Trelleborg reports double-digit growth in sales, earnings

Trelleborg, Sweden – Trelleborg AB has finished 2021 on a high note, posting a double-digit growth in sales, operating profit and margins.

The year “turned out to be the best year in the history of Trelleborg,” said president and CEO Peter Nilsson, announcing the company’s year-end report 4 Feb.

“We delivered healthy organic growth and improved profitability, despite challenges in the form of increased inflation pressure and growing imbalances in the supply chain,” he said.

Group earnings (EBITDA) in the fourth quarter rose 8% to SEK1.6 billion (€153 million), on 15% higher sales at SEK8.7 billion, marking ‘the best-to-date results for a fourth quarter.’

Organic sales for Trelleborg Industrial Solutions grew in most market segments and geographies, with "healthy profitability". 

Segment sales rose 9% to SEK2.8 billion during the fourth quarter and was, for the full year, 7% higher than 2020 at SEK1.1 billion.

EBIT, however, was down 7% during the fourth quarter at SEK364 million, while the EBIT margin fell to 12.7% from 14.9% compared to the final quarter of 2020.

For the full year, EBIT was up 25% at SEK1.3 billion, and EBIT margin rose nearly two percentage points at 12.4%.

Trelleborg linked the fourth quarter EBIT decline to “a very strong comparative period, which was positively impacted by individual large-scale projects.”

Furthermore, strong rises in raw material, logistics and energy costs as well as exchange rate effects also dampened profitability for the quarter. 

Within Trelleborg Sealing Solutions, organic sales performed favourably in all market segments and geographies, apart from the automotive industry, which was held back by the shortage of components. 

Sales to healthcare & medical developed positively, but the spread of the new variant of Covid-19 had a negative impact on demand, due to the postponement of some scheduled operations. 

The segment reported a 28% increase in EBIT to SEK656 million, on 16% higher sales at SEK3.1 billion over the fourth quarter. For the full year, sales were up 15% at SEK12.4 billion, while EBIT was up 34% at SEK2.8 billion.

The ‘significant increase’, Trelleborg said, was mainly due to higher volumes to most market segments. 

Furthermore, the group said the effects of rising energy prices and raw materials were limited by “strict cost control and efficiency improvements.” 

Trelleborg Wheel Systems also performed strongly, with higher sales and EBIT in both fourth quarter and full year.

Fourth quarter EBIT was up 22% at SEK275 million, on 26% higher sales at SEK2.7 billion. For the full year, EBIT increased 16% to SEK1.2 billion while sales rose 15% to SEK10 billion.

Despite the strong growth in all tire categories and most geographies, Trelleborg said the segment’s profitability was hampered by "continued price rises for raw materials and freight and particularly by the accelerating energy costs." 

The group expects price adjustments implemented for customers, as well as continued demand to lead to improved profitability in future quarters.

“During the fourth quarter, costs rose further for raw materials and energy. 

“The pandemic also increased in strength, with higher sickness absence, while the logistics chain remained under strain,” said Nilsson commenting on market dynamics. 

According to the Trelleborg boss, general inflationary pressure, accentuated by a shortage of labour in some regions, will continue to create challenges in the new year. 

“Our general assessment in the current situation is that demand for the first quarter will be on a par with the fourth quarter”, he concluded.