SALZGITTER AG 
By FRANKFURT (Reuters) - Kloeckner & Co (>> Kloeckner & Co SE), Europe's biggest independent steel trader, said it would only reach its 2012 profit target if Europe's economy improved in the second half of the year.
"In Europe, as we expected, the environment remains difficult. With substantial overcapacity dominating the market, competition is very fierce," Chief Executive Gisbert Ruehl said in a statement on Wednesday.
"On top of this, customers continue to be unsettled by the ongoing sovereign debt crisis," he said.
The metals trader said its earnings before interest, tax, depreciation and amortisation (EBITDA) will stagnate at last year's figure of 217 million euros ($282 million) if Europe's economy fails to recover.
It previously saw an increasing in operating profit, and analysts on average have forecast a figure of 274 million euros for the year.
Kloeckner's gloomy outlook echoes comments by ArcelorMittal (>> ARCELORMITTAL), which said on Tuesday it sees steel consumption dropping 2 percent in Europe this year, while a surge in North American demand would lead to global steel consumption growing by between 4 and 4.5 percent.
Kloeckner is the largest steel and metals distributor in Europe by sales and caters to the construction, machinery engineering and automotive industries.
Its CEO, who had already warned of a recessionary threat in Europe in mid-2011, said earlier this year that a slight price recovery in the first quarter would be short-lived, with a risk of steel demand dropping by as much as 5 percent this year.
In the first quarter, Kloeckner's operating profit dropped by more than half to 45 million euros, coming in just below a consensus forecast of 48.2 million euros.
Kloeckner said it sees operating profit of 50-60 million euros in the second quarter if Europe's economy does not deteriorate further.
The metal trader's stock has lost 60 percent of its value over the past 12 months as the euro zone crisis rattled its customers, led to an 88 percent drop in annual net profit and prompted Kloeckner to scrap its dividend.
It also announced last year plans to cut 700 jobs in Europe and sell low-margin units in preparation for an economic slowdown, with sites in Spain and eastern Europe most affected.
Germany's biggest steelmakers ThyssenKrupp (>> ThyssenKrupp AG) and Salzgitter (>> Salzgitter AG) are both due to publish quarterly results on May 15. ($1 = 0.7695 euros)
(Reporting by Maria Sheahan)
