Interim report January-March 2018

"Good earnings improvement"

“Trelleborg started the year by reporting a strong result. Organic sales rose 4 percent and, adjusted for projected-related business, organic growth was 5 percent. Organic sales continued to develop well in most market segments. However, the Group’s organic performance was dampened by continued challenging market conditions for some of our project businesses and unusually harsh winter conditions, which impacted parts of our operations.

Both EBIT and the corresponding margin, excluding items affecting comparability, reached the highest levels on record for the Group in a single quarter. Our largest business area, Trelleborg Sealing Solutions, performed well and reported its highest quarterly profit to date.

Trelleborg Wheel Systems noted a clear improvement in profitability during the quarter as a result of previously implemented price adjustments combined with relatively stable raw material prices and the ongoing integration of CGS. However, the aftermarket business was impacted negatively by the protracted winter season in the northern hemisphere, which is deemed to have dampened the willingness of farmers to replace worn-out tires.

Trelleborg Industrial Solutions continued to report a healthy growth rate, and we are seeing strong growth primarily in the industry-related businesses. Profitability also increased, driven by higher volumes and good cost control.

The market situation in our offshore oil & gas business remained challenging during the quarter. However, the assessment is that a slight increase in market activity will lead to improvements in the latter part of the year. Activities to reposition our offshore oil & gas operation are continuing as planned.

The integration of implemented acquisitions is proceeding according to schedule and part of our efforts to capture synergies includes investments aimed at realizing a more efficient structure and increased manufacturing capacity.

The rate of investment in the Group has never been higher and we are continuing to build on our leading market positions. One example of this is the inauguration after the summer of Trelleborg Sealing Solutions new Innovation Center in Germany, which will ensure that we will remain at the leading edge of sealing technology. We are also continuing to position ourselves in terms of our geographic footprint, and examples of this include the inauguration of two new manufacturing facilities in China and India.

Overall, our assessment is that the market will move laterally in the next quarter. We are monitoring developments and maintaining preparedness to manage our various operations in line with fluctuating demand,” says Peter Nilsson, President and CEO.

First quarter

Net sales for the first quarter of 2018 rose 3 percent to SEK 8,577 M (8,298).

Organic sales increased 4 percent. Excluding project deliveries, the corresponding increase was 5 percent.

EBIT, excluding items affecting comparability, rose 12 percent to SEK 1,291 M (1,154), which was equivalent to an EBIT margin of 15.1 percent (13.9). Both EBIT and the EBIT margin were the highest on record for the Group.

Items affecting comparability for the quarter were a negative SEK 18 M (pos: 366), in line with information previously communicated.

Earnings per share for continuing operations excluding items affecting comparability totaled SEK 3.41 (3.12).

Operating cash flow amounted to SEK 406 M (417). The cash conversion ratio for the most recent 12-month period was 87 percent (96).

Market outlook for the second quarter 2018
Demand is expected to be on a par with the first quarter of 2018, adjusted for seasonal variations.

Market outlook from the interim report published on February 2, 2018, relating to the first quarter of 2018
Demand is expected to be on a par with the fourth quarter of 2017, adjusted for seasonal variations.

For further information, please contact:
Vice President Media Relations Karin Larsson, +46 (0)410 67015, +46 (0)733 747015,
Vice President IR Christofer Sjögren, +46 (0)410 67068, +46 (0)708 665140,

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 13:00 p.m. CET on April 25, 2018.

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