"Continued strong performance"
“The second quarter was characterized by a continued strong performance. Organic sales increased 31 percent compared with the preceding year, which, was strongly impacted by the pandemic. Compared with the second quarter of 2019, a period that was unaffected by the pandemic, organic sales increased 6 percent, and all three business areas contributed growth.
EBIT, excluding items affecting comparability, increased 58 percent, corresponding to an EBIT margin of 16.1 percent (12.5). Earnings were the company’s best to date for a single quarter. Operating cash flow remained strong. The earnings improvement was enabled by higher volumes in all business areas, in combination with continued good cost control and effective price discipline.
In Trelleborg Industrial Solutions, most market segments and geographic markets reported an upturn in demand, which was particularly notable in the automotive industry and construction-related segments. It was also gratifying that sales growth was noted for the aerospace industry compared with both the previous quarter and a year earlier.
Organic sales in Trelleborg Sealing Solutions to general industry and the automotive industry grew significantly in all regions. Sales to the aerospace industry improved compared with the preceding quarter but remained lower year on year. However, clear signals from our customers in this segment indicate that the bottom has been reached and growth is expected to occur from the current levels going forward.
Trelleborg Wheel Systems also reported strong organic sales growth compared with the year-earlier period. Marked sales growth for tires for agricultural machinery was noted in most geographic markets. Sales of tires for materials handling and construction vehicles also displayed a significant upturn compared with the preceding quarter and the year-earlier period. However, the margin was negatively affected by the rapid and strong price rise for raw materials and partly by the sales mix. Price adjustments to customers were implemented and will gradually offset the higher raw materials prices.
As we look toward the second half of the year, we do so with confidence. Order intake during the quarter was at a record level in many of our businesses and the order books are well filled. The level of activity is high in most of our manufacturing units and price adjustments have already been implemented to address the rising raw materials prices. In the few segments in which we are still waiting for growth, such as the aerospace industry, the market conditions are looking more promising for the remainder of the year.
However, the situation remains strained in several stages of the supplier chain, which, combined with continued development of the pandemic, represents a certain risk. If the situation escalates, it could restrict sales growth in the short to medium term, but as it stands today, it is expected that it will be possible to manage the situation satisfactorily.
As usual, we continue to adapt to changed conditions. Our general assessment at present is that demand for the third quarter will be on a par with the high level of demand in the second quarter, adjusted for seasonal variations”, says Peter Nilsson, President and CEO.
- Organic sales increased 31 percent in the quarter compared with the preceding year, which was strongly impacted by the pandemic. Net sales during the quarter increased 23 percent, despite negatively impacted by exchange rate effects, and amounted to SEK 8,637 M (7,031).
- EBIT, excluding items affecting comparability, increased by 58 percent to SEK 1,387 M (878), corresponding to an EBIT margin of 16.1 percent (12.5). Earnings were the best to date for a single quarter.
- Operating cash flow amounted to SEK 1,279 M (1,403). The cash conversion ratio for the most recent 12-month period amounted to 112 percent (121).
- Items affecting comparability for the quarter were a negative SEK 43 M (neg: 61) and pertained to restructuring costs.
- Earnings per share, excluding items affecting comparability, totaled SEK 3.74 (2.28). For the Group as a whole, earnings per share were SEK 3.66 (2.11).
- The key figures in this report relate to continuing operations, unless otherwise stated.
Market outlook for the third quarter of 2021
Demand is expected to be on a par with the second quarter of 2021, adjusted for seasonal variations. Uncertainty regarding the pandemic’s impact on the coming quarters remains.
Market outlook from the interim report published on April 22, 2021, relating to the second quarter of 2021
Demand is expected to be better than in the first quarter of 2021, adjusted for seasonal variations.
For further information, please contact:
Media: Vice President Media Relations Karin Larsson, +46 (0)410 67015, +46 (0)733 747015, firstname.lastname@example.org
Investors/analysts: Vice President IR Christofer Sjögren, +46 (0)410 67068, +46 (0)708 665140, email@example.com
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 issued, by the contact person above, for publication on July 22, 2021 at 1:00 p.m. CEST.
This is a translation of the company’s Interim Report in Swedish.