'Major structural changes' ahead for Trelleborg

TRELLEBORG, Sweden—Trelleborg A.B. has signaled that 2016 is likely to bring “major structural changes” for the group, as the company continues to strengthen its positions in various markets.

“We are maintaining preparedness to adjust our various businesses to fluctuating demand,” said President and CEO Peter Nilsson, while announcing the group's full year results.

Trelleborg achieved “record results” despite “challenging market conditions in several segments,” with its highest ever recorded operation profit for a fourth quarter, he said.

Net sales for the full year 2015 increased 10 percent to $2.94 billion, although organic sales declined by 2 percent. Operating income rose 7 percent to $380.2 million.

“With a relatively weak market situation in several segments and raw material prices that continued to decline, with a subsequent negative effect on our organic growth, the year proved challenging in terms of growth,” Nilsson added.

The group envisions continuing development with a focus on selected segments and improved positions, he said.

During fiscal 2015, Trelleborg completed eight acquisitions, established a plant for agricultural tires in North America and struck a deal to acquire the Czech producer CGS Holding—parent of the Mitas tire business—which will be “well-positioned” within agricultural and specialty tires, as well as engineered polymer solutions, the executive said.

The eight acquisitions, including Brazil's Standard Tyres Group, represent $60 million in annual sales. Nilsson said these acquisitions “will … strengthen our total offering and market positions in selected segments. We will continue to actively seek bolt-on acquisitions.”

Nilsson said he expected the $1.25 billion deal for CGS, which is subject to regulatory approvals, to be completed in the first half of 2016.

Commenting on the anti-vibration automotive parts joint venture with Freudenberg, TrelleborgVibracoustic, Nilsson said that the IPO preparations were progressing according to plan.

A Reuters report in January suggested that Trelleborg was considering divesting its 50 percent share to KKK investment fund.

Commenting on the market, he said some segments, such as the aerospace and automotive industries, appear to be displaying satisfactory development.

Trelleborg Wheel Systems reported 3.6 percent higher revenue last year of $511.3, despite 6 percent lower organic sales, both in the aftermarket and at the original equipment level.

Operating income fell 7.1 percent to $55.5 million due to lower volumes in certain key segments and start-up costs for the plant in Spartanburg, S.C.