Trelleborg launches major restructuring plan

TRELLEBORG, Sweden—Trelleborg A.B. unveiled a reorganization program that will reduce the number of business units it operates, a move it contends will boost profitable areas and strengthen areas where profitability is weak.

The plan calls for the elimination of the Trelleborg Coated Systems and Trelleborg Offshore & Construction, reducing the company's number of units to three from five, Trelleborg said Dec. 4.

The remaining business units will be:

• Trelleborg Industrial Solutions, which specializes in polymer-based niche applications and infrastructure projects;
• Trelleborg Sealing Solutions, which specializes in polymer-based sealing solutions; and
• Trelleborg Wheel Systems, which specializes in tires for off-highway vehicles.

In addition, Trelleborg plans to create a reporting segment called "Businesses Under Development," to which the operations with low profitability will be transferred.

As of January, Trelleborg Industrial Solutions will consist of its current operations, the engineered coated fabrics operations of Trelleborg Coated Systems, and the operations of marine solutions and infrastructure projects of Trelleborg Offshore & Construction.

Certain operations from the business unit will be transferred to businesses under development.

Following the reorganization, Trelleborg expects its Industrial Solutions business to post annual sales of about $1.14 billion and an EBIT margin of about 11 percent. The figures, the company said, are based on the most recent fiscal year reports.

Trelleborg Sealing Solutions will be unaffected by the organizational changes.

Trelleborg Wheel Systems, meanwhile, will be marginally affected with the transfer of its bicycle tire operations to businesses under development.

The new reporting segment businesses under development will consist of:

• the printing blankets operations of Trelleborg Coated Systems;
• the oil & gas operations of Trelleborg Offshore & Construction;
• the Swedish and Estonian operations for specialty molded components of Trelleborg Industrial Solutions;
• the Czech operations for specialty molded components; and
• the technical rubber products of Trelleborg Industrial Solutions as well as the bicycle tire operations of Trelleborg Wheel Systems.

Dario Porta, business area president of Trelleborg Coated Systems, will leave Trelleborg's Group management at the end of the year to head the company's printing blankets operations. The segments housed in business under development will be operated independently and report to Ulf Berghult, Trelleborg's chief financial officer.

Over the past 12 months, the units that will be included in the business under development unit had collective sales of about $410 million and weak profitability, according to Trelleborg.

An impairment of capital employed in the amount of roughly $340 million will be recognized in Trelleborg's fourth quarter report.

As a result of the new organization, the company said its restructuring costs will increase by $5.3 million, distributed between 2019 and 2020.

Peter Nilsson, Trelleborg CEO and president said the company will be conducting "an intensive strategic review" of the operations that will are included in businesses under development.

"I want to be clear that we are demanding that profitability should be significantly improved within a 12–24 month period in order for these operations to be included in the group," Nilsson said, adding that the company would "continuously evaluate various structural alternatives."