Trelleborg 'cautiously confident' over short-term outlook

Trelleborg, Sweden – Trelleborg AB has seen strong growth in sales and profitability in the first quarter of 2022, and remains 'cautiously confident' over the short-term outlook. 

Earnings (EBITDA) was for the three months to end of March were up 21% year-on-year at SEK1.5 billion (€144 million), on 22% higher sales of SEK7 billion, the Swedish group announced 27 April.

Earnings (EBIT), excluding items affecting comparability rose 25% to SEK1.2 billion, while operating margin grew to 17.3% compared to 16.9% reported last year.

“Demand was healthy in most industries, and the order book was at its highest level to date at the end of the quarter,” said CEO and president Peter Nilsson.

Capacity utilisation, he went on to say, was high in manufacturing facilities, generating good efficiency.

However, Nilsson said the geopolitical situation in Europe added to challenges related to raw materials supplies and freight, but had “only a limited financial impact during the quarter.”

“We have managed to balance the rising cost inflation well so far using our own price adjustments and efficiency improvements,” he added.

During the first quarter, Trelleborg Industrial Solutions, which supplies polymer-based solutions in industrial applications and infrastructure projects, saw sales grow 29% year-on-year to SEK3.3 billion.

Segment EBIT rose to SEK6 million, up from a loss of SEK8 million reported in the first quarter of 2021.

Segment sales grew in all geographical markets and deliveries to all industries increased, particularly notable within marine, aerospace and construction sectors.

Sales to automotive and train manufacturers remained positive compared with the year-earlier quarter, the group reported.

Trelleborg Sealing Solutions recorded a positive EBIT at SEK8 million, up from a loss of SEK8 million last year. Segment sales grew 17% to SEK3.6 billion during the period.

The division noted “favourable organic development” in most industries, as order intake improved. Deliveries increased in Europe and, particularly in North and South America.

However, sales in Asia were lower, negatively impacted by further restrictions and measures in China due to Covid-19.

Sales to general industry, healthcare & medical and the aerospace industry increased significantly.

Deliveries to the automotive industry also grew somewhat as a result of increased market shares in some niches.

Trelleborg Wheel Systems, which is currently being sold to Yokohama Rubber Co., also saw “a highly favourable” increase in sales in all tire categories and geographical markets.

The segment reported a 24% increase in sales to SEK3.7 billion, while EBIT rose 47% to SEK585 million.

Commenting on Trelleborg's short-term outlook, Nilsson said the availability of some raw materials and transport capacity still represented a bottleneck while the group also faces workforce shortage in some regions.

“The extensive geopolitical uncertainty means that the market outlook is difficult to assess in many respects.

“Our record-strong order book and favourable market positions, however, mean that we can continue to look ahead with cautious confidence,” he added.

The general assessment, said Nilsson, is that demand for the second quarter will remain “at the same healthy level as in the first quarter.”

“We foresee continued major potential for growth, both organically and through acquisitions, within adjacent products and solutions that complement and strengthen our existing offerings,” he concluded.