Interim report January – March 2022

"Strong growth and profitability”

 

“The first quarter of the year was characterized by strong growth and improved profitability. Net sales increased by 22 percent, mainly impacted by organic growth of 13 percent and positive exchange rate effects.

 

EBIT, excluding items affecting comparability, increased 25 percent and the operating margin amounted to 17.3 percent (16.9). This was the best quarter to date in terms of EBIT and the EBIT margin, despite challenges in the form of rising prices for raw materials, energy and freight. Operating cash flow was held back by an increased need for working capital in pace with growing sales, but also the need to secure customer deliveries by deliberately increasing inventory levels for some products, raw materials and input goods.

 

Demand was healthy in most industries, and the order book was at its highest level to date at the end of the quarter. Capacity utilization is high in our manufacturing facilities, which generated good efficiency. The deterioration in the geopolitical situation in our local area added to the challenges related to raw materials supplies and freight, but had only a limited financial impact during the quarter. We have managed to balance the rising cost inflation well so far using our own price adjustments and efficiency improvements.

 

In Trelleborg Industrial Solutions, sales grew in all geographical markets. Deliveries to all industries increased, which was particularly notable within marine solutions, and to the aerospace and construction-related industries. Sales to automotive and train manufacturers remained positive compared with the year-earlier quarter.

 

Trelleborg Sealing Solutions noted favorable organic development in most industries, at the same time as order intake improved. Deliveries increased in Europe and, above all, in North and South America. However, sales in Asia were lower, negatively impacted by further restrictions and measures in China due to Covid-19. Sales to general industry, healthcare & medical and the aerospace industry increased significantly. Deliveries to the automotive industry also grew somewhat as a result of increased market shares in some niches.

 

Trelleborg Wheel Systems noted a highly favorable increase in sales in all tire categories and geographical markets. During the quarter, we signed an agreement to divest the business area to Yokohama Rubber Company for approximately SEK 22 billion. The valuation reflects the operation’s position as one of the world’s foremost suppliers of off-the-road tires, while the transaction, when completed, will create new, exciting opportunities for a more streamlined Trelleborg going forward.

 

The availability of some raw materials and transport capacity still represents a bottleneck. There is also a workforce shortage in some regions. We foresee continued major potential for growth, both organically and through acquisitions, within adjacent products and solutions that complement and strengthen our existing offerings. Our strong financial position also allows for a share repurchase program, which commenced during the quarter and will continue in the future.

 

The extensive geopolitical uncertainty means that the market outlook is difficult to assess in many respects. Our record-strong order book and favorable market positions, however, mean that we can continue to look ahead with cautious confidence. Our general assessment in the current situation is that demand for the second quarter will remain at the same healthy level as in the first quarter”, says Peter Nilsson, President and CEO.
 

 

First quarter 2022 – continuing operations

 

Net sales during the quarter increased 22 percent, positively impacted by acquisitions and exchange rate effects, and amounted to SEK 7,095 M (5,822). Organic sales increased 13 percent compared with the preceding year.

 

EBIT, excluding items affecting comparability, increased 25 percent to SEK 1,230 M (982). Earnings were the best to date for a quarter. The EBIT margin was 17.3 percent (16.9).

 

Operating cash flow amounted to SEK 328 M (484). The cash conversion ratio for the most recent 12-month period amounted to 76 percent (121).

 

Items affecting comparability for the quarter were a negative SEK 25 M (pos: 105).

 

EBIT, including items affecting comparability, amounted to SEK 1,205 M (1,087) for the quarter.

 

Earnings per share, excluding items affecting comparability, totaled SEK 3.25 (2.68). For the Group as a whole, earnings per share were SEK 4.81 (4.08).

 

 

An agreement was signed to divest the Trelleborg Wheel Systems business area to Yokohama Rubber Company. It is reported as a discontinued operation in the financial statements. For further information, refer to page 10. 

 

The repurchase of own shares according to a previous decision was initiated at the end of the quarter. For further information, refer to page 10.

 

The key figures in this report relate to continuing operations, unless otherwise stated.

 

Market outlook for the second quarter of 2022

Demand is expected to be on a par with the first quarter of 2022, adjusted for seasonal variations. However, the geopolitical situation (for further information, refer to page 11) that has arisen entails a heightened degree of uncertainty.

 

Market outlook from the interim report published on February 4, 2022, relating to the first quarter of 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.

 

For further information, please contact:

Media: Vice President Communications 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 27, 2022.

 

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