Klöckner & Co AG

1st Klöckner & Co

Analysts' and Investors' Meeting

Switzerland, September 19, 2007

Dr. Thomas Ludwig, CEOGisbert Rühl, CFO

2

Agenda

1. Multi metal distribution – value chain and customerrequirementsDr. Thomas Ludwig

2. Acquisition processGisbert Rühl

3

Overview multi metal distribution

Important mediator between producer and customer

Bundling of needs, purchasing in bulk

Via processing / sale of customer specific products

Operating in local markets close to the customers

Competition primarily via service, availability of products and short lead times

Servicing small and medium-sized enterprises of all industries

Steady demand over the price cycle

Ability to pass on price changes of the market to customers

Not affected by more cyclical end-user businesses, e.g. automotive

4

Function of a multi metal distributor in the value added chain

Requirements of theend- users:

Offering of the multi metaldistributor

Requirements of themulti metal producers:

High sales and accessto new customers

Adequate lead time

Increased capacityutilization

Long term customerrelationships

Simplified logistics

“One-stop-shop”

Availability of a broadrange of multi metalproducts

Services generatinghigher value added

Reduced purchasingand stocking costs

Warehouses nearby

Quality assurance

Purchasing in bulk fromproducers

Handling of small customerorders

Further processing of thematerial according tocustomer requirements

Stocking to ensure shorterlead times

Continuous purchase

5

Products and services

Products

Long products Sectionalsteel/Tubes

Stainless andaluminum

Flat steel

Services

Blanking/Flame &Plasma cuttingCut and slit from coilCut to length/

Mitre cut/BendingShot blasting/

Priming/Conservation

6

Steel distribution and market supply

About two thirds of market supply in Western Europethrough steel distribution and service centers

40 to 80% of the steel consumption (depending on the individualmarket) served through distribution and service centers

Steel distribution is partly linked to mills through same shareholderstructure

7

Steel distribution and market supply

Share of steel distributionTotal market supply

Direct deliverythrough

producers Steeldistribution

Flat SSC

Independent smalland medium sizeddistributors

Source: www.metalbulletin.com

30%

20%Mill-tied

distribution

Independentbig

distributors

50%

27%

33%40%

8

Requirements of the customers

Market oriented price policy

Access to global sourcing through distribution

Availability of broad range of multi metal products

Manifold processing available

On-time delivery within 24 hours guaranteed

Increased outsourcing of processing

Smaller and more complex order sizes

Tailor-made logistics

Full service offering

Quality control

9

Customer decides!

Processes are getting more complex

The most convenient solution for the customer will be the most successful

Distributor has to ease complex structures for the customers:

Customer

10

Broad rangeof products

Stockholding(Full range of

products)

Processing/Services

Distribution/Information/

Logistics

One Stop Shopping

A comprehensive service chain = One Stop Shopping

Tailor-made logistics for the customer includingon-time delivery (24 hour delivery) and high quality

+++

11

Need to grow

Consequences for the distribution:

Know-how,competences andservices required

to serviceproducer and

customer at thesame time

Expandgeographic reach,as distribution hasto be close to thecustomers also toensure supplier’smarket coverage

Services linkedwith logistics

require criticalmass in order tomake the system

profitable

The systemrequires volume –

to realize“Economics of

Scale”

Preconditions to achieve cost and price leadership

12

How will the supplier-distributor relationship developin the future?

Increasing consolidation of the steel producers

Risk of market dominating positions for steel producers inindividual markets

Increasing need of size in the steel distribution sector toprove benefit for the steel producers

Global sourcing is compulsory for the steel distribution

Global sourcing results in new challenges for an optimizedsupply chain and capital as well as price risk management

Further consolidation of the steel distribution is required

13

No shift of the market allocation between producers and steeldistribution in Europe

Producers will further invest in globalization

Backward integration – access to raw material – is of high strategicimportance for the producers

Steel distribution is – like in other industries - not the logical part of thevalue chain of steel production

Service centers for key accounts remain business segment of theproducers

Integrated strategic concepts of production and distribution will loseimportance as a result of increasing product specialization (e.g. qualitysteel flat only) and globalization

14

Full lineproduct portfolio

for material group(e.g. stainless)

Competition of distribution concepts: who will be the winner?

Specializeddistributor insingle product

categories(e.g. heavy plate)

Multi metaldistribution

(steel, stainless,non-ferrous metal)

15

Our answer: multi metal distribution

Buy global

Sell local

As a full product range supplier

For a broad range of metal consumers

Requires a network of branches

Thus decentral organization

With strong central functions – sourcing, IT, finance, etc.

16

Klöckner & Co at a glance

CustomerDistributor

Products:

Services:

Producer

Construction Structual

Steelwork Building and cvil

engineering

Machinery/MechanicalEngineering

Automotive Metal products/

goods, installation Durable goods etc.

Klöckner & Co Leading producer-independent steel and

metal distributor in the European and NorthAmerican markets combined

Distribution network with approx. 250warehouses in Europe and North America

Key financials FY 2006- Sales volume: 6.0 million tons- Sales: €5.532 million- EBITDA: €395 million

17

Distributor in the sweet spot

Local customersGlobal suppliers

Suppliers Sourcing Productsand services

Logistics/Distribution Customers

Global Sourcingin competitivesizes

Strategicpartnerships

Frame contracts Leverage one

supplier againstthe other

No speculativetrading

One-stop-shopwith wide productrange of high-quality products

Value addedprocessingservices

Quality assurance

Efficient inventorymanagement

Local presence Tailor-made

logistics includingon-time deliverywithin 24 hours

> 200,000customers

No customeraccounts for morethan 1% of sales

Average ordersize of €2,000

Wide range ofindustries andmarkets

Service moreimportant thanprice

Purchase volumep.a. of 6 milliontons

Diversified set ofworldwide approx.70 suppliers

Examples:

Klöckner & Co’s value chain

18

CDN

B D

F

E

CH ACZ

PL

LT

RO

NL CN

USA

GBIRL

Global reach with broad product and customer diversification

About 250 locations

28 LocationsUSA5 LocationsCDN

48 LocationsE30 LocationsCH76 LocationsF25 LocationsD

11 LocationsEastern Europe7 LocationsNL1 LocationIRL

24 LocationsGB

BU

19

Global reach with broad product and customer diversification

Customer diversification (2006)

Other

GB

Construction

Machinery/Manufacturing

Auto-motive

40%

20%5%

35%23%

21%

15%

10%

9%

6%1%

10%

Germany/Austria

France/BelgiumSpain

Nether-lands

EasternEurope

USA(incl. Primary

17%)

Switzerland

Canada

5%Steel-flatProducts

Steel-longProducts

Tubes

Specialand

QualitySteel

Aluminum

Other Products

28%

31%9%

10%

8%

14%

Sales split by industry Sales split by markets Sales split by product

20

Agenda

1. Multi metal distribution – value chain and customerrequirementsDr. Thomas Ludwig

2. Acquisition processGisbert Rühl

21

Profitable growth

Grow more thanthe market

Continuousbusinessoptimization

1 Acquisitions drivingmarket consolidation

Organic growth andexpansion into newmarkets

2

3 STAR Program:- Purchasing- Distribution network

Profitable growththrough value-addeddistribution and serviceswithin multi metals tocompanies in Europeand North America

Profitable growththrough value-addeddistribution and serviceswithin multi metals tocompanies in Europeand North America

22

€36 millionMetalsnabAug 2007

€108 million4 acquisitions2006

€537 million9 acquisitions2007 ytd.

€35 millionTournierJan 2007

€14 millionTeulingApril 2007

€360 millionPrimary SteelApril 2007

€17 millionEdelstahlserviceApril 2007

€15 millionMax CarlApril 2007

€11 millionZweygartApril 2007

€23 millionPremier SteelMay 2007

€26 millionWestokJune 2007

€141 million

Sales

2005

Acquired CompanyCountry

2 acquisitions

Accelerating numbers of acquisitions

Acquisitions

9

42

2005 2006 2007

Number Sales

€141 million€108 million

€537 million

23

North America (2006)

Companies: ~1,300 only independent distributors

Europe (2006)

Companies: ~3,000 few mill-tied, most independent

Huge opportunities in fragmented markets

Source: Purchasing Magazine (May 2007)Source: EuroMetal, company reports, own estimates

ArcelorMittal AM3S Division(Distribution approx. 5.5%)

ThyssenKrupp

Corus

Otherindependents

Othermill-tieddistributors

Klöckner & Co

Olympic Steel

Namasco(Klöckner & Co)

Ryerson

Other

Reliance Steel

Samuel, Son & Co

ThyssenKrupp Materials NA

Russel Metals

WorthingtonSteel

MetalsUSA

CarpenterTechnology

PNA Group

McJunkin

O'Neal Steel

Mac-Steel

AM Castle72.5%

Namascowith Primaryapprox. 1.4%

11%

8%

7%

4%~ 45-55%

~ 15-25%

4.5%

2.5%

2.1%

1.8%

0.9%0.9%0.8%

1.4%

1.3%

1.2%

1.3%

1.8%

1.4%

1.0%

4.7%

24

Strong acquisition criteria

Further acquisitions in core markets and Eastern Europe:• Leverage existing structure in core markets with small- and

mid-size bolt-on acquisitions• Large scale acquisitions when appropriate• Acquisitions in Eastern Europe to increase footprint

Focus on targets in 3 directions:• Expansion of geographic reach• Extension of customer base• Extension of product portfolio

Focus on targets at attractive valuations:• EV/EBITDA multiple between 4x and 5x for smaller

acquisitions• EV/EBITDA multiple between 5x and 6x for mid-size and large

scale acquisitions

Focus on targets with significant synergy and scale effects:• Stronger purchasing power• Streamlining operations and processes, integrating IT• Integration of STAR

Accretive growth

25

Efficient acquisition process

Approach• Existing local contacts to competitors• Pro-active contact via M&A advisors• External contacts (seller, M&A advisors, banks, etc.)

Selection of acquisition targets• Targets must fulfil acquisition criteria

Handling of acquisition projects• Depending on size and complexity of the deal and

experience of the country management the process iseither run locally or lead by the headquarters

• Duration of the projects between 3 to 6 months (firstcontact to completion)

• Due diligence is focussed on the areas of finance, sales/marketing, logistics/distribution/stocks, personnel andlegal/environmental

CountryOrganization

Group

Joint effort

Size of the project

Com

plex

ityof

the

proj

ect

Process run by…

26

Namasco Gen. line

Namasco Processing

Example: Primary Steel

Geographical Scope Facts (2006)Sales: $467m (€360m)Employees: 412Customers: 2,500

Sales split: Plate (89%)Light flat rolled (8%)Pipe (3%)

Segments: Heavy Equipment (29%)Oil & Gas (16%)Power Generation (6%)Ship Building (5%)Transp. Equipm. (5%)Metal builders (3%)Construction (3%)Service Centers (33%)

One of the leading suppliersof heavy plates in the US withan excellent reputation

Primary outlet

Primary Sales office

Oakland

Houston

Missouri

Chicago

Tampa

CharlotteArizona

Arkansas

Iowa

Alabama Georgia

SouthCarolina

North Carolina

Indiana

Maryland

Maine

Connecticut

Florida

Louisiana

Illinois

Texas

CaliforniaDubuque

Louisville

Indianapolis

AtlantaB´ham

CharlestonDallas

AustinNew Orleans

Jacksonville

Orlando

Pompano

Santa Fee Springs

Phoenix

Santa Fee Springs

Tulare

West Memphis

Savannah

Portland

Middletown

New Castle

27

Selection and processing

Contacts

Selection

Processing

Klöckner & Co was approached by investment bank acting for the seller Limited auction process

Local team with close co-operation with headquarters Duration approx. 5 months including negotiations Intensive due diligence including all areas

Further strengthening of market position in the area of heavy plates Expansion of geographic reach Access to new customer groups Improved basis for further acquisitions Significant synergy potential Reasonable valuation

28

Integration will be fully completed until Q1 2008

Title May Jun Jul Aug Sep Oct Nov Dec Jan

Transfer of ownership 11.05.

Integration of central functions:

11.05.Cash Management01.07.Reporting finance01.07.Creditors

01.01.AccountingPersonnel

30.09.Debtors

01.06.Health & safety

24.06. 20.08.Integration of sites (> 400 employees):West Memphis

Co-ordinationQ1 2008

Centralization/IntegrationPurchasing (locally)

01.08.Financing (ABS)

Q1 2008Remaining locations

29.07. 20.10.Oakland05.08. 14.11.Santa Fe Springs

29

Oakland

Houston

Missouri

Chicago

Tampa

Charlotte

Arizona

Arkansas

Iowa

AlabamaGeorgia

SouthCarolina

North Carolina

Indiana

Maryland

Maine

Connecticut

Florida

Louisiana

Illinois

Texas

CaliforniaDubuque

Louisville

Indianapolis

AtlantaB´ham

CharlestonDallas

AustinNew Orleans

Jacksonville

Orlando

Pompano

Phoenix

Santa Fe Springs

Tulare

West Memphis

Savannah

Portland

Middletown

New Castle

Integration of the location Santa Fe Springs (1)

Primary outlet

Primary Sales office

Namasco Gen. line

Namasco Processing

• New geographicdimension

• 86 employees• €73 million sales• 89 Kto sales volume

30

Integration of the location Santa Fe Springs (2)

Organization ProcessTeam

Site Manager (1.0)Assistants (2.0)Purchasing (2.0)Sales (1.0 + 12.0)Warehouse (1.0 + 32.0)Processing (2.0)Logistics (2.5)Debtors (1.0)Creditors (0.5)Quality management (0.5)Accounting (1.0)IT (1.0)Personnel (1.0)Total: (86.0)

Minimal complexity

Total integration completedwithin 12 weeks

• IT network, dataand IT system 8 weeks

• Training newsoftware 8 weeks

• Intensivesupport 2 weeks

Fast process

2 Project managers(Namasco)

18 Team members(Namasco+Primary)

2 Data transfer(Namasco)

3 Network/IT-support (Namasco)

Experienced team

31

Significant synergy and scale effects

Integration

Primary Steel will be managed as additionallocations with partial back office integration

• Finance functions and purchasing will be fullyintegrated into Namasco’s headquarters inAtlanta

• Stock management will report to headquarters• Billing and Credit Management will remain local

but report into same function in headquarters• Sales remains under local management• Namasco’s flat rolled SE division will be

reporting into a new sales division “Primary “• Primary’s brand name be maintained for the

nearer future

Implementation would take until Q1 2008 withsystems’ integration as main challenge

• Estimate 6-8 weeks per location required• Approximately 50 weeks to fully integrate into

Namasco’s systems

Synergies (in $000’s)

Area

Additional rebates from includingPrimary into Namasco’s rebateschemes and vice versa

Reduction of management andadmin headcounts

Sale of Namasco’s productsthrough Primary’s warehouses

Increasing value added services

IT Integration cost

Total

2,500

1,000

2,000

1,500

7,000

AdditionalEBITDA

p.a.One-timeexpenses

500

500

750

1,750

Expected margin improvement of 1.5%

32

Strong acquisition criteria fulfilled

Further acquisitions in core markets and Eastern Europe:• Leverage existing structure in core markets with small- and

mid-size bolt-on acquisitions ✔• Large scale acquisitions when appropriate ✔• Acquisitions in Eastern Europe to increase footprint

Focus on targets in 3 directions:• Expansion of geographic reach ✔• Extension of customer base ✔• Extension of product portfolio

Focus on targets at attractive valuations:• EV/EBITDA multiple between 4x and 5x for smaller

acquisitions• EV/EBITDA multiple between 5x and 6x for mid-size and large

scale acquisitions ✔

Focus on targets with significant synergy and scale effects:• Stronger purchasing power ✔• Streamlining operations and processes, integrating IT ✔• Integration of STAR ✔

Accretive growth ✔

33

Clear target

Finally the target of driving consolidation is clear

Increase volume and scaleto improve purchasing conditions

to improve logistics and stockholding

to improve coverage of fix costs

to improve local market share

34

Our symbol

the earsattentive to customer needs

the eyeslooking forward to new developments

the nosesniffing out opportunitiesto improve performance

the ballsymbolic of our role to fetchand carry for our customers

the legsalways moving fast to keep up withthe demands of the customers

35

Disclaimer

This presentation contains forward-looking statements. These statements use words like "believes,"assumes," "expects" or similar formulations. Various known and unknown risks, uncertainties andother factors could lead to material differences between the actual future results, financial situation,development or performance of our company and those either expressed or implied by thesestatements. These factors include, among other things:

Downturns in the business cycle of the industries in which we compete; Increases in the prices of our raw materials, especially if we are unable to pass these costs

along to customers; Fluctuation in international currency exchange rates as well as changes in the general

economic climateand other factors identified in this presentation.In view of these uncertainties, we caution you not to place undue reliance on these forward-lookingstatements. We assume no liability whatsoever to update these forward-looking statements or toconform them to future events or developments.