Trelleborg reports flat business in Q2

Trelleborg, Sweden – Trelleborg AB has had an “eventful” second quarter completing three business transactions, with financial results remaining mostly flat.

Net sales for the second quarter of 2016 were on par with the same period last year and amounted to SEK 6,544 million (€690 million), while organic sales declined by 6 percent, mainly as a result of the foreseen downturn in deliveries to the oil & gas segment.

Earnings (EBIT, excluding items affecting comparability), rose by 2 percent to SEK 899 million.

While financially the business remained flat, the group completed a number of major transactions throughout the second quarter, ending 30 June. The €1.17-billion purchase of Prague-based CGS – parent company of Mitas tire manufacturer – was completed at end of May, and according to Trelleborg, the integration process has already started.

Following the acquisition, Trelleborg expects annual sales to amount to SEK 30 billion (€3 billion) on a pro forma basis.

The group also completed the sale of its shares in the automotive parts JV, Trelleborg Vibracoustic – now called Vibracoustic – to their partner Freudenberg.

Trelleborg also finalised the acquisition of SSF, a US-based manufacturer of high-precision silicone components in the high-growth life sciences market, during the quarter, which according to CEO Peter Nilsson will give the group “a strong platform for continued development in this attractive segment.”

During the quarter, the group’s organic sales declined compared with both the preceding quarter and the same period in 2015.

This downturn was mainly driven by Trelleborg’s oil & gas operation, where sales decreased “sharply”, the company said.

According to Nilsson, the drop in sales was offset by Trelleborg’s “operational control” efforts, with the offshore & construction business delivering a profit, despite “challenging market conditions.”

While the general industry trend remains sluggish in mainly capital-intensive sectors, Trelleborg achieved gains in the automotive and aerospace industries, markets outside Western Europe and North America.

The company also noted that the agricultural market, which has long been in decline, is beginning to stabilise, albeit at a low level.

Assessing the market, Nilsson said that the UK’s decision to leave the EU had increased the “prevailing economic uncertainty”.

Nevertheless, he added, “we will continue to focus on the factors we can influence and maintain a strong focus on cost control, cash flow and value creation in this unpredictable business environment.”

The company expects markets to stay flat, or slightly drop, during the third quarter, mainly due to the continued decline of its oil & gas operation.