TRELLEBORG, Sweden—Polymer engineer Trelleborg A.B. has posted a 36 percent rise in first quarter net sales to $937 million, helped largely by the purchase of CGS in 2016.
Structural changes made a positive contribution of 30 percent on net sales, with the acquisition of CGS—parent group of Mitas—accounting for the main part of this increase, Trelleborg said in a April 27 results announcement.
Earnings (EBIT excluding items affecting comparability), rose 37 percent to $129.8 million, which the group said was its "highest figure on record for a single quarter." EBIT margin stood at 13.9 percent compared to 13.8 percent for the first quarter the previous year.
Looking forward, however, Trelleborg expects recent rises in raw materials prices to more fully impact results in the second half of 2017, CEO Peter Nilsson said in the financial statement.
First quarter tire sales to the agricultural sector and industrial and construction vehicles performed well, according to Nilsson. This, he noted, was despite a "temporary negative impact on margins" in parts of the business due to raw material costs.
"We are working intensively to compensate for the higher raw material prices, which is deemed to have a full impact particularly in the second half of the year," Nilsson said.
In the general industry sector, the CEO reported improvements in all regions and noted healthy levels of activity in several market segments, particularly in Asia.
Trelleborg's oil and gas operation, however, "is still experiencing a weak market," with Nilsson unable to see "any improvement on the horizon in the near future."
"We are working actively to adapt the oil and gas business to the lower level of activity and the cost base is continuing to shrink," he added.
The oil and gas operation, according to Nilsson, only has "a minor impact" on the group's quarterly earnings.
Nilsson went on to highlight Trelleborg's investments in new technologies. The group, he said, was "working particularly intensively with digitalization, and this will lead to a number of major changes in how we do business with customers for many years to come."
During the quarter, Trelleborg sold a compounding operation in Lesina, Czech Republic, generating a capital gain of $53.3 million.
Trelleborg said it expected demand for the second quarter of 2017 to be in line with, or slightly higher, than the first quarter of 2017.