"Continued good market trend"
“During the second quarter of the year, sales increased by 26 percent, of which acquired units contributed 20 percentage points. Organic sales rose 3 percent. Excluding project businesses, comprising mainly offshore oil & gas-related operations – which are currently experiencing a difficult market situation – organic sales rose 5 percent, driven by improved demand in most market segments and in all geographic regions.
General industry continued to develop well in all regions, and continued highly favorable organic trend was noted in Asia. Demand for our tires for both the agricultural sector and industrial and construction machinery is continuing to grow. Following a scenario during which the prices for the majority of raw materials dramatically skyrocketed over the course of a few months, these have subsequently fallen to approximately the same levels as during last summer. Our premium position has limited the impact these turbulent movements had on our earnings. We are continuing to work with pricing to offset the effect of this, and the outcome moving forward is largely dependent on how the players in the various stages of the market react.
The market for our operations in oil & gas remains weak, which mainly affects the Trelleborg Offshore & Construction business area, which reported a minor loss for the quarter. The market situation is similar to the first quarter, with intense price pressure for the small number of outstanding project transactions. However, this business had only a minor impact on our quarterly earnings from a Group perspective. We are continuing to adapt the oil & gas business to the lower level of activity, and these efforts are aimed at building a long-term attractive structure that will be ready when the market outlook improves.
We have completed a number of acquisitions in past year and we are working hard to ensure that the integration of these new units is carried out in a long-term and structured fashion. This could mean that we may decide to recognize costs in individual quarters aimed at generating synergies and thus providing scope for improved earnings in the future. It is also of the utmost importance that, during the integration work, we do not lose focus on the daily sales work, and I believe that we have been successful in that regard.
We have talked a lot about digitalization recently, and I can’t emphasize enough how important it is that we are at the forefront of our industry to respond to the changes brought about by new technology in terms of how we do business with customers. A key word we use internally is ‘easy. We want to make it as easy as possible for customers to do business with Trelleborg. If we also combine this with our strong niche positions, and continue to offer the highest product quality and smartest comprehensive solutions, then we as a Group have an exciting future ahead of us.
In summary, we saw a general improvement in the demand situation in most of our segments during the quarter. For the third quarter, our overall assessment is that demand will be in line with the second quarter of the year. We are continuing to carefully monitor economic developments and maintain a high level of preparedness to manage fluctuating market conditions”, says Peter Nilsson, President and CEO.
Second quarter 2017
Net sales for the second quarter of 2017 rose 26 percent to SEK 8,265 M (6,544). Organic sales increased 3 percent. Excluding project deliveries, the corresponding increase was 5 percent.
Effects of structural changes made a positive contribution of 20 percent to net sales, with the acquisition of CGS accounting for the main part of this increase.
EBIT, excluding items affecting comparability, rose 21 percent to SEK 1,089 M (899), equivalent to an EBIT margin of 13.2 percent (13.7).
Items affecting comparability for the quarter were a negative SEK 76 M (neg: 107), in line with information previously communicated.
Earnings per share for continuing operations excluding items affecting comparability totaled SEK 2.92 (2.31), up 26 percent
The second quarter of 2016 included net profit for discontinuing operations of SEK 4,369 M related to Vibracoustic.
Operating cash flow amounted to SEK 1,096 M (835), up 31 percent. The cash conversion ratio for the most recent 12-month period was 98 percent (83).
Market outlook for the third quarter 2017
Demand is expected to be in line with the second quarter of 2017, adjusted for seasonal variations.
Market outlook from the interim report published on April 27, 2017, relating to the second quarter of 2017
Demand is expected to be in line with, or slightly higher than, the first quarter of 2017, adjusted for seasonal variations.
For further information, please contact:
Media: Vice President Media Relations Karin Larsson, +46 (0)410 67015, +46 (0)733 747015, email@example.com
Investors/analysts: Vice President IR Christofer Sjögren, +46 (0)410 67068, +46 (0)708 665140, firstname.lastname@example.org
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 submitted for publication, through the agency of the contact person set out above, at 07:45 a.m. CET on July 20, 2017.
Trelleborg is a world leader in engineered polymer solutions that seal, damp and protect critical applications in demanding environments. Its innovative solutions accelerate performance for customers in a sustainable way. The Trelleborg Group has annual sales of SEK 31 billion and operations in about 50 countries. The Group comprises five business areas: Trelleborg Coated Systems, Trelleborg Industrial Solutions, Trelleborg Offshore & Construction, Trelleborg Sealing Solutions and Trelleborg Wheel Systems, and the operations of Rubena and Savatech. The Trelleborg share has been listed on the Stock Exchange since 1964 and is listed on Nasdaq Stockholm, Large Cap.