Trelleborg results slump as pandemic hits

TRELLEBORG, Sweden—Trelleborg A.B.'s announcement of restructuring measures on July 20 follows a challenging first half of trading for the Sweden-based rubber-based products and systems manufacturer.

Group earnings (EBIT excluding items affecting comparability) fell 17 percent year-on-year to $245 million on 9 percent lower sales of $1.9 billion during the first six months of the year, Trelleborg said in its first half report July 20.

The second quarter was particularly impacted by COVID-19 shutdowns and slow demand, which contributed to a 29 percent decline in earnings at $106 million and an 18 percent drop in sales to $858 million.

"It was a very challenging quarter in many respects and without the extensive efforts ... [of] employees at all of our sites throughout the world, this [performance] would not have been possible," CEO Peter Nilsson said.

The pandemic negatively impacted organic sales and earnings in most regions within the Trelleborg Industrial Solutions and Trelleborg Sealing Solutions.

Trelleborg Wheel Systems' sales of tires to OE manufacturers of agricultural machinery was negatively impacted by several customers closing their production sites for a number of weeks.

However, according to Nilsson, there was "a slightly positive trend" for agricultural tire deliveries to the aftermarket.

Sales of tires for material handling and construction vehicles were particularly affected by COVID-19, since deliveries to OE manufacturers and aftermarket customers declined significantly, the group CEO noted.

The volume loss was partly offset by the positive sales mix, strict cost control and the benefits gained from structural measures implemented earlier, Nilsson added.

Organic sales in Businesses Under Development declined in spite of "continued strong development for offshore oil and gas." Other operations were affected by temporary facility closures caused by customers suspending production and official decisions.

According to Nilsson, the near future will remain challenging as the company does not expect a return to normal market conditions.

For the third quarter, however, the group expects demand to be "slightly better than in the second quarter of 2020," despite considerable uncertainty regarding demand.