Trelleborg eyes expansion after strong third quarter

Trelleborg, Sweden – Trelleborg AB is considering new business and market initiatives on the back of continued “strong earnings growth,” the group signalled in its third quarter results.

Over the three-month period to 30 Sept, Trelleborg achieved higher sales, improved earnings and a strong operating cash flow, president and CEO Peter Nilsson reported 26 Oct.

The gains included an 11% year-on-year increase in earnings (EBITA, excluding items affecting comparability) to SEK1.5 billion (€127 million), on 12% higher sales of SEK8.4 billion.

While organic sales decreased by 1%, acquisitions contributed 9% and positive exchange rate effects 4% to overall sales. Earnings margin remain on a par with last year at 17.6%.

By segment, Trelleborg Industrial Solutions (TIS) reported 6% growth in sales to SEK3.6 billion, despite “slightly lower” organic sales year-on-year.

Sales at the industrial parts unit grew particularly well in Europe, but also in North America – while declining in Asia.

A dip in sales to the construction industry was offset by sales to the automotive and marine markets, including buoyant sales related to 'SmartPort concept'. 

Third quarter earnings at TIS grew 17% year-on-year to SEK597 million on price adjustments, positive sales mix and improved efficiencies.

At 16.2%, the business area achieved its “highest margin to date for a single quarter,” according to Trelleborg.

At Trelleborg Sealing Solutions (TSS), sales grew 18% year-on-year to SEK4.7 billion, despite a ‘marginal decline’ in organic sales.

“Sales to the aerospace industry remained strong, while deliveries to the automotive industry continued to grow, driven mainly by sales in Europe.” 

Sales to the healthcare & medical sector also developed positively, while deliveries to general industry declined in several geographic regions, partly due to inventory adjustments.

Earnings at TSS rose 3.0% year-on-year to SEK936 million, while earnings margin dropped by 2.9 percentage points to 20.0%, noted Trelleborg.

The margins-decline was linked to “substantial investments in the organisation within a number of rapidly expanding market segments.”

Looking ahead, group CEO Nilsson said external factors “continue to create significant uncertainty” regarding market developments in the near-term.

But, he added, Trelleborg is “highly confident” in its ability to address the fluctuations in the market.

For the final quarter, the group’s overall assessment is that demand will be in line with that seen in the third quarter, according to the Trelleborg leader.

Nilsson went on to highlight a series of recent restructuring and expansion moves at Trelleborg, adding that “more initiatives are in progress."

Promising more information "in the near future," Nilsson said these measures would further improve the group’s profitability and balance its 'geographic exposure'.