Trelleborg sees 'rapid & strong' change of pace in industry

Trelleborg, Sweden – Trelleborg AB has seen a ‘rapid and strong’ turn of events in the supply of its products, as demand continues to soar amid logistics and raw materials woes.

“At the beginning of the second quarter, our challenges are different in many ways to what they were a year ago,” said president and CEO Peter Nilsson, presenting the group’s first quarter results 22 April.

“At that time, demand fell sharply due to the pandemic. Today, we are grappling with the challenge of being able to produce and deliver in pace with the order intake,” he noted. 

According to the group CEO, the availability of some raw materials and transport capacity is becoming more constricted than the company has experienced “in a long time.” 

In addition, the group is facing 'high employee absenteeism' in several geographies where local restrictions related to the pandemic are still in place.

“This change of scenario emerged rapidly and strongly, which underlines the importance of our agile and flexible organisational structure,” Nilsson added.

For the first three months of the year, the Swedish polymer group posted a 33% increase in net profit to SEK1.1 billion, on 3% lower sales of SEK8.2 billion. 

Organic sales for the period rose 5% but net sales fell due to an 8% currency impact, Trelleborg announced. 

EBIT, excluding items affecting comparability, rose 15% to SEK1.3 billion, corresponding to an EBIT margin of 16.4%. 

“The group had a strong start to the year,” said president and CEO Peter Nilsson, “This was the best quarter to date for both EBIT and the EBIT margin, despite the continued impact of the pandemic in some segments.”

According to Nilsson, demand for most of Trelleborg products and solutions increased gradually during the quarter, with expanding order books as a result. 

Within Trelleborg Industrial Solutions, sales to most market segments increased, in particular to the automotive and construction-related industries. Sales to aircraft and train manufacturers were lower year on year, still affected by the pandemic and travel restrictions.

While organic sales for the segment rose 3%, exchange rate effects lowered overall revenue 5% to SEK2.6 billion. Segment EBIT rose 45% to SEK315 million, due to improved demand and cost-saving initiatives.

Similar to TIS, Trelleborg Sealing Solutions also saw revenue dented by an 8% currency impact, brining total sales to SEK3.1 billion, down 2% year-on-year. Segment EBIT rose 4% to SEK734 million, helped by higher deliveries and strict cost control.

TSS noted favourable organic development in most segments during the period and improved order intake, according to Nilsson. Sales to the aerospace industry continued to be negatively impacted by the ongoing pandemic, but order intake in the segment is “beginning to slowly improve from low levels.”

Within Trelleborg Wheel Systems, a 9% currency impact saw sales drop 3% year-on-year to SEK3.4 billion, while higher sales volumes and structural measures pushed EBIT up 21% to SEK359 million.

Here, Trelleborg said it witnessed “distinct and sharp” increase in demand for tires for agricultural machinery in most geographical markets, “which could not be fully satisfied through existing inventories and increased production.” 

Sales growth was also dampened to some extent by high absenteeism among staff and challenging conditions for freight in certain units because of the pandemic, Nilsson said.

Sales of tires for material handling and off-highway vehicles “gradually improved” during the period, but remained lower than in the corresponding period in 2020.

However, according to Nilsson, the order intake in the market segment points toward increasing deliveries going forward.

Trelleborg discontinued its “businesses under development” reporting segment at the end of the quarter, since its operations have been largely divested or are intended to be divested during 2021.