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2021-10-27

TRELLEBORG: Interim report July - September 2021

"Strong performance in the quarter"

"Trelleborg performed strongly in the third quarter. Sales increased 15 percent, of which organic sales rose 16 percent. EBIT, excluding items affecting comparability, increased 25 percent, corresponding to an operating margin of 14.6 percent (13.5). Both sales and earnings were the best to date for a third quarter. Operating cash flow in relation to operating profit remains at a high level, despite increasing investments and a higher working capital requirement driven by higher sales.

Order intake during the quarter remained healthy in most geographies and market segments. We continue to advance our positions through investments in new geographies, improved efficiency, increased presence in selected market segments and value-generating solutions for our customers.

There were challenges during the quarter. The prices of raw materials continued their upward movement. The supply chains were disrupted by shortages of some components and raw materials, occasionally with temporary production stoppages as a result. A continued shortage of containers in some regions and historically high freight costs continued to present challenges, at the same time as the sudden and clear increase of energy costs pose an additional test. Overall, the challenges have been well managed within the Group, with flexible production and adjustments of prices to customers.

Within Trelleborg Industrial Solutions, demand from most market segments and all geographical markets improved. Sales to the construction and industry-related market segments were significantly higher compared with the preceding year. Deliveries to the aerospace and rail segments also increased. However, sales to the automotive industry declined, impacted by postponed deliveries, which were largely attributable to shortages of semiconductor components.

Organic sales in Trelleborg Sealing Solutions grew significantly in all market segments and geographies with good profitability. Order intake remained strong in most segments. Also in this business area, the lack of certain components and raw materials led to temporary production stoppages for some customers, especially in the automotive industry.

Trelleborg Wheel Systems displayed strong organic sales growth during the quarter. Significant sales growth was noted in all tire categories and in the majority of geographies. At the same time, raw materials prices continued upwards, which had a negative impact on the margins in the short term due to price formulas with OE manufacturers, meaning that the new higher customer prices take effect with some delay. Profitability is expected to gradually recover already during the next quarter.

We enter the fourth quarter with well-filled order books and with a high level of activity in most of our manufacturing units. As mentioned earlier, some challenges remain that we will need to address, but for a long time, the Group has demonstrated its ability to adapt to constantly changing conditions. Our general assessment at present is that demand for the fourth quarter will be on a par with the level of demand in the third quarter, adjusted for seasonal variations", says Peter Nilsson, President and CEO.
 

  • Organic sales increased 16 percent in the quarter compared with the preceding year.

  • Net sales during the quarter increased 15 percent, negatively impacted by exchange rate effects, and amounted to SEK 8,240 M (7,152).

  • EBIT, excluding items affecting comparability, increased 25 percent to SEK 1,203 M (965), corresponding to an EBIT margin of 14.6 percent (13.5). Earnings were the best to date for a third quarter. 

  • Operating cash flow amounted to SEK 1,117 M (1,352). The cash conversion ratio for the most recent 12-month period amounted to 102 percent (124).

  • Items affecting comparability for the quarter were a negative SEK 32 M (neg: 81) and pertained to restructuring costs of SEK 65 M and a capital gain on the sale of properties of SEK 33 M.

  • EBIT, including items affecting comparability, amounted to SEK 1,171 M (884) for the quarter.

  • Earnings per share, excluding items affecting comparability, totaled SEK 3.25 (2.21). For the Group as a whole, earnings per share were SEK 3.20 (2.41). 

  • The key figures in this report relate to continuing operations, unless otherwise stated.

Market outlook for the fourth quarter of 2021
Demand is expected to be on a par with the third quarter of 2021, adjusted for seasonal variations. Uncertainty regarding the pandemic's impact on the coming quarters remains.

Market outlook from the interim report published on July 22, 2021, relating to the third quarter of 2021
Demand is expected to be on a par with the second quarter of 2021, adjusted for seasonal variations. Uncertainty regarding the pandemic's impact on the coming quarters remains

For further information, please contact:
Media: Vice President Media Relations Karin Larsson, +46 (0)410 67015, +46 (0)733 747015, karin.larsson@trelleborg.com
Investors/analysts: Vice President IR Christofer Sjögren, +46 (0)410 67068, +46 (0)708 665140, christofer.sjogren@trelleborg.com

This information is information that Trelleborg AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was issued, by the contact person above, for publication on October 27, 2021 at 7:45 a.m. CEST.

This is a translation of the company's Interim Report in Swedish.

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