Trelleborg’s Capital Markets Day: A stronger Trelleborg–well-positioned and with an improved structure. Adjusted financial targets for enhanced focus.
Trelleborg’s overriding long-term strategy to create value remains. The strategy is based on products and solutions that seal, damp and protect, and aims to create leading positions in carefully selected, attractive segments. Trelleborg is continuously moving toward these segments and in recent years, this has led to strengthened positions in growing segments in offshore oil and gas extraction, infrastructure and selected industry segments. The geographic relocation to growth markets has been extensive in the past five years and the Group currently has 27 percent of its production units outside Western Europe and North America. Since 2005 the Group has exited 25 production units in Western Europe and North America and in the same period started 10 new units outside these regions. “At the same time, these regions currently account for about 20 percent of Trelleborg’s sales, which is a figure that will rise in the near future through further investments,” says Peter Nilsson. Since 2005, the Trelleborg Group has systematically worked to improve the Group’s structure, which is now significantly more efficient. In addition, Trelleborg was quick to adapt its capacity to new market conditions in the past year’s dramatic economic downturn. For the Group as a whole, these adjustments have entailed a more than 20-percent reduction in personnel since mid-2008 to slightly more than 20,000 employees at the end of 2009. The actions taken have resulted in improved EBITDA margins during the year with maintained sales volume, and during the same period the Group has also experienced a continued robust cash flow. Trelleborg has adjusted its financial targets and is currently focusing on three targets: organic growth, the EBITDA margin and return on equity. The EBITDA margin target remains at 12 percent. The growth target focuses on organic growth and is set at average growth of 5 percent from now and one economic cycle onward. In addition, the Group has the ambition to make bolt-on acquisitions. The third goal, return on equity, is set at 12 percent. The reduction from the previous target, which was 15 percent, was primarily based on altered assumptions regarding a lower debt/equity ratio and a lower rate of capital turnover. Trelleborg’s dividend policy remains in place and ultimately entails a dividend corresponding to 30-50 percent of net profit for the year. The Trelleborg Engineered Systems business area’s strategy to create a structure for profitable growth generates leverage. A key element of this involves the continuous improvement of Trelleborg’s positions in offshore oil and gas, infrastructure construction, coated systems and selected areas of other industries. The business area remains focused on portfolio management and geographic expansion. In recent years for example, three new production facilities have opened in China, and, looking ahead, priority will be assigned to Brazil, where offshore oil and gas is an attractive growth segment. Trelleborg Automotive is a global leader in anti-vibration and damping solutions for vehicles and is continuing to work to further enhance its positions in this area. In recent years, work has been in progress to create a more efficient production structure, a process in which most major projects have now been completed and on which the business area is beginning to capitalize. At the same time, Trelleborg Automotive continues to work to become even stronger in emerging markets, such as China, India, Brazil, Turkey and Eastern Europe, partly to capitalize on the higher growth in these markets and partly to create a more efficient cost base. Approximately one third of the sales within anti-vibration, the largest part of the business area, is outside North America and Western Europe. At Trelleborg Sealing Solutions, extensive measures have been taken to enhance the efficiency of and adapt the production structure to the global market with maintained market organization. To meet the rise in demand in growth markets, investments have been made in production facilities in China, India and Brazil. At the same time, the business area has decreased the number of productions units, for example by discontinuing two facilities in North America and that the number of facilities decreased with five by merging facilities in the US and Europe. The business area is well prepared for the future with a considerably lower cost level and a product portfolio that is stronger than ever. Trelleborg Wheel Systems has successfully achieved a strong premium position in both highly-advanced agricultural tires as well as industrial tires. The business area has a competitive advantage compared with other players in the market in that it delivers complete wheel systems. The strong technology base is used to develop the product portfolio in many specialized niches. The business area also foresees geographical growth opportunities, including the North American market. Trelleborg AB is hosting its Capital Markets Day today at the National Museum of Science and Technology in Stockholm. Presentations will commence at 1:00 p.m. and will be posted at www.trelleborg.com under “Presentations” at the end of the Capital Markets Day.