Trelleborg reports ‘best-to-date’ Q3 despite supply chain woes

Trelleborg, Sweden – Trelleborg AB has reported its ‘best-to-date’ third quarter results with both sales and earnings (EBIT, excluding items affecting comparability) seeing double-digit increases over last year.

Earnings were up 25% at SEK1.2 billion (€120 million) on 15% higher sales of SEK8.2 billion, Trelleborg announced 27 Oct.

Order intake during the quarter remained healthy in most geographies and market segments, despite a challenging business environment, said group president and CEO Peter Nilsson. 

The challenges, he went on to say, included continued increase in the prices of raw materials and supply chain disruption.

“The supply chains were disrupted by shortages of some components and raw materials, occasionally with temporary production stoppages as a result,” Nilsson explained. 

Furthermore, a continued shortage of containers in some regions, historically high freight costs as well as the sudden and clear increase of energy costs posed additional test. 

Trelleborg Industrial Solutions (TIS) posted 19% year-on-year higher earnings at SEK326 million, on 9% higher sales of SEK2.7 billion during the three-month period.

Here, demand from most market segments and all geographical markets improved, according to Nilsson. 

Sales to the construction and industry-related market segments were significantly higher compared with the preceding year.

While sales to the aerospace and rail segments increased, demand from the automotive industry declined, due to postponed deliveries, largely caused by shortages of semiconductor components.

Nilsson noted 'significant growth in sales and good profitability' within Trelleborg Sealing Solutions, which reported increases in all market segments and geographies. 

The segment posted 59% increase in earnings at SEK720 million, on 23% higher sales of SEk3.0 billion.

While order intake remained strong in most segments, the lack of certain components and raw materials led to temporary production stoppages for some customers, especially in the automotive industry.

Trelleborg Wheel Systems (TWS) saw earnings decline 13% to SEK238 million, mainly due to rising costs of raw materials, freight and energy.

Segment sales were up 14% to SEK2.3 billion, with significant growth in all tire categories and in the majority of geographies. 

According to Nilsson, higher raw materials prices had a negative impact on the margins in the short term due to price formulas with OE manufacturers.

As a result, he went on to say, new higher customer prices take effect with some delay and the profitability is expected to “gradually recover” during the next quarter.