Trelleborg's rubber activities perform well in tough times

ERJ staff report (RD)

Trelleborg, Sweden - Trelleborg AB has today published its financial results for 2008. The company's rubber-related units have reported solid results despite a turbulent year for the company as a whole during the economic downturn and falling demand.

The company's Sealing Solutions unit, a supplier of precision rubber seals for the industrial, aerospace and automotive industries, with a market of around SEK 18 billion (Euro 1653 million) per year in Europe and North America, reported net sales were up to SEK 6022 million from SEK 5844 million in 2007. Operating profit was up to SEK 888 million from SEK 839 million in 2007 and EBITDA was up from SEK 1019 million in 2007 to SEK 1079 million, the company reported.

The company's Sealing Solutions unit recorded zero organic growth during 2008, the company said, with both operating profit and the operating margin being reinforced by the shift toward more profitable segments, Trelleborg added.

“The trend in our Industrial core business was favorable, and performance in Southeast Asia was very strong,” said business area president, Trelleborg Sealing Solutions, Claus Barsøe. “In addition, I was pleased with the way we reduced our exposure to the automotive industry before the impact of the financial crisis was felt,” he added. Barsøe also said that the current economic trend will be the main challenge facing the unit, as well as consolidating and developing leading positions in Western Europe.

Trelleborg Wheel Systems, consisting of Agricultural & Forest and Industrial tyres, recorded net sales of SEK 3708 million compared with SEK 3248 million in 2007. Operating profit was SEK 363 million, up 26 percent from SEK 288 million for the previous year, and EBITDA came in at SEK 453 million compared with SEK 374 million in 2007.

The unit reported a strong global trend for large agricultural tyres in 2008 and recorded organic growth of nearly 11 percent, Trelleborg said. The consolidation of industrial tyre production in Sri Lanka will lead to fully operational production during the first six months of 2009, the company added. The company said growth of 14 percent was recorded during 2008 in Trelleborg Wheel Systems.

“It is important to remember that this was accomplished despite a tougher economic climate over much of the period,” said business area president Maurio Vischi. “ We can now use this new situation as a springboard to further develop our operations,” he added.

At the beginning of 2009, the European Commission announced its decision regarding the competition investigation, which has been ongoing since 2007, Trelleborg said. The total costs in conjunction with the competition cases are now estimated to amount to SEK 516 million, of which SEK 430 million was charged to 2008, with the remainder impacting 2007. Accordingly, the possible outcome, earlier communicated by Trelleborg, has been significantly reduced, the company added.

“2008 was a turbulent year in many ways,” said Trelleborg ceo, Peter Nilsson. “An economic slowdown was anticipated by many, but nobody could foresee how rapid it would be. Following a favourable trend in the first three quarters of 2008, the downturn in the fourth quarter was dramatic.”

Nilsson said that overall, the rapid decline in the market in the fourth quarter of 2008 had a significant impact on Trelleborg. Sales for the year amounted to SEK 31 263 million, compared with SEK 30 971 million in 2007 and operating profit totaled SEK 1 798 million, down from SEK 2 274 million in 2007.

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Press release from Trelleborg AB