Trelleborg plans share repurchase programme, targets M&A drive

Trelleborg, Sweden – Trelleborg Group has completed the revamp of its portfolio and is now eyeing growth through mergers and acquisitions (M&As) and investment in ‘high potential’ segments.

Through M&As, increasing global footprint and ‘speedboat accelerating’ of growth in certain segments, the Swedish polymer group aims to increase sales by 5-8%, said chief financial officer Fredrik Nilsson.

The Swedish group, meanwhile, aims to raise EBIT margin to more than 16% “in the near term,” Nilsson set out at a 2 Dec capital market day presentation.

“We have a strong list of [acquisition] prospects which we now like to turn into pipeline and we are also allocating more resources internally to drive the M&A agenda,” the CFO said noting that Trellebrog had identified 200 acquisition prospects.

In addition, the group’s board has called an EGM for 28 Dec to discuss a share-repurchase programme to ‘adapt the group’s capital structure’ and deliver 'shareholder value'. 

The goal, explained Nilsson, is to repurchase own shares of approximately SEK2-3 billion (€194-291 million) per year.

Also presenting at the event, group president and CEO Peter Nilsson said the Swedish group continued to focus on 'the good positions' offered by its three main segments: sealing solutions, industrial solutions and wheel systems. 

In addition, he stated, Trelleborg aims to expand its presence in ‘speedboat areas’ such as healthcare, medical, aerospace, green aviation, semiconductor business, e-mobility and sensor technology.

"We have had M&A ambitions but we have not been able to execute. But we feel we have good prospects and are able to execute some M&As," the CEO noted.

“The conditions are better than ever, both operationally, and thanks to trends such as increased electrification, digitisation, and industrial automation,” he added. 

Elaborating on post-restructuring standing of Trelleborg businesses, Peter Nilsson said the sealing solutions segment was “like clockwork, running very well and is well balanced”. 

“The target here is to scale up and accelerate,” he said adding that Trelleborg had no plans to change the structure of the segment. 

Industrial solutions, noted Trelleborg's leader, was the unit most impacted by the portfolio changes and had “now become a better business.”

“What we have in the Industrial solutions is only good businesses,” he went on to say, adding that new opportunities to enhance the unit had been identified through the restructuring.

“Here, we are what we call climbing the value ladder, which is to say that there is still room to add value,” he added.

As for Trelleborg Wheel Systems, Peter Nilsson said the group had been building ‘a very efficient and good platform’ over the past few years which he said is now “ready for take-off.

“We have, this year, been exposed to heavy increases of raw materials… The way the pricing works here is a bit delayed but we think we will see solid improvement in this area quite soon.”