Trelleborg’s Capital Markets Day, 2005: Focus on sealing, damping and protecting in harsh environments – increased concentration on attractive segments

“We have the expertise and capacity to provide demanding customers with qualified solutions that seal, damp and protect. We are highly competitive,” said Peter Nilsson, Trelleborg’s new CEO on Tuesday’s Capital Markets Day. He noted a number of spectacular orders, including seals for the oil industry resistant to chemicals, seismic movements and extreme temperatures, damping components for the automotive industry that enhance comfort and safety, and seals for spacecraft.

“We will be concentrating our resources on attractive segments to an even greater degree,” Peter continued. “These are segments suited to our technology and the unique characteristics offered by polymers – segments in which our customer relations are already established and which offer growth through underlying markets or through consolidation. They are also segments that offer a strong return. Normally, this requires a leading position, and consequently having or being able to achieve this is also a decisive characteristic for what is considered an attractive segment.”

Peter also explained that focusing includes deselecting. “With time, we will leave areas that do not fit. This has already begun in some cases,” he said, referring to certain industrial-tire dimensions, simpler hoses and profiles, as well as certain components for the automotive industry.

“In this way, we can expand within our selected segments. We will achieve this through system solutions, among other approaches. It also means that, alongside our own development, we will purchase certain products. The solution for the customer is what is important, not how it is manufactured.” An increasing proportion of Trelleborg’s products originate from low-cost countries, where the Group has both production units of its own as well as sub-suppliers. Peter Nilsson stressed that transfers are not motivated by cost advantages alone, it is equally important to follow customers and to have a presence in new growth markets.

Peter also enlarged upon the importance to success of developing the people and management within the organization, and stressed the need for leadership that supports Trelleborg’s particular business structure.

CFO Bo Jacobsson commented on Trelleborg’s financial targets, which remain unchanged. A new profit target in the form of an EBITDA margin of 12 percent was established. Bo also affirmed that the Group’s successful focus on cash flow is continuing and closed by saying that this focus ensures continued favorable dividend capacity, as well as supporting growth capacity.

Claus Barsøe, President of the Trelleborg Sealing Solutions business area spoke about precision seals, which, although small, serve critical functions. Operations are conducted according to a unique customer-driven business model, including extensive focus on research and development, particularly in materials development, resulting in a large number of patents, and successful supply-chain management. This is now being extended in North America and introduced in Asia, where a new production and technical development unit is also being constructed in Shanghai. Claus also explained that the logistics function in Stuttgart will be outsourced to a third party. 

George Caplea, President of Trelleborg Automotive spoke of growth in a cost-driven market and the importance of achieving a strong niche position in relation to attractive segments. Having demonstrated areas of technology in which Trelleborg is a leader, mainly antivibration and noise reduction, he outlined the business area’s global strategies. In addition to utilizing the Group’s technological advantage, these strategies primarily entail cost reductions, technology transfer and an increased focus on Asia and other growth markets.

Lennart Johansson, the newly-appointed President of Trelleborg Engineered Systems, described the business area’s clear focus on selected segments. He also demonstrated the business area’s capacity by describing its various solutions in extreme environments. Among notable developments, he mentioned two major new orders for products developed in-house for the oil/gas/offshore area, which is among Trelleborg Engineered Systems’ prioritized segments. “We are constantly strengthening our positions within these segments with complementary acquisitions and in-house product development,” he said.

Maurizio Vischi, President of the Trelleborg Wheel Systems business area was able to report that the business area is continuously improving its key figures. This is the result of the focus on tires for forestry and industrial purposes, which is unique in the industry, and an efficient production structure. Today, an increasing proportion of production is conducted in what are often described as low-cost areas. The scenario also includes the successful launch of tires for new growth markets.

Peter Suter, who heads Trelleborg Building Systems, described a trend that has been favorable and stable over the years, despite a somewhat troublesome construction market in certain parts of Europe, and new production forms, including both outsourcing and in-house production in low-cost areas. He also outlined innovations – primarily new membranes, with specific characteristics and favorable market potential, now being launched in Europe.