted for €67 million of the increase relative to the prior year-end, meaning that - at constant exchange rates there was a decrease of €19 million.

Net financial debt

$($ $\in$ million)	September 30, 2015	September 30, 2014*)	December 31, 2014
Net financial debt	517	557	472
Gearing (Net financial debt/shareholders' equity**)	38 %	39 %	34 %

*) Comparative amounts for 2014 adjusted due to the initial application of IFRIC 21 (Levies).

**) Consolidated shareholders' equity less non-controlling interests and less goodwill from business combinations subsequent to May 23, 2013.

Net financial debt came to €517 million. Exchange rate changes and payments under foreign currency hedging derivatives used for central group financing purposes account for €57 million of the increase from €472 million in the prior fiscal year. Accordingly, net debt in operating activities declined. Compared to September 30, 2014, the same effects account for €95 million of the increase.

At 38%, gearing remained well below the 150% maximum applicable for financing purposes.

In April, our syndicated loan was prolonged ahead of term by one year to May 2018 in an amend and extend process, while retaining the €360 million loan amount. In addition, some of the loan terms were amended in Klöckner&Co's favor effective May 2015. Klöckner&Co therefore succeeded in negotiating more favorable financing terms while improving the maturity profile.

Key substantive changes also include the accession of our US subsidiary Kloeckner Metals Corporation as a borrower and the ability to draw up to 50% of the facility amount in US dollars. This gives Klöckner & Co added financial flexibility. Subject to the banks' approval, the new loan documentation once again includes the option to extend the loan term in two stages up to May 2020. The banking syndicate was reduced from eleven to ten banks, thus strengthening the business relationship with Klöckner & Co's core banks.

As of August 10, 2015, the facility amount for the European ABS program was also reduced by €60 million to €300 million due to the decrease in receivables requiring funding.

(€ million)	Q3 2015	Q3 2014*)	Jan. 1 – Sep. 30, 2015	Jan. 1 – Sep. 30, 2014*)
	75		60
	– 24		– 18
Free cash flow	50	50	42	– 184
	– 49		– 59

Subsequent events

Macroeconomic outlook including key opportunities and risks

The outlook for the Brazilian economy is still poor. In light of high interest rates, fiscal adjustments and weak consumer confidence, the IMF expects economic output to decline by 3.0%. Although the government is launching economic stimulus programs, these will probably lend impetus only in the medium term.

Expected development of GDP (in percent)	2015
Europe *)	1,5
Germany	1,5
United Kingdom	2,5
France	1,2
Spain	3,1
Switzerland	0,8
China	6,8
Americas
United States	2,6
Brazil	$-3,0$

Source: International Monetary Fund, Bloomberg. *) Eurozone.

Expected trend in the steel industry

The World Steel Association currently predicts that global steel demand will fall by 1.7% in 2015. For the European Union, the Association anticipates an increase of 1.3%, while the North American Free Trade Agreement (NAFTA) region is expected to contract by 2.7% and South and Central America by 7.3%. A decline of 3.5% is also forecast for China.

Expected trend in our core customer sectors

Construction industry

According to Euroconstruct estimates in 2015, the European construction industry is set to grow this year – with help from sustained low interest rates - by some 2%. In the USA, the sector is expected to expand by 6% in 2015, with stimulus coming primarily from residential construction. Growth may also be fostered by individual government infrastructure projects.

Machinery and mechanical engineering

Global machinery and mechanical engineering is projected to see a further increase of 1% in shipments over the year as a whole. In Europe, despite the positive impact of the favorable exchange rate environment, steel industry association Eurofer expects the sector in this region to expand by only a marginal 0.1% overall. A sharp increase of 3.6% is forecast for the USA due to substantial replacement demand.

Automotive industry

According to current estimates from the German Association of the Automotive Industry (VDA), the major automotive markets will remain on track for growth this year, but with declining momentum. VDA forecasts growth of 6% in Europe. The US market will grow by 3%, according to VDA.

Current assessment of opportunities and risks

Outlook

®

Share price performance

	Q3 2015	Q3 2014	Jan. 1 – Sep. 30, 2015	Jan. 1 – Sep. 30, 2014
	99,750,000		99,750,000
	7.32		7.32
	730		730
	8.85		10.12
	7.03		7.03
	741,159		893,713

Ownership structure

Capital market communications

(€ thousand)	Q3 2015	Q3 2014*)	Jan. 1 – Sep. 30, 2015	Jan. 1 – Sep. 30, 2014*)
	1,597,208		4,987,740
	4,297		24,141
	– 3,758		– 11,538
	-		21
	– 1,282,811		– 4,036,020
	– 154,640		– 508,742
	– 22,943		– 75,259
	– 38		– 3,954
	– 132,073		– 433,938
Operating result	5,280	37,734	– 53,595	90,054
	– 123		785
	– 11,962		– 37,767
Financial result	– 12,085	– 13,635	– 36,982	– 46,854
Income before taxes	– 6,805	24,099	– 90,577	43,200
	– 2,195		5,146
Net income	– 9,000	16,221	– 85,431	26,041
	– 8,929		– 84,179
	– 71		– 1,252
Earnings per share (€/share)
– basic	– 0.09	0.16	– 0.84	0.26
– diluted	– 0.09	0.16	– 0.84	0.26

(€ thousand)	Q3 2015	Q3 2014*)	Jan. 1 – Sep. 30, 2015	Jan. 1 – Sep. 30, 2014*)
Net income	– 9,000	16,221	– 85,431	26,041
	– 7,912		– 8,484
	3,029		4,910
Total	– 4,883	– 23,604	– 3,574	– 44,351
	– 17,175		58,290
	146		– 1,596
	-		-
	– 46		506
Total	– 17,075	26,713	57,200	36,141
Other comprehensive income	– 21,958	3,109	53,626	– 8,210
Total comprehensive income	– 30,958	19,330	– 31,805	17,831
	– 30,892		– 30,612
	– 66		– 1,193

Assets

(€ thousand)	September 30, 2015	December 31, 2014
Non-current assets
	454,302
	657,852
	10,486
	1,338
	15,151
	4,046
	7,429
Total non-current assets	1,150,604	1,103,143
Current assets
	1,103,967
	828,165
	21,041
	88,382
	304,500
	2,210
Total current assets	2,348,265	2,525,534
Total assets	3,498,869	3,628,677

Equity and liabilities

(€ thousand)	September 30, 2015	December 31, 2014
Equity
	249,375
	900,759
	192,550
	23,901
Equity attributable to shareholders of Klöckner & Co SE	1,366,585	1,414,701
	9,200
Total equity	1,375,785	1,428,685
Non-current liabilities
	333,856
	16,348
	394,985
	56,379
	93,834
Total non-current liabilities	895,402	1,000,985
Current liabilities
	164,703
	10,147
	420,766
	563,114
	68,952
Total current liabilities	1,227,682	1,199,007
Total liabilities	2,123,084	2,199,992
Total equity and liabilities	3,498,869	3,628,677

(€ thousand)	Q3 2015	Q3 2014*)	Jan. 1 – Sep. 30, 2015	Jan. 1 – Sep. 30, 2014*)
	– 9,000		– 85,431
	2,195		– 5,146
	12,085		36,982
	22,943		75,259
	443		– 405
	440		– 4,543
	100,690		286,919
	79,929		– 48,045
	– 113,555		– 219,979
	– 16,540		55,363
	– 4,856		– 21,420
	280		943
	– 417		– 10,948
Cash flow from operating activities	74,637	63,594	59,549	– 78,452
	406		26,063
	-		-
	– 213		11,955
	– 24,415		– 55,333
	– 10		– 1,145
Cash flow from investing activities	– 24,232	– 14,058	– 18,460	– 105,954
	-		– 19,950
	-		-
	-		-
	-		– 100,000
	-		– 51,500
	– 48,922		112,444
Cash flow from financing activities	– 48,922	– 23,638	– 59,006	– 36,194
Changes in cash and cash equivalents	1,483	25,898	– 17,917	– 220,600
	– 1,296		6,053
	304,313		316,364
Cash and cash equivalents at the end of the reporting period as per statement of financial position	304,500	380,522	304,500	380,522

(€ thousand)	Subscribed capital of Klöckner & Co SE	Capital reserves of Klöckner & Co SE	Retained earnings
Balance as of January 1, 2014	249,375	900,759	266,925
Other comprehensive income
Total comprehensive income
Balance as of September 30, 2014*)	249,375	900,759	292,642
Balance as of January 1, 2015	249,375	900,759	289,257
Other comprehensive income
Total comprehensive income
Balance as of September 30, 2015	249,375	900,759	192,550

Accumulated other comprehensive income

Currency translation adjust ment	Actuarial gains and losses (IAS 19)	Fair value adjust ments of financial instruments	Equity attributable to shareholders of Klöckner & Co SE	Non–controlling interests	Total
72,912	– 56,648	– 3,764	1,429,559	15,913	1,445,472
					31,877
					944
					5,106
					– 49,902
					3,765
			– 8,332	122	– 8,210
					26,041
			17,385	446	17,831 – 1,689
104,548	– 100,880	500	1,446,944	14,670	1,461,614
114,797	– 138,862	– 625	1,414,701	13,984	1,428,685
					58,290
					– 1,596
					– 8,484
					5,416
			53,567	59	53,626
					– 85,431
			– 30,612	– 1,193	– 31,805
					– 1,145
					– 19,950
168,111	– 142,495	– 1,715	1,366,585	9,200	1,375,785

	Closing rate		Average rate
1 € =	September 30, 2015	December 31, 2014	Jan. 1 – Sep. 30, 2015	Jan. 1 – Sep. 30, 2014
	4.4808		3.5257
	0.7385		0.7271
	1.0915		1.0621
	1.1203		1.1144

̓

In the opinion of the Management Board, the interim consolidated financial statements reflect all adjustments deemed necessary to provide a true and fair view of the results. The results for the period ending September 30, 2015 are not necessarily indicative of future results.

The present interim consolidated financial statements for the nine-month period ending September 30, 2015 were authorized for issuance by the Management Board after discussion with the Audit Committee of the Supervisory Board on November 3, 2015. Unless otherwise indicated, all amounts are stated in million euros (€ million). Discrepancies to the unrounded figures may arise.

(2) New accounting standards and interpretations

The following table summarizes accounting standards and interpretations that were initially applied in fiscal year 2015:

Annual improvements to IFRSs 2011-2013

IFRIC Interpretation 21 (Levies)

As part of the Annual Improvement Project, modifications were made to four standards under the term "Annual improvements to IFRSs 2011-2013". These changes did not have an impact on the financial statements of Klöckner & Co SE.

IFRIC 21 regulates the closing date of public taxes accrued either upon threshold limits or accrued irregularly within the year and not being subject to IAS 12 (Income Taxes). The initial application of the interpretation led to a change in periodization of such taxes and thus increased other expenses and other liabilities in the amount of $E$ 2 million as well as deferred tax liabilities by €1 million in the first nine months 2015 for the Klöckner & Co Group. Under consideration of income tax benefit effects totaling €1 million, the net result was decreased by €1 million. Prior year's presentation of other operating expenses and other liabilities in the financial statements as of September 30, 2014 increased accordingly by €2 million. Additionally, deferred tax liabilities decreased by €1 million. The impact on earnings during the first nine months 2014 amounted to €1 million after consideration of the tax reducing effects. The initial application of IFRIC 21 will not have an impact on the 2015 full year results.

(3) Changes in ownership interests

By contract dated June 24, 2015 the remaining non-controlling interests of 30% in Klöckner Metals Brasil S.A.-Group, São Paulo, Brazil, was acquired at a purchase price of about €1 million. The acquisition, which did not have a material impact on the consolidated financial statements, is accounted for as equity transaction in accordance with IFRS 10.

(4) Special items in the results

Due to the continuously difficult economic situation especially in France, further restructuring measures were initiated in 2015 (mainly site closures and lay-offs). In addition, the winding down of our Chinese operations commenced. Further measures are attributable to continuously unprofitable activities in Great Britain and Switzerland.

The program impacted the Klöckner & Co Group key results' figures as follows:

(€ million)	EBITDA		EBIT		Net income
	Q32015	9M 2015	Q3 2015	9M 2015	Q3 2015	9M 2015
Result as reported	28	22	5	$-54$	$-9$	$-85$
Stock write-downs		5		5
Personnel expenses		31		31		31
Other restructuring expenses		19		19		19
Asset impairments				3		3
Tax effects						$-2$
Result before restructuring expenses and impairments	30	76		3	$-7$	$-30$

(5) Earnings per share

Earnings per share are calculated by dividing net income of the interim period attributable to shareholders by the weighted average number of shares outstanding during the period. In accordance with IAS 33.41, 7,596 thousand dilutive potential shares of the convertible bonds (2014: 10,904 thousand shares) were not included in the computation of diluted earnings per share as they were anti-dilutive.

		Jan. 1 - Sep. 30, 2015	Jan. $1 -$ Sep. 30, 2014 *
Net income attributable to shareholders of
Klöckner & Co SE	(€ thousand)	$-84.179$	25,717
Weighted average number of shares	(thousands of shares)	99.750	99.750
Basic earnings per share	(€/share)	$-0.84$	0.26
Diluted earnings per share	(€/share)	$-0.84$	0.26

*) Comparative amounts 2014 adjusted due to initial application of IFRIC 21 (Levies).

(6) Inventories

$($ $\in$ million)	September 30, 2015	December 31, 2014
Cost	1,153	1.355
Valuation allowance (net realizable value)	$-49$	$-37$
Inventories	1,104	1.318

(€ million)	September 30, 2015	December 31, 2014
Non-current financial liabilities
	124
	-
	268
	3
	395	522
Current financial liabilities
	188
	97
	135
	-
	1
	421	259
Financial liabilities as per consolidated balance sheet	816	781

(€ million)	September 30, 2015	December 31, 2014
Financial liabilities as per consolidated balance sheet	816	781
	6
Gross financial liabilities	822	788
	– 305
Net financial debt Klöckner & Co Group	517	472

Financial assets as of September 30, 2015 Measurement in accordance with

				IAS 39	IAS 17
(€ million)	Carrying amount	Amortized costs	Fair value recognized in profit and loss	Fair value recognized in equity	Amortized costs	Not covered by the scope of IFRS 7	Fair value
Non-current financial assets
Current financial assets
Total	1,237	1,215	1	-	-	21	1,216

Financial liabilities as of September 30, 2015 Measurement in accordance with

				IAS 39	IAS 17
(€ million)	Carrying amount	Amortized costs	Fair value recognized in profit and loss	Fair value recognized in equity	Amortized costs	Not covered by the scope of IFRS 7	Fair value
Non-current financial liabilities
Current financial liabilities
Total	1,504	1,393	3	56	4	48	1,460

Financial assets as of December 31, 2014 Measurement in accordance with

				IAS 39	IAS 17
(€ million)	Carrying amount	Amortized costs	Fair value recognized in profit and loss	Fair value recognized in equity	Amortized costs	Not covered by the scope of IFRS 7	Fair value
Non-current financial assets
Current financial assets
Total	1,185	1,167	-	-	-	18	1,167

Financial liabilities as of December 31, 2014 Measurement in accordance with

				IAS 39	IAS 17
(€ million)	Carrying amount	Amortized costs	Fair value recognized in profit and loss	Fair value recognized in equity	Amortized costs	Not covered by the scope of IFRS 7	Fair value
Non-current financial liabilities
Current financial liabilities
Total	1,635	1,540	5	38	4	48	1,596

The fair values of current financial assets are largely identical to their carrying amounts. The fair values of financial liabilities reflect the current market environment as of the reporting date for the respective financial instruments. The fair value is not reduced by transaction costs. For current financial liabilities for which no transaction costs are to be considered, the carrying amount approximates the fair value.

The fair values of the derivative financial instruments are determined on the basis of banks' quoted market prices or on the basis of financial models commonly used by banks. The fair value calculation also considers counterparty risk at the respective valuation date. If fair values exist, they correspond to the amount third parties would pay for the rights or obligations arising from the financial instruments. The fair values are the market values of the derivative financial instruments, irrespective of any offsetting changes in value in the underlying transactions.

The valuation of all financial instruments follows the hierarchy concept of IFRS 13. Financial instruments for which the fair value is obtained from quoted prices for similar instruments are classified as Level 1. If fair values are derived from directly observable market inputs, those instruments are included in Level 2. Financial instruments for which the fair values are not based on observable market data are assigned to Level 3. All financial instruments are allocated to Level 2 of the measurement hierarchy.

$(9)$ Subsequent events

On October 1, 2015, 100 % of American Fabricators, Inc., Nashville, Tennessee, USA, was acquired. From October 1, 2015 on, the company will be consolidated in the Klöckner & Co Group financial statements. American Fabricators, Inc. specializes in the professional fabrication of sheets into complex parts for customers from a wide range of different industries and generated sales of USD 30 million (about €27 million) with 150 employees.

The purchase price amounts to USD 37 million (roughly €33 million). Due to the transaction coinciding with the compilation of the interim financial statements, further information according to IFRS 3.B64 cannot be published at this time.

(10) Related party transactions

Within the framework of its ordinary business activities, the Klöckner & Co Group has business relationships with numerous companies. These also include related parties. Business relations with these companies do not differ from trade relationships with third parties. No material transactions were conducted with any of these related parties in the reporting period.

	Europe			Americas		Headquarters/ Consolidation		Total
(€ million)	9M 2015	9M 2014*)	9M 2015	9M 2014*)	9M 2015	9M 2014*)	9M 2015	9M 2014*)
	3,064		1,924		-		4,988
	3		34		– 15		22
	– 36		-		– 18		– 54
	824		544		1		1,369
	6,940		2,532		88		9,560

Reconciliation of EBIT to income before taxes:

$(\epsilon$ million)	9M 2015	$9M$ 2014 *)
Earnings before interest and taxes (EBIT)	$-54$	90
Financial result	$-37$	$-47$
Income before taxes	$-91$	43

*) Comparative amounts 2014 adjusted due to initial application of IFRIC 21 (Levies).

Duisburg, November 3, 2015

Klöckner & Co SE

Management Board

Gisbert Rühl Chairman of the Management Board

Marcus A. Ketter Member of the Management Board Karsten Lork Member of the Management Board

William A. Partalis Member of the Management Board

March 1, 2016	Annual financial statements 2015 Financial statements press conference Conference with analysts
May 4, 2016	Q1 interim report 2016 Conference call with journalists Conference call with analysts
May 13, 2016	Annual General Meeting 2016 Düsseldorf
August 4, 2016	Q2 interim report 2016 Conference call with journalists Conference call with analysts
November 3, 2016	Q3 interim report 2016 Conference call with journalists Conference call with analysts

Klöckner&Co SE

Christian Pokropp

Disclaimer

This report (particularly the "Forecast" section) contains forward-looking statements that are based on the current estimates of the Klöckner & Co SE management with respect to future developments. They are generally identified by the words "expect", "anticipate", "assume", "intend", "estimate", "target", "aim", "plan", "will", "endeavor", "outlook" and comparable expressions, and include generally any information that relates to expectations or targets for economic conditions, sales or other performance measures.

Forward-looking statements are based on current plans, estimates and projections. You should consider them with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Klöckner & Co's control. Among the relevant factors are the impacts of important strategic and operating initiatives, including the acquisition or disposal of companies. If these or other risks or uncertainties materialize, or if the assumptions underlying any of the statements prove incorrect, Klöckner & Co's actual results may be materially different from those stated or implied by such statements. Klöckner & Co SE can offer no assurance that its expectations or targets will be achieved.

Without prejudice to existing legal obligations, Klöckner & Co SE does not assume any obligation to update forward-looking statements to take information or future events into account or otherwise. In addition to the figures prepared in line with IFRS or HGB (Handelsgesetzbuch - German Commercial Code), Klöckner & Co SE presents non-GAAP financial performance measures, e.g., EBITDA, EBIT, net working capital and net financial debt.

These non-GAAP measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS or HGB. Non-GAAP measures are not subject to IFRS or HGB, or to other generally accepted accounting principles. Other companies may define these terms in different ways.

There may be rounding differences in the percentages and figures in this report.

This English version of the interim report is a courtesy translation of the original German version; in the event of variances, the German version shall prevail over the English translation.