Trelleborg, Sweden – Trelleborg has signalled that 2016 is likely to bring “major structural changes” for the group, as the company continues to strengthen its positions in various markets.
“We are maintaining preparedness to adjust our various businesses to fluctuating demand,” said president and CEO Peter Nilsson, while announcing the group's interim results of the full year 2015.
According to Nilsson, Trelleborg achieved “record results” despite “challenging market conditions in several segments”, with highest ever recorded operation profit for a fourth quarter.
Organic sales were down 2 percent for the full-year, but remained unchanged in the fourth quarter.
“With a relatively weak market situation in several segments and raw material prices that continued to decline, with a subsequent negative effect on our organic growth, the year proved challenging in terms of growth,” Nilsson added.
According to the Trelleborg boss, the development of the group will continue, with a focus on selected segments and improved positions.
Trelleborg has invested in geographic areas, including the establishment of a new manufacturing unit for agricultural tires in North America and purchase of Brazilian Standard Tyres Group.
“We completed eight acquisitions during the year, which will contribute almost SEK 500 M (€53.2 million) to annual sales, strengthen our total offering and market positions in selected segments. We will continue to actively seek bolt-on acquisitions,” said Nilsson.
Trelleborg signed an agreement to acquire Mitas parent company, CGS Holding, in November 2015, which according to Nilsson will be “well-positioned” within agricultural and specialty tires, as well as engineered polymer solutions.
Nilsson said he expected the €1-billion transaction, which is subject to regulatory approvals, to be completed in the first half of 2016.
Commenting on the anti-vibration automotive parts joint venture with Freudenberg, TrelleborgVibracoustic, Nilsson said that the IPO preparations were progressing according to plan.
A Reuters report in January suggested that Trelleborg was considering the sales of its 50-percent share to KKK investment fund.
Commenting on the market, he said some segments, such as the aerospace and automotive industries appear to be displaying satisfactory development.
However, he added, the situation looks considerably more difficult than it did last year in other parts of Trelleborg's business.
“Low oil prices, generally low raw material prices and a continued weak trend in parts of general industry and agriculture are continuing to hamper some parts of the group,” he said.
According to Nilsson, the share of order-backlog related to oil & gas had contracted “significantly”, signalling “tougher times” ahead with both fewer project deliveries and lower profitability in the segment.
Net sales for the full-year 2015 increased by 10 percent and totalled SEK24,803 million. Organic sales declined by 2 percent.
Effects of structural changes made a positive contribution of 2 percent, while the effects of exchange rate movements were 10 percent.
Operating profit, excluding the participation in TrelleborgVibracoustic, and items affecting comparability, rose 7 percent to SEK 3,219 million, equivalent to an operating margin of 13.0 percent. Operating profit was the highest to date for the group for a full-year.