Trelleborg cautious despite ‘highest ever' quarterly earnings

Trelleborg, Sweden – Trelleborg Group has reported a strong business  performance, posting its "highest earnings to date for a single quarter."

For the three months to 30 June, earnings grew 14% year-on-year to SEK1.5 billion (€130 million) on sales 18% higher at SEK8.7 billion, Trelleborg announced 19 July.

Revenue gains included a 9% contribution from acquisitions and a 6% positive currency effect, noted the Swedish rubber products maker.

The higher earnings, meanwhile, reflected positive currency effects, price increases and efficiency improvements, according to the statement.

During the quarter, Trelleborg concluded the sales of its wheel & tires and printing blanket operations, leading to a capital gain after tax of SEK6.1 billion.

“Our strong balance sheet enables continued share buybacks [and investment in] focused organic initiatives and acquisitions,” said CEO and president Peter Nilsson.

Trelleborg Industrial Solutions (TIS) reported a 13% year-on-year rise in second quarter sales to just under SEK4 billion, with sales up in all geographic regions.

Most market segments, said Nilsson, contributed to the growth, in particular the LNG-related and marine solutions, as well as for the aerospace industry.

However, deliveries of sealing solutions for residential construction continued to develop negatively, the Trelleborg leader added.

Furthermore, TIS saw a slowdown in some industrial segments, partly impacted by inventory adjustments among customers.

Segment earnings improved 13% year-on-year to SEK632 million, as sales growth and price adjustments more than offset inflationary pressures.

Trelleborg Sealing Solutions (TSS) reported an 11% increase in earnings to SEK1 billion, on sales of SEK4.5 billion, 23% higher than in the prior-year period.

However, noted Nilsson, the positive development had a “somewhat calmer” pace compared to recent quarters.

Sales to healthcare & medical segment performed well, while deliveries to the aerospace industry remained “highly favourable”.

Deliveries to the automotive industry "increased somewhat", mainly driven by improvement in the European market.

Trelleborg's sealings business, however, noted “a certain decrease in sales to general industry in several geographic regions.”

Nilsson linked the development to “somewhat lower demand accentuated by destocking among our customers.”

Looking ahead, Nilsson said there was “significant uncertainty” regarding market performance in the second half of the year.

“While our order book is solid, we can see a slight slowdown in order intake compared with previous quarters,” he said.

For the third quarter, added Nilsson, Trelleborg's overall assessment is that demand will be somewhat lower than in the second quarter of the year.