Kloeckner & Co CEO Says Company Will Withdraw From East Europe

German steel distributor Kloeckner & Co. SE (KCO.XE) will completely withdraw from markets in Eastern Europe, Chief Executive Gisbert Ruehl told shareholders at the company's annual general meeting Friday.

"In the interesting markets like Poland and the Czech Republic, our market share is insignificant and other markets like Romania and Bulgaria are losing their attractiveness," Ruehl said according to the text of a speech.

His comments come after Ruehl announced a possible withdrawal from the markets in early May. At the time he cited a challenging situation on steel markets in the wake of the euro-zone sovereign debt crisis, which particularly affects southern and eastern European peripheral countries.

Ruehl said that Kloeckner & Co.'s operations in Eastern Europe are too fragmented.

He said that 13 distribution sites are involved in the sale of around 100 million metric tons of steel in the region, while selling the same volume in Germany would only involve two distribution centers.

Kloeckner & Co. previously said that its Eastern European subsidiaries generate around 1% of the company's overall revenue and are presently posting losses before interest, taxes, depreciation and amortization.

Ruehl also reiterated the company's 2012 earnings outlook, saying earnings before interest, taxes, depreciation and amortization, or Ebitda, are expected to increase this year. However, he said that this will only be the case if the broader European economy recovers in the second half of the year.

For the second quarter, the company expects Ebitda of between EUR50 million and EUR60 million.

-By Jan Hromadko, Dow Jones Newswires; [phone]; [e-mail]