Trelleborg eyes expansions after strong Q3

TRELLEBORG, Sweden—Trelleborg A.B. is considering new business and market initiatives on the back of continued "strong earnings growth," the group signaled in its third-quarter results.

Over the three-month period to Sept. 30, Trelleborg achieved higher sales, improved earnings and a strong operating cash flow, President and CEO Peter Nilsson reported Oct. 26.

The gains included an 11-percent year-on-year increase in earnings (EBITA, excluding items affecting comparability) to $144.8 million, on 12-percent higher sales of $810.8 million.

While organic sales decreased by 1 percent, acquisitions contributed 9 percent and positive exchange rate effects 4 percent to overall sales. Earnings margins remain on a par with last year at 17.6 percent.

By segment, Trelleborg Industrial Solutions reported 6-percent growth in sales to $347.5 million, despite "slightly lower" organic sales year-on-year.

Sales at the industrial parts unit grew particularly well in Europe and in North America, while declining in Asia.

A dip in sales to the construction industry was offset by sales to the automotive and marine markets, including buoyant sales related to "SmartPort concept."

Third quarter earnings at the industrial solutions unit grew 17 percent year-on-year to $57.6 million on price adjustments, positive sales mix and improved efficiencies.

At 16.2 percent, the business area achieved its "highest margin to date for a single quarter," according to Trelleborg.

At Trelleborg Sealing Solutions, sales grew 18 percent year-on-year to $453.7 million, despite a "marginal decline" in organic sales.

"Sales to the aerospace industry remained strong, while deliveries to the automotive industry continued to grow, driven mainly by sales in Europe," the company said.

Sales to the health care and medical sector also developed positively, while deliveries to general industry declined in several geographic regions, partly due to inventory adjustments.

Earnings at Trelleborg Sealing rose 3.0 percent year-on-year to $90.3 million, while earnings margin dropped by 2.9 percentage points to 20.0 percent, Trelleborg said. The margins-decline was linked to "substantial investments in the organization within a number of rapidly expanding market segments."

Looking ahead, Nilsson said external factors "continue to create significant uncertainty" regarding market developments in the near-term. But, he added, Trelleborg is "highly confident" in its ability to address the fluctuations in the market.

For the final quarter, the group's overall assessment is that demand will be in line with that seen in the third quarter, Nilsson said.

He highlighted a series of recent restructuring and expansion moves at Trelleborg, adding that "more initiatives are in progress."

Promising more information "in the near future," Nilsson said these measures would further improve the group's profitability and balance its "geographic exposure."