Trelleborg reports historical ‘best year' with double-digit growth

TRELLEBORG, Sweden—Trelleborg A.B. has finished 2021 on a high note, posting a double-digit growth in sales, operating profit and margins.

The year "turned out to be the best year in the history of Trelleborg," said President and CEO Peter Nilsson, announcing the company's year-end report Feb. 4.

"We delivered healthy organic growth and improved profitability, despite challenges in the form of increased inflation pressure and growing imbalances in the supply chain," he said.

Group earnings (EBITDA) in the fourth quarter rose 8 percent to $175 million (SEK 1.6 billion), on 15 percent higher sales at $952 million, marking "the best-to-date results for a fourth quarter."

Organic sales for Trelleborg Industrial Solutions grew in most market segments and geographies, with "healthy profitability."

Segment sales rose 9 percent to $306 million during the fourth quarter and was, for the full year, 7 percent higher than 2020 at $120 million.

EBIT, however, was down 7 percent during the fourth quarter at $39.8 million, while the EBIT margin fell to 12.7 percent from 14.9 percent compared to the final quarter of 2020.

For the full year, EBIT was up 25 percent at $142 million, and EBIT margin rose nearly two percentage points at 12.4 percent.

Trelleborg linked the fourth quarter EBIT decline to "a very strong comparative period, which was positively impacted by individual large-scale projects."

Furthermore, strong rises in raw material, logistics and energy costs as well as exchange rate effects also dampened profitability for the quarter.

Within Trelleborg Sealing Solutions, organic sales performed favorably in all market segments and geographies, apart from the automotive industry, which was held back by the shortage of components.

Sales to healthcare & medical developed positively, but the spread of the new omicron variant of COVID-19 had a negative impact on demand due to the postponement of some scheduled operations.

The segment reported a 28-percent increase in EBIT to $71.8 million, on 16 percent higher sales at $339 million over the fourth quarter. For the full year, sales were up 15 percent at $1.4 billion, while EBIT was up 34 percent at $306 million.

The "significant increase," Trelleborg said, was mainly due to higher volumes to most market segments.

Furthermore, the group said the effects of rising energy prices and raw materials were limited by "strict cost control and efficiency improvements."

Trelleborg Wheel Systems also performed strongly, with higher sales and EBIT in both fourth quarter and full year.

Fourth quarter EBIT was up 22 percent at $30.1 million, on 26 percent higher sales at $296 million. For the full year, EBIT increased 16 percent to $131 million, while sales rose 15 percent to $1.09 billion.

Despite the strong growth in all tire categories and most geographies, Trelleborg said the segment's profitability was hampered by "continued price rises for raw materials and freight and particularly by the accelerating energy costs."

The group expects price adjustments implemented for customers, as well as continued demand to lead to improved profitability in future quarters.

"During the fourth quarter, costs rose further for raw materials and energy," Nilsson said.

"The pandemic also increased in strength, with higher sickness absence, while the logistics chain remained under strain," he added, commenting on market dynamics.

According to the Trelleborg boss, general inflationary pressure, accentuated by a shortage of labor in some regions, will continue to create challenges in the new year.

"Our general assessment in the current situation is that demand for the first quarter will be on a par with the fourth quarter," he concluded.