Trelleborg reports strong third quarter despite increasing costs

Trelleborg, Sweden – Trelleborg AB has reported a strong third quarter with sales and earnings (EBIT, excluding items affecting comparability) seeing double-digit increases year-on-year.

Third-quarter earnings rose 34% year-on-year to just under SEK1.3 billion, on sales 28% higher at SEK7.5 billion, Trelleborg reported 26 Oct.

While sales reached a record high for a single quarter, Trelleborg observed a slowdown in order intake during the period.

“Order intake during the quarter remained healthy in most geographies and market segments, albeit not as strong as during the first six month,” said CEO and president Peter Nilsson.

Energy and raw materials prices, noted Nilsson, continued on an upward trajectory for most of the period and the general rate of inflation continued to increase in most parts of the world.

Overall, he said, Trelleborg managed the challenges “well”, with flexible production and adjustments of prices to customers.

“We continue to advance our positions through investments in new geographies, improved efficiency and increased presence in selected market segments,” he added.

Group segment Trelleborg Industrial Solutions reported higher sales in all market segments and geographical markets.

Segment earnings rose 46% to SEK476 million, on 28% higher sales at SEK3.4 billion, said Trelleborg.

While deliveries to the construction and industry-related market segments were higher year-on-year, Trelleborg noted ‘indications of a downward trend in the European construction industry.’

The segment saw “highly favourable” sales to the aerospace industry and for applications related to liquefied natural gas (LNG).

Sales to the automotive industry were similarly healthy, as costumers recovered from lower production rates.

Trelleborg Sealing Solutions saw earnings rise 23% to SEK884 million, on 29% higher sales to SEK3.9 billion.

Sales grew by double figures in all geographies, with the trend strongest in North America, Trelleborg said.

Segment earnings increased mainly due to higher sales volumes, but margins declined on integration costs related to acquisitions and addition of resources in selected fast-growing markets.

To address this, Trelleborg said further price adjustments for customers have been introduced during the fourth quarter to adapt prices with general inflation.

Trelleborg Wheel Systems, which is reported under 'assets held for sale', recorded 33% higher sales, at SEK3.1 billion, with earnings up 30% to SEK309 million.

Trelleborg linked the sales growth at TWS to increased pricing reflecting higher costs for raw materials and energy.

During the quarter however, Trelleborg noted “a weakening of the aftermarket for agricultural tires in Europe," mainly due to the increasing geopolitical uncertainty in the region.

On the sale of TWS to Yokohama Rubber Industries, Nilsson said there were “several outstanding transactions” that are expected to be completed “in the next few months.”

“The divestment of Trelleborg Wheel Systems and Trelleborg Printing Solutions are being processed at the time of writing by the authorities in a number of countries that still need to approve the transactions,” he said.

“We also expect that the acquisition of Minnesota Rubber & Plastics will be finalised in the near future,” the Trelleborg boss concluded.