Trelleborg reports 37% rise in Q1 earnings

Trelleborg, Sweden – Polymer engineer Trelleborg AB has posted a 36% rise in first quarter net sales to SEK8,298 million (€861 million), helped largely by the purchase of CGS in 2016.

Structural changes made a positive contribution of 30% on net sales, with the acquisition of CGS – parent group of Mitas – accounting for the main part of this increase, Trelleborg said in a 27 April results announcement.

Earnings (EBIT excluding items affecting comparability), rose 37% to SEK1.15 billion, which the group said was its “highest figure on record for a single quarter”. EBIT margin stood at 13.9% compared to 13.8% for the first quarter the previous year.

Looking forward, however, Trelleborg expects recent rises in raw materials prices to more fully impact results in the second half of 2017, CEO Peter Nilsson said in the financial statement.

First-quarter tire sales to the agricultural sector and industrial and construction vehicles performed well, according to CEO Peter Nilsson. This, he noted, was despite a “temporary negative impact on margins” in parts of the business due to raw material costs.

“We are working intensively to compensate for the higher raw material prices, which is deemed to have a full impact particularly in the second half of the year,” Trelleborg’s boss added.

In the general industry sector, the CEO reported improvements in all regions and noted healthy levels of activity in several market segments, particularly in Asia.

Trelleborg’s oil & gas operation, however, “is still experiencing a weak market,” with Nilsson unable to see “any improvement on the horizon in the near future.”

“We are working actively to adapt the oil and gas business to the lower level of activity and the cost base is continuing to shrink,” he added.

The oil and gas operation, according to Nilsson, only has “a minor impact” on the group’s quarterly earnings.

Nilsson went on to highlight Trelleborg’s investments in new technologies. The group, he said, was “working particularly intensively with digitalisation, and this will lead to a number of major changes in how we do business with customers for many years to come.”

During the quarter, Trelleborg sold a compounding operation in Lesina, Czech Republic, generating a capital gain of SEK472 million.

Trelleborg said it expected demand for the second quarter of 2017 to be in line with, or slightly higher, than the first quarter of 2017.