Trelleborg boss “not satisfied” as margins decline

Trelleborg, Sweden – Trelleborg AB has seen a reduction in business from automotive-related customers during the first quarter of 2019, the company reported 26 April.

While sales grew 9% year-on-year to SEK9.38 billion (€884 million), Trelleborg said organic growth slowed at 1% compared to the preceding period.

Earnings (EBITDA) grew 1% to SEK1.38 billion, while EBIT margin fell to 13.8% from 15.1% in the prior-year first quarter.

“We are not satisfied with our performance, as our operating margin declined during the period,” said Peter Nilsson, president and CEO.

Some operations were burdened by sales mix and “certain units lagged behind in compensating for increased costs,” he explained.

On a more positive note, Nilsson said the overall economy and the company’s business activity remained “at a generally high level.”

“Order bookings continued to trend positively during the quarter, although certain market segments are displaying a more modest organic trend year-on-year,” he added.

The group’s largest business area Trelleborg Sealing Solutions registered unchanged organic sales, although performance varied from segment to segment.

Sales to aerospace were strong, while a downturn in sales was witnessed in the automotive industry, according to Nilsson.

Impacted by sales-mix and an imbalance between raw materials and sales prices, earnings within the tire operations fell despite higher sales.

Trading at Trelleborg’s offshore oil & gas operation remained difficult during the quarter, but Nilsson saw “both market activity and order bookings continuing to increase.”

The oil & gas business is expected to improve its earnings during the quarters ahead, with positive earnings forecast in the latter part of the year.