Trelleborg deals with downturn

ERJ staff report (DS)

Stockholm, Sweden -- In presentations at its annual capital markets day, a series of Trelleborg managers noted that their break-even turnover levels have been substantially reduced. This, they said, will bring substantial rewards when sales volumes return, and in the interim have returned the company to a strong and profitable position.

“As a result of continuous focus on selected market segments, Trelleborg now has an increasingly concentrated and simultaneously profitable business. The company was early in adapting its capacity to the current market situation. We are now well-positioned and have a significantly more efficient structure and flexibility to meet future changes in the market,” says Trelleborg's CEO Peter Nilsson at the company's Capital Markets Day being held in Stockholm last week.

The geographic relocation to growth markets has been extensive in the past five years and the Group currently has 27 percent of its production units outside Western Europe and North America. Since 2005 the Group has exited 25 production units in Western Europe and North America and in the same period started 10 new units outside these regions.

Trelleborg has adjusted its financial targets and is currently focusing on three targets: organic growth, the EBITDA margin and return on equity. The EBITDA margin target remains at 12 percent. The growth target focuses on organic growth and is set at average growth of 5 percent from now and one economic cycle onward. In addition, the Group has the ambition to make bolt-on acquisitions. The third goal, return on equity, is set at 12 percent. The reduction from the previous target, which was 15 percent, was primarily based on altered assumptions regarding a lower debt/equity ratio and a lower rate of capital turnover.

The Trelleborg Engineered Systems business area's strategy to create a structure for profitable growth generates leverage. A key element of this involves the continuous improvement of Trelleborg's positions in offshore oil and gas, infrastructure construction, coated systems and selected areas of other industries.

Trelleborg Automotive claims to be the global leader in anti-vibration and damping solutions for vehicles and is continuing to work to further enhance its positions in this area. The unit continues to work to invest in emerging markets, such as China, India, Brazil, Turkey and Eastern Europe, partly to capitalize on the higher growth in these markets and partly to create a more efficient cost base. Approximately one third of the sales within anti-vibration, the largest part of the business area, is outside North America and Western Europe.

At Trelleborg Sealing Solutions, extensive measures have been taken to enhance the efficiency of and adapt the production structure to the global market with maintained market organization. To meet the rise in demand in growth markets, investments have been made in production facilities in China, India and Brazil. At the same time, the business area has decreased the number of productions units, for example by discontinuing two facilities in North America and that the number of facilities decreased with five by merging facilities in the US and Europe. The business area is well prepared for the future with a considerably lower cost level and a product portfolio that is stronger than ever.

Trelleborg Wheel Systems has successfully achieved a strong premium position in both highly-advanced agricultural tyres as well as industrial tyres. The business area has a competitive advantage compared with other players in the market in that it delivers complete wheel systems. The strong technology base is used to develop the product portfolio in many specialized niches. The business area also foresees geographical growth opportunities, including the North American market.

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Press release from Trelleborg