Interim report and Year-end report 2021

"Strong finish to a record year "
 
“2021 turned out to be the best year in the history of Trelleborg in terms of sales, operating profit and margin. We delivered healthy organic growth and improved profitability, despite challenges in the form of increased inflation pressure and growing imbalances in the supply chain.

The year also ended on a strong note. Sales in the fourth quarter increased 15 percent, of which organic sales increased 14 percent. EBIT, excluding items affecting comparability, increased 12 percent, corresponding to an operating margin of 13.8 percent. Sales and earnings were the best to date for a fourth quarter.

Organic sales for Trelleborg Industrial Solutions grew in most market segments and geographies, with healthy profitability. Order intake was strong during the quarter and the order book continued to grow.

Within Trelleborg Sealing Solutions, organic sales performed favorably in all market segments and geographies, apart from the automotive industry, which was held back by the well-documented shortage of components. Order intake remained strong in most segments, with a resultant growing order book.

Trelleborg Wheel Systems displayed strong organic sales growth during the quarter, in all tire categories and most geographies. However, profitability was hampered by continued price rises for raw materials and freight, but in particular, by the accelerating energy costs. Price adjustments implemented for customers, combined with continued strong demand, will lead to improved profitability in future quarters.

We finalized the divestment of the Czech operation in technical rubber products at the beginning of the quarter and followed up on this by signing an agreement to divest the printing blanket operation. We are now awaiting the relevant authorities’ approval of the latter transaction, after which our work to focus the Group will be complete. As we communicated at our Capital Markets Day at the beginning of December, we are now ready for the next phase of development for Trelleborg. This largely involves accelerating growth successfully in several dimensions.

At the time of writing, we are compiling a large amount of data as part of our sustainability work, and although not all of the results are ready, I can report already now that, in 2021, we made good progress toward our goal of halving the Group’s carbon emissions relative to sales by 2025.

An Extraordinary General Meeting at the end of the period authorized the Board to resolve on a program for the buyback of own shares. We are taking this step because our balance sheet is stronger than it has been for decades, at the same time as our operating cash flow is at a consistent and healthy level. Accordingly, our financial scope allows for the implementation of company acquisitions and payment of ordinary dividends, as well as buying back shares through the stock exchange.

During the fourth quarter, costs rose further for raw materials and energy. The pandemic also increased in strength, with higher sickness absence, while the logistics chain remained under strain. General inflationary pressure, accentuated by a shortage of labor in some regions, will continue to create challenges in the new year. However, our committed employees proved more than capable of handling all of these challenges and I am convinced that Trelleborg will navigate the right course toward a successful 2022.

Our general assessment in the current situation is that demand for the first quarter will be on a par with the fourth quarter”, says Peter Nilsson, President and CEO.

Fourth quarter 2021

  • Organic sales increased 14 percent in the quarter compared with the preceding year.
  • Net sales during the quarter increased 15 percent, positively impacted by acquisitions, and amounted to SEK 8,768 M (7,593).
  • EBIT, excluding items affecting comparability, increased 12 percent to SEK 1,211 M (1,079). Earnings were the best to date for a fourth quarter. The EBIT margin was 13.8 percent (14.2).
  • Operating cash flow amounted to SEK 989 M (1,740). The cash conversion ratio for the most recent 12-month period amounted to 84 percent (128).
  • Items affecting comparability for the quarter were a negative SEK 160 M (neg: 140) and pertained to restructuring costs.
  • EBIT, including items affecting comparability, amounted to SEK 1,051 M (939) for the quarter.
  • Earnings per share, excluding items affecting comparability, totaled SEK 3.19 (2.91). For the Group as a whole, earnings per share were SEK 2.78 (2.43). 
  • The key figures in this report relate to continuing operations, unless otherwise stated.

Full-year 2021

  • Organic sales increased 16 percent compared with the preceding year.
  • Net sales for the full-year 2021 increased 12 percent to SEK 33,864 M (30,258).
  • EBIT, excluding items affecting comparability, increased 26 percent to SEK 5,151 M (4,095), corresponding to an EBIT margin of 15.2 percent (13.5).
  • Items affecting comparability amounted to negative SEK 136 M (neg: 318) and pertained to restructuring costs of SEK 313 M and the capital gain on the sale of properties of SEK 177 M.
  • Earnings per share, excluding items affecting comparability, totaled SEK 13.95 (10.44). For the Group as a whole, earnings per share were SEK 13.71 (10.00).
  • Net profit for the Group totaled SEK 3,716 M (2,711).
  • Operating cash flow amounted to SEK 4,347 M (5,227), a decrease of 17 percent. The cash conversion ratio amounted to 84 percent (128).

Market outlook for the first quarter 2022
Demand is expected to be on a par with the fourth 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 October 27, 2021 relating to the fourth quarter of 2021
Demand is expected to be on a par with the third quarter of 2021, adjusted for seasonal variations. Uncertainty regarding the pandemic’s impact on the coming quarters remains.

Dividend 2021
The Board of Directors proposes a cash dividend of SEK 5.50 per share (5.00).

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 07:45 a.m. CET on February 4, 2022.

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