Trelleborg anticipates "tougher climate" in coming months

Trelleborg, Sweden – Trelleborg AB has reported weak results for the third quarter of 2020 and expects a “tougher climate” in the final quarter of the year, as new Covid-19 restrictions are imposed in various countries.

During the three months to end of September, group sales declined 12% to SEK7.7 billion (€747 million), reflecting a 7% decline in organic sales and a 5% negative impact of exchange rates, said CEO and president Peter Nilsson 27 Oct. 

EBIT (excluding items affecting comparability) fell 4% during the three-month period to SEK999 million, corresponding to an operating margin of 12.9%, up from 11.7% last year. 

Over the nine months to end of September, sales fell 10% to SEK24.7 billion, while EBIT declined 13% to SEK3.1 billion.

Trelleborg Industrial Solutions' sales decreased 14% t SEK2.3 billion during the third quarter. Segment EBIT decreased 9% to SEK262 million, due mainly to lower volumes. 

However, Nilsson said, the unit saw sales to most market segments "continue to recover." 

“Deliveries to the automotive industry made a strong recovery and sales of our marine solutions grew somewhat,” he said.

Trelleborg Sealing Solutions' sales to the aerospace industry continued to note “a very negative trend” due to the pandemic, with deliveries to the segment halved compared with a year ago.

TSS reported a 32% decline in EBIT to SEK454 million, on 16% lower sales at SEK2.5 billion for the three months. 

According to Nilsson, the business unit’s sales to both general industry and the automotive segment improved during the three-month period, compared with the sharp fall during the second quarter. 

China, he said, “stood out, in particular, with a positive trend.”

Sales within Trelleborg Wheel Systems made “a strong recovery and displayed slightly positive growth overall.” 

Despite a 1% organic growth, overall sales were down 5% to SEK2 billion, due to structural changes and currency effects.

Nilsson linked the growth primarily to deliveries of agricultural tires, both to OE manufacturers and aftermarket sales. 

Sales of tires for material handling and construction vehicles remained weaker compared with the year-earlier period.

TWS also saw EBIT improve 84% to SEK272 million, as a result of “strict price and cost discipline and measures to offset Covid-19 effects.” 

The comparison period in 2019 was also characterised by a lower rate of production aimed at adjusting inventory levels. 

Organic sales in 'Businesses Under Development' declined, although the trend was more positive compared with the preceding quarter. This was mainly attributable to the favourable development in our offshore oil & gas operation.

Commenting on the results, Nilsson said during the quarter, demand improved gradually in most market segments.

However, he said there was “considerable uncertainty” regarding Covid-19 developments and further consequences of the pandemic as new local restrictions are being imposed across the globe.

“We foresee a tougher climate during the fourth quarter of the year, not least in the oil & gas segment, and a recovery in the aerospace segment will not occur until further into the future,” he said. 

Trelleborg’s general assessment of the current situation is that demand for the fourth quarter will be on a par with the third quarter, Nilsson concluded.