Trelleborg, Sweden – Trelleborg president and CEO Peter Nilsson has defended the €1.1-billion purchase of CGS group, parent company of tire manufacturer Mitas, saying the agricultural tire sector “will eventually turn”.
Trelleborg boss defends CGS acquisition
In an in-house interview published on the company’s website, Nilsson was asked whether the timing of the Czech group's acquisition was right, and if it increased Trelleborg’s exposure to weak agriculture sector.
“We always maintain a long-term perspective,” said Nilsson in response.
The company, he added, must be sure that it can handle a future rise in demand as the market would eventually turn around.
For example, the Trelleborg boss said machinery sales in the agricultural market were down about 25% from its peak:
“We now see how cereal production is continuing to rise, without sales of tractors and other machinery increasing, but rather decreasing.
“So, we do not know when it will turn around, but we must be prepared when it does.”
Nilsson went on to say that the acquisition was “special”, because of its size and the way different parts of CGS fit into different business areas at Trelleborg.
According to Nilsson’s assessments, the two companies’ synergies up until 2020 will amount to about SEK400 million (€41 million).
“These are mainly cost synergies, but also a great deal of sales synergies,” he said.
The estimate, Nilsson concluded, could be conservative and was based on how the market looks today.