YEAR END REPORT January - December 2001
* Operating profit, excluding non-comparable items, increased to
SEK 1,134 M (992).
* Group cash flow from ongoing operations increased to SEK 1,395
* Profit after net financial items, excluding non-comparable
items, amounted to SEK 976 M (981).
* Earnings per share, excluding non-comparable items, increased
to 7.45 SEK (6.50).
* The restructuring program within the Wheel Systems business
area affected non-comparable items in the amount of SEK 200 M.
* Anders Narvinger is being proposed as the new Chairman of the
Board of Directors.
* Reclassification of Series A shares proposed.
* A dividend of SEK 4.00 (3.75) per share proposed.
Net sales, SEK M 18,760 13,654
Operating profit, SEK M 1,134 992
(excluding non-comparable items)
Cash flow from
ongoing operations, SEK M 1,395 763
Profit after net financial items, SEK M 976 981
(excluding non-comparable items)
Earnings per share, SEK 7.451) 6.502)
(excluding non-comparable items)
Earnings per share, SEK 5.351) 7.302)
1) Based on an average number of shares excluding holding of own
2) Based on an average number of shares excluding holding of own
Group, full year 2001
Net sales and profit Full year 2001
The Group's net sales amounted to SEK 18,760 M (13,654). Net sales of
comparable units declined by two percent, excluding currency effects.
The Group's net sales during the period were distributed as follows:
approximately one third denominated in U.S. dollars and two thirds
denominated in other currencies, mainly euro. The portion of sales of
comparable units denominated in U.S. dollars declined by seven percent,
while the portion denominated in euro declined by one percent.
Operating profit for the Group, excluding non-comparable items, amounted
to SEK 1,134 M (992).
Non-comparable items affected operating profit negatively by SEK 208 M
during the period, compared with a positive effect of SEK 367 M a year
earlier. As noted in the Group's nine-months report, these items in 2001
included a restructuring program amounting to SEK 200 M in the Wheel
Systems business area to adapt the business area's capacity to a weaker
market. Approximately SEK 130 M of the restructuring costs have an
effect on cash flow, mainly in 2002. The program is expected to yield a
repayment on cash flows corresponding to approximately two years, and to
affect the business area's earnings positively beginning in the second
half of 2002. The program is expected to produce full effect,
corresponding to slightly more than SEK 70 M, as of 2004. Operating
profit for the Group amounted to SEK 926 M (1,359).
The Group's net financial expense amounted to SEK 158 M (11). Profit
after net financial expense amounted to SEK 727 M (1,141), and to SEK
976 M (981) excluding non-comparable items.
The write-down of Boliden shares was adjusted positively in the amount
of SEK 80 M during the last quarter of the year, resulting in a total
write-down of SEK 41 M.
The return on capital employed, excluding amortization of goodwill,
amounted to 12.2 (14.9) percent.
Earnings per share, excluding non-comparable items, increased by 15
Earnings per share, excluding non-comparable items, increased to SEK
7.45 (6.50) during the period. Earnings per share were SEK 5.35 (7.30).
Earnings per share were affected favorably by repurchases of Company
shares. The table in connection with the income statement includes
Earnings per share based on the number of shares outstanding at year-end
in order to show the full effect of the repurchase of Company shares.
Earnings per share excluding non-comparable items as of December 31,
2001 amounted to SEK 7.95 (6.85).
Group Earnings per share excluding non-comparable items and amortization
of goodwill amounted to SEK 9.00 (7.35). This data is provided as
supplementary information when comparing Trelleborg with companies which
effective in 2002, in accordance with US GAAP, are reporting profit
excluding amortization of goodwill.
Balance sheet, cash flow and investments Full year 2001
As of December 31, 2001, the Group's capital employed amounted to SEK
10,451 M (9,675). Company shares totaling SEK 1,135 M (1,048) were
repurchased during the year. Financial liabilities amounted to SEK 3,267
Liquid funds included Boliden shares with a book value of SEK 314 M
The debt/equity ratio at year-end was 41.7 percent (19.7). The
equity/assets ratio was 44.2 percent (50.9). Shareholders' equity per
share (based on 86.6 million shares outstanding) at year-end amounted to
SEK 88.70 (84.60). The return on shareholders' equity, excluding non-
comparable items was 8.9 percent (8.1). The return on shareholders'
equity amounted to 6.3 percent (9.0).
The Group's cash flow from ongoing operations amounted to SEK 1,395 M
(763), and investments totaled SEK 642 M (543). The strong increase in
cash flow was primarily the result of action programs implemented in a
Business areas, Full year 2001
Trelleborg Automotive Operating margins in line with preceding year
The business area's net sales amounted to SEK 9,777 M (5,822). Operating
profit for the year rose to SEK 747 M (451). During the fourth quarter,
the operating margin was positively affected by the high personnel-
related costs charged against earnings earlier in the year.
In terms of geographical distribution, the business area has about 62
percent of its sales in Europe, nearly 30 percent in North America and
approximately 8 percent in the rest of the world.
Auto production in Europe showed growth of 1 percent, compared with
2000. During the final quarter, European auto production declined by
about 5 percent as a result of adjustments following the inventory build-
up during the third quarter.
Auto production in North America was down by around 10 percent for 2001
as a whole, due mainly to inventory adjustments at the beginning of the
year. The decline in production during the final quarter was around 5
Although the Brazilian market developed slightly more favorably during
2001, compared with the preceding year, this market deteriorated during
the second half. The markets in China and India developed satisfactorily
during the year.
Work to integrate the operations of earlier acquisitions progressed
favorably during the year. Four plants were closed during the year and
production was transferred to other units in the business area with
lower cost levels. In addition, the reorganization of the sales,
development and purchasing structure in Europe proceeded according to
It is planned that the Component & Acoustics plant in Bow in the UK will
be closed in 2002 and production transferred to other product area
To meet the declining demand in North American markets, and as a result
of the reduction in production locations noted above, Trelleborg made
adjustments to the workforce during the year, corresponding to a total
of approximately 600 personnel.
During the year, the decision was made to expand the unit in Kalmar,
Sweden, to accommodate the production of the noise-suppression material
DuruLam (Durability, Rubber and Laminate). During the fourth quarter,
production started for the first series production order for DuruLam.
Also during the final quarter, authorities approved building plans for a
new plant for the production of industrial antivibration products and
systems in Leicester, UK, which will replace an existing facility. The
new plant is expected to be ready for occupancy at the year end 2002.
The business area's operating cash flow amounted to SEK 903 M (510).
Trelleborg Wheel Systems Weak demand in main markets
Net sales during the year amounted to SEK 3,127 M (3,024). Operating
profit totaled SEK 93 M (200).
In the Forest and Farm Tires segment, which accounts for the bulk of the
business area's sales, OEM sales in Europe, the most important market,
declined gradually during the year. In the most important machine
categories in Europe, the decline for the year as a whole was 10-15
percent. The business area strengthened its position in this segment,
primarily through its Pirelli range.
The business area's other large product segment is Industrial Tires.
Demand in this market segment is directly related to the trend of
industrial investment. The weak investment climate in both North America
and Europe had a substantial impact on the industrial tires product area
throughout the second half of 2001. Demand in North America declined for
the fourth consecutive quarter, while in Europe the fourth quarter of
2001 was one of the weakest in many years. The downturn in OEM sales in
North America was 30 percent and in after-market sales 25 percent. The
business area strengthened its market share in these segments in North
America. The continuing market downturn created pressure on prices in
The continuing decline in demand in the business area's main markets
resulted in an operating loss in the fourth quarter and sharply reduced
earnings for the year as a whole.
Towards the end of 2001, the business area implemented a restructuring
program, which resulted in costs of SEK 200 M being charged against
fourth-quarter earnings, of which approximately SEK 130 M will affect
cash-flow, primarily during 2002. The pay-back time for the cash-flow
expense is an estimated two years, with a positive effect on earnings
expected in the second half of 2002. The program is expected to produce
full effect, corresponding to slightly more than SEK 70 M, as of 2004.
Parts of the restructuring program were presented in December 2001 and
include mainly a reduction of about 150 personnel at various production
units in the Trelleborg area at an estimated cost of approximately SEK
The remaining elements of the restructuring program will be announced
during the first half of 2002.
The business area's operating cash flow amounted to SEK 104 M (128).
Trelleborg Engineered Systems
Continued improvement in profitability despite poorer market conditions
Net sales in 2001 increased to SEK 3,369 M (2,941). Operating profit
rose to SEK 181 M (140).
The increase in profit was achieved through cost-savings and
improvements in the business area's product portfolio - mainly in the
form of acquisitions in the field of marine fender systems.
The higher results were achieved despite more difficult market
conditions, notably in the area of industrial supplies, where the market
in North America declined by 15 percent and the market in Europe
weakened gradually during the year. This substantial loss of volume was
offset through corrective-action programs in North America and an
increase in market shares in Europe.
Demand in the oil, offshore and infrastructure market sectors was
stable, but characterized by some uncertainty during the latter part of
the year. Interest in, and demand for, the business area's chemical-
resistant suits was strong during the second half of 2001.
During the fourth quarter the business area concluded an agreement with
Vredestein, a Dutch company, to acquire its operations in the field of
sealing systems - including tunnel seals - for infrastructure projects.
Trelleborg acquired the company's customer base, machines and inventory.
All production is being transferred to Trelleborg Engineered Systems'
Earlier in the year the business area acquired Hercules Rubber &
Chemicals (Singapore), Queensland Rubber (Australia) and Fentek Marine
Systems (Germany). The companies' principal products are marine fender
systems - a field in which Trelleborg is a market leader in Europe and
Oceania and number two in the world - and other infrastructure products
(including bridge bearing systems and and tunnel seals), areas in which
the Group already occupies good market positions.
The business area's operations in roll coverings in Trelleborg were sold
during the year. The unprofitable production of laminates in Mexico was
also closed down.
As a result of acquisitions and the improvement of the product
portfolio, the business area now has a broader geographic balance of
The business area's cash flow from ongoing operations amounted to SEK
199 M (159).
Trelleborg Building Systems
Declining markets in Central Europe depress earnings
Net sales for the period amounted to SEK 1,794 M (1,471) and the
operating profit was SEK 138 M (162).
Because the markets for Building Systems' products follow the seasons,
the first and fourth quarters are the weakest for the business area.
This effect has become even more pronounced with the acquisition of
Phoenix Tag, a Danish company, which increases the percentage of roof
Overall demand in Central Europe - notably in Germany, the business
area's most important geographical market - continued to be weak. The
trend in other important geographical markets, including the Nordic
Region, was more fragmented, with a stable development in Sweden, but a
leveling off in the other countries. The business area's programs in
consumer profiles contributed to increased profits in the North American
market, among others.
The non-building-related sector of the business area's markets leveled
off slightly during the second half of 2001. Despite the weakening,
Industrial Profiles developed well, due to increased exports. Lead times
in the unit in Värnamo were reduced successfully by improving the
efficiency of the process.
There was an increase in the number of project inquiries related to
rubber sheeting for roofs. As a result of this, combined with the
successes recorded by the new Elastofol and Elastoseal product systems,
sales and profitability in the Rubber Membranes business unit were
Phønix Tag, a Danish company, was acquired in the beginning of the year,
strengthening the position of the business area in the field of bitumen-
based waterproofing products in the Nordic Region. As a result of
synergy effects, the company - which was operating at a loss when it was
acquired - is already showing positive operating results, calculated at
an annual rate.
Despite weakening markets, the greater part of the units developed at
the level of 2000. Within Industrial Profiles-Europe earnings declined
due to the downturn in the market in continental Europe, and within
Roofing due to the higher prices for materials. The effects of higher
raw-material prices were offset through improvements in efficiency.
The business area's cash flow from ongoing operations amounted to SEK
172 M (153).
Trenor (49 percent holding)
Trelleborg's share (49 percent) of profit before tax in the Trenor Group
amounted to SEK 121 M (203). The decline was attributable primarily to
the effects of a weaker economy, which affected both Bröderna Edstrand
and Reynolds. Trelleborg's holding in Trenor Holding is carried on the
books at SEK 177 M (90).
Holding in Boliden. Preference shares were converted to common shares
Trelleborg participated in Boliden's issue of shares during the second
half of 2001. Trelleborg sold its portion of the issue during the
autumn. In connection with the transfer of Boliden shares from the
Toronto Stock Exchange to the Stockholm Exchange, Trelleborg's holding
of Boliden preference shares was converted to a corresponding 7.2
million common shares with a total value of SEK 314 M at December 31,
Buy-back of Company shares 15 million shares redeemed or cancelled
To "normalize" its balance sheet and achieve its objective with respect
to the return on shareholders' equity, Trelleborg has implemented
measures designed to create a better financial structure. Accordingly,
Trelleborg has made substantial repurchases of Company shares.
During the fourth quarter, 15 million Series B common shares were
redeemed or cancelled. There are now 90.6 million shares outstanding.
Trelleborg owns approximately 4 million Company shares for its own
account, with the result that the number of outstanding shares, net, is
Based on the decision of a General Meeting of shareholders, there is a
mandate for Trelleborg to purchase as many as 10 percent of the
Company's shares - or approximately another five million shares.
Proposals to be submitted to the Annual General Meeting on April 23
The Board of Directors proposes that a dividend
of SEK 4.00 per share be paid
The Board of Directors and the President propose that a cash dividend of
SEK 4.00 per share (3.75) be distributed to the shareholders. The
Group's dividend policy, which was revised in 2001, provides that the
dividend should amount over the long term to between 30 percent and 50
percent of net profit for the year. The proposed dividend, corresponding
to SEK 347 M, amounts to distribution of 48 percent of the net profit
for 2001, excluding non-comparable items.
Reclassification of A-shares The Board of Directors is proposing the
reclassification of 2.5 million Series A shares
The Board of Directors has decided to present a proposal to the Annual
General Meeting regarding the reclassification of Series A shares to a
corresponding amount of Series B shares. The principal shareholders, the
Dunker Funds and Foundations, have stated that they are willing to
reclassify 2.5 million of their 12 million Series A shares to Series B
shares. In line with what was stated when the buy-back program was
started, this will restore the Dunker Funds and Foundations' holdings of
voting rights to the level of their holding before the repurchasing
began. Following the reclassification, outstanding Series A shares will
carry 53.9 percent of the voting rights of the present 90.6 million
shares, and 52.4 percent after full dilution (following conversion of
debentures and exercise of options).
New Chairman Anders Narvinger to succeed Rune Andersson as new Chairman
Rune Andersson, Chairman of the Board of Directors of Trelleborg AB, and
Lennart Nilsson, Vice Chairman, have decided to resign their positions
in connection with the Annual General Meeting in April 2002. The Board
intends to appoint Anders Narvinger, who has been a member of
Trelleborg's Board since 1999, as the new Chairman.
Anders Narvinger, 53, will become President of the Association of
Swedish Engineering Industries in May 2002. Earlier, he worked in the
ABB Group for many years and has a solid industrial background. He held
various senior executive positions in ABB, including President and Chief
Executive Officer of ABB Sweden during the years 1996-2001. Anders
Narvinger is Chairman of the Boards of Directors of the Swedish Export
Council and Lund Technical College, among other responsibilities.
Repurchase of Company shares
Extended mandate to repurchase up to 10 percent of the shares
The Board of Directors intends to propose to the Annual General Meeting
that the Board be given an extended mandate, in line with an earlier
General Meeting decision, to repurchase up to 10 percent of the
Options program for senior executives
Proposed continuation in 2002
The Board of Directors intends to propose to the Annual General Meeting
that the Board be authorized to continue the three-year call-options
program for senior executives that was introduced in 2000. The scope and
terms of the program, which are in line with the program for 2001, will
be presented prior to the Annual General Meeting on April 23.
Improvements in efficiency and cash flow being given priority in
uncertain principal markets
Uncertainty with respect to future demand from our customers continued
in the fourth quarter of 2001 in both North America and Europe, which
are Trelleborg's principal markets.
The downturn in the general economy and the prevailing uncertainty is
expected to result in reduced production of cars in North America as
well as Europe. Production of cars in North America is expected to
decline by one to two percent in 2002, compared with 2001. The decline
in Europe is estimated to amount to between two and four percent. The
first half of 2002 is expected to be weaker than the second half,
relative to 2001.
Conditions for most market segments of the Group's other business areas
are expected to be weaker during the first half of the year, with a
potential improvement during the second half, driven by a higher rate of
a potential growth in GDP in North America and Europe.
The work of integrating acquisitions will continue in the Automotive
business area, with a positive impact on profit in 2002.
The restructuring program being implemented in the Wheel Systems
business area is expected to have a favorable impact on earnings
beginning in the second half of 2002.
Trelleborg has taken major steps toward normalizing its financial
structure during the past two years. The Group continues to have good
financial capacity and the adaptation to a higher debt/equity ratio will
continue, primarily via acquisitions.
As a result of its repurchases of Company shares during the past two
years, the number of shares outstanding has been reduced substantially,
which will continue to have a favorable impact on earnings per share.
The "share base", excluding own holdings, was reduced from approximately
101 million shares to 86.6 million in 2001.
The Group is continuing to focus on improvements in efficiency, lower
costs and a strong cash flow as a means of dealing with a weak market
Trelleborg, February 5, 2002
For additional information, please call: Jan Björck, Trelleborg's Chief
Telephone: +46-410 670 28 Mobile: 46-708 46 02 07, or Mikael Byström,
Senior Vice President, Corporate Communcations.Telephone: +46-410 670
37, Mobile +46-708 55 21 69.
The preliminary report on 2001 operations and other information on the
Trelleborg Group, including T-TIME, a publication for persons with an
interest in Trelleborg. is available on the Internet at
The interim report for the first quarter of 2002 will be issued on April
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