Trelleborg sales, earnings drop amid lower volumes

Trelleborg, Sweden – Trelleborg Group has reported a decline in first quarter sales and earnings (EBITDA), due to lower volumes.

Volumes were impacted during the three months to end of March, due to Easter holidays, which led to fewer working days, explained group president and CEO Peter Nilsson 24 April.

Earnings for the quarter fell 2% year-on-year to SEK1.5 billion (€128 million), on 5% lower sales of SEK8.2 billion, Trelleborg announced.

Despite the earnings decline, Trelleborg said earnings margin improved to 18.1% from 17.5% reported the year before.

According to the group leader, Trelleborg has noted "subdued performance" in several market segments for the past several quarters and has adapted itself to lower demand.

“We, therefore, see it as a sign of strength that we were able to display a margin improvement despite lower volumes during the quarter,” Nilsson added.

For the long-term, he said, the group aims to improve its structure to achieve a margin of 20%.

Breaking down segments, Nilsson said sales for Trelleborg Industrial Solutions (TIS) slowed somewhat.

Segment revenue declined 3% year-on-year to SEK3.7 billion, while earnings rose 9% to SEK613 million.

Here, Nilsson said, the construction industry "remains under pressure in several markets", while the group has also noted weaker demand in certain industrial segments.

Meanwhile, project transactions for LNG-related solutions continued to grow significantly, and sales to the automotive industry were also positive.

Nilsson linked the improvement in segment earnings and margin to “operational and structural improvements as well as a positive sales mix.”

During the quarter, the Swedish group established Trelleborg Medical Solutions (TMS), a new business area focusing on healthcare and medical.

At the same time, it signed an agreement to acquire Baron Group, an Australian-Chinese manufacturer of advanced precision silicone components, which will strengthen TMS’s application expertise and manufacturing capacity. (ERJ report)

TMS, according to Nilsson, is currently experiencing a challenging market, with the segment reporting an 11% year-on-year decline in sales to SEK583 million and 1% lower earnings at SEK82 million.

“The aftermath of the pandemic has led to a protracted period of destocking in the medtech industry," said Nilsson.

Trelleborg, he went on to say, has now been affected by "significant destocking by a few major customers.” 

According to the group executive, Trelleborg expects the destocking trend to continue for “at least another quarter”.

However, Nilsson said, “underlying demand remains healthy, and we expect a much stronger second half of 2024.”

Trelleborg Sealing Solutions (TSS) reported declines both in sales and earnings, with “the Easter effect explaining the absolute majority of this [sales] decrease.”

Here, earnings dropped 9% year-on-year to SEK864 million, on 3% lower sales at SEK4.1 billion.

Deliveries to the automotive industry were "unchanged", while sales to the aerospace industry continued to increase sharply.

Trelleborg went on to note that “acquisitions with lower margins” impacted TSS profitability.

“The integration of Minnesota Rubber & Plastics is continuing and the work to achieve synergies from this major acquisition will gradually result in higher sales and profitability in the years ahead,” Nilsson added.