TRELLEBORG, Sweden—Trelleborg Wheel Systems reported slightly higher operating income for fiscal 2014 on 5 percent lower revenue, and management sees a “challenging market climate” persisting throughout much of 2015.
Trelleborg's operating income rose 2.9 percent last year to $73.5 million on sales revenue of $607.4 million. Trelleborg attributed the earnings improvement, to 12.1 percent of sales, to effective cost controls, price discipline, successful market positioning and the positive effects of exchange rate differences.
Organic sales actually fell 5 percent from 2013, Trelleborg said in its recently released 2014 annual report, but revenue held steady due to the exchange rate differences.
The company experienced a gradual deterioration in demand for agricultural tires due to “sharp falls” in agricultural machinery makers' volumes. This activity represents about a quarter of the business sector's annual sales.
In contrast, the organic sales trend for materials-handling tires was “slightly positive.”
A key strategic move this year will be the start of production of farm tires at the company's plant in Spartanburg, S.C., where it is spending $50 million to convert an existing factory to farm tire capacity. Production is expected to start in the second half of 2015.
Business in North America represented 24 percent of Trelleborg Wheels's sales last year, or roughly $146 million, according to the annual report figures.
Overall, Trelleborg reported 15 percent higher operating income of $437.5 million on sales of $3.82 billion. Trelleborg Wheel Systems represented 18.5 percent of Trelleborg A.B.'s sales last year, down from 19.5 percent in 2013 owing to growth in other Trellebrog business sectors last year.