TRELLEBORG, Sweden—Trelleborg A.B. posted double-digit gains in pre-tax operating income and sales for fiscal 2017, and management is confident the firm can continue to make gains in both.
The company's sales growth was buoyed to a large degree by Trelleborg Wheel Systems, whose revenue grew 39.7 percent due largely to the full-year inclusion of results from Mitas A.S., which was acquired in mid-2016.
Overall, Trelleborg reported a 17 percent increase in operating income to $497 million, while sales improved 16.3 percent to $3.7 billion. The operating margin improved half a point to 13.4 percent.
Net earnings sank 56.4 percent to $336.5 million due to provisions taken to account for the divestment of the Vibracoustic business.
Peter Nilsson, Trelleborg president and CEO, attributed the firm's performance to improvements in several market segments, including the agricultural sector, which he said "gained momentum in Europe" during the year.
"We are hopeful that the North American (agricultural) market will once again start growing following several years of decline," he said in a statement.
Nilsson said Trelleborg expects its first quarter 2018 results to be on par with the 2017 fourth quarter, which showed a double-digit gain in earnings and 4 percent sales growth.
Trelleborg Wheel Systems reported a 41.1 percent rise in operating income to $119 million on sales of $1.04 billion, for an operating margin of 11.4 percent.
Trelleborg said organic growth accounted for about a quarter of the overall revenue improvement, with the rest coming from the addition of sales from the Mitas acquisition.
Organic sales of agricultural tires, particularly to European tractor makers, rose significantly during the quarter, Trelleborg said, with aftermarket sales growing in all regions, albeit at a slower pace.
Sales developed in North America despite the underlying market remaining at depressed levels, the company said. Organic sales of tires for materials-handling vehicles and construction equipment rose year on year, with North America performing particularly well.
During the fourth quarter, Trelleborg Wheel Systems acquired White Baumaschinenreifen & Montageservice GmbH, a Duisburg, Germany-based company specializing in the service, fitting and repair of pneumatic and solid tires for construction vehicles in Germany.
The acquisition further strengthens and enlarges Trelleborg's European distribution network for tires for materials-handling and construction vehicles. White generates about $10 million in annual sales.
Meanwhile, Trelleborg noted that deliveries to the aerospace industry remained healthy, but added that, within the segment, it had "observed indications of bottlenecks in the sub-supplier stage in the second half of the year."
Nilsson went added that the company had compensated for sharp rises in raw materials costs.
Trelleborg's Oil & Gas segment again faced challenging market conditions throughout the last year. Nilsson said he does not anticipate any significant improvements in this area any time soon.
"We are, therefore, continuing to adapt the business and a decision on a number of strategic measures was taken during the fourth quarter," he said.
Last November, Trelleborg announced that it was consolidating its U.S. manufacturing of buoys for drilling equipment in deep-water environments with its operation in England.
European Rubber Journal staff contributed to this report