Interim report January – March 2021

"Strong start to the year"

“The Group had a strong start to the year. During the first quarter, organic sales increased by 5 percent compared with the preceding year. Exchange rate effects had a negative impact on sales of 8 percentage points.

EBIT, excluding items affecting comparability, increased 15 percent, corresponding to an operating margin of 16.4 percent (13.8). This was the best quarter to date for both EBIT and the EBIT margin, despite the continued impact of the pandemic in some segments. Operating cash flow, in relation to operating profit, was very strong. The earnings improvement was enabled by higher volumes in combination with the implemented structural enhancements, continued cost control and effective price discipline at all levels of the Group.

Demand for most of our products and solutions increased gradually during the quarter, with expanding order books as a result. In some areas, demand was surprisingly favorable and created challenges in meeting the customers’ increasing needs in some units. In several geographies, local restrictions related to the pandemic remained. It created high employee absenteeism and challenges in meeting the increasing order intake quickly enough, which dampened sales growth in parts of the operations.

Within Trelleborg Industrial Solutions, sales to most market segments increased, above all to the automotive industry and construction-related industries. Order intake grew gradually in the majority of segments during the quarter. Sales to aircraft and train manufacturers were lower year on year, still affected by the Coronavirus pandemic and the restrictions that remain in place.

Trelleborg Sealing Solutions noted favorable organic development in most segments during the period, at the same time as order intake improved. Sales to the aerospace industry continued to be negatively impacted by the ongoing pandemic, but order intake in this segment is also beginning to slowly improve from low levels.

Within Trelleborg Wheel Systems, a distinct and sharp increase in demand for tires for agricultural machinery was noted in most geographical markets, which could not be fully satisfied through existing inventories and increased production. Sales growth was also dampened to some extent by periodically high absenteeism among staff and challenging conditions for freight in certain units caused by the pandemic. Sales of tires for material handling and off-highway vehicles gradually improved during the period, but remained lower than in the corresponding period in 2020. However, the order intake in this market segment points toward increasing deliveries going forward.

The Businesses Under Development reporting segment was discontinued at the end of the quarter, since its operations have been largely divested or are intended to be divested during 2021. During the quarter, the offshore operation in the UK was divested and discussions with external stakeholders regarding other units in the reporting segment are at an advanced stage.

At the beginning of the second quarter, our challenges are different in many ways to what they were a year ago. At that time, demand fell sharply due to the pandemic. Today, we are grappling with the challenge of being able to produce and deliver in pace with the order intake. The availability of some raw materials and transport capacity is becoming more constricted than we have experienced in a long time. This change of scenario also emerged rapidly and strongly, which again underlines the importance of our agile and flexible organizational structure.

We continue to adapt to the constantly changing conditions. Our general assessment in the current situation is that demand for the second quarter will be better compared with the first quarter”, says Peter Nilsson, President and CEO.

Continuing operations

• Organic sales increased 5 percent in the quarter compared with the preceding year. Net sales during the quarter declined 3 percent, impacted by currencies, and amounted to SEK 8,219 M (8,482).

• EBIT, excluding items affecting comparability, rose 15 percent to SEK 1,350 M (1,173), corresponding to an EBIT margin of 16.4 percent (13.8). This was the best quarter to date for both EBIT and the EBIT margin. 

• Operating cash flow amounted to SEK 962 M (732). The cash conversion ratio for the most recent 12-month period amounted to 128 percent (103).

• Items affecting comparability for the quarter amounted to SEK 99 M (neg: 36) and pertained to restructuring costs of SEK 45 M and the capital gain on the sale of properties of SEK 144 M.

• Earnings per share, excluding items affecting comparability, totaled SEK 3.77 (3.04). For the Group as a whole, earnings per share were SEK 4.07 (3.05). 

• The Businesses Under Development reporting segment was discontinued at the end of the quarter since its operations have been largely divested or are intended to be divested during 2021. The new organization is reflected in this report. Refer to page 9. The key figures in this report relate to continuing operations, unless otherwise stated.

Market outlook for the second quarter of 2021
Demand is expected to be better than in the first 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 February 10, 2021, relating to the first quarter of 2021
Demand is expected to be slightly better than in the fourth quarter of 2020, adjusted for seasonal variations. 

  
For further information, please contact:
Media: Vice President Media Relations Karin Larsson, +46 (0)410 67015, +46 (0)733 747015, karin.larsson@trelleborg.com
Investors/analysts: Vice President IR Christofer Sjögren, +46 (0)410 67068, +46 (0)708 665140, christofer.sjogren@trelleborg.com

This information is information that Trelleborg AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 1:00 p.m. CET on April 22, 2021.

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