Trelleborg, Sweden – Trelleborg AB has seen its first quarter results hit by the outbreak of Covid-19 and expects the pandemic to impact sales and earnings “significantly more” during the coming quarters.
Net sales for the first quarter of 2020 declined 1% to SEK9.29 billion (€856 million), while organic sales decline 5%, Trelleborg announced in its interim first quarter results 23 April.
Earnings (EBIT, excluding items affecting comparability) fell 5% to SEK1.23 billion, which the Swedish group linked entirely to its restructuring scheme, launched earlier this year.
For the full year, however, Trelleborg anticipates the impact of Covid-19 outbreak to be stronger on its results.
Demand, according to Trelleborg, is expected to be “significantly lower” than in the first quarter, adjusted for seasonal variations.
“During the next quarters, the negative impact on demand will be considerable due to all of the direct and indirect effects arising from the Covid-19 pandemic,” said Peter Nilsson, president and CEO.
While the scope and length of the pandemic are still uncertain, Trelleborg said it expected its supply chain and profitability to be hit by the outbreak.
The group said it currently is not experiencing “any major disruption” to its supply chain but predicted that a continued uncertainty could affect its “access to components and the ability to transport finished products to customers.”
In addition, Trelleborg said its revenue and profitability could be affected by individual countries’ decisions on extraordinary measures and customer behaviours.
The group, however, said it had “guaranteed long-term financing in place and healthy liquidity.”
In terms of segments, sales and earnings in Trelleborg Industrial Solutions were negatively impacted by strikes in Turkey and France, as well as Covid-19, the group announced.
Segment sales fell 1% to SEK2.59 billion, while earnings declined 26% to SEK209 million, due mainly to a drop in demand in most regions, particularly within the automotive industry.
Trelleborg Sealing Solutions noted “relatively good sales”, despite the negative effect of temporary facility closures, first in China and then in Europe.
While sales were up 3% at SEK3.2 billion, organic sales fell 3%, as a result of declining demand and increased uncertainty in most regions, primarily in Asia.
TSS earnings decreased 2% to SEK706 million, due to lower deliveries and 'a continued subdued market.'
Segment sales were down 10% at SEK2.4 billion, due to a ‘significant’ decline demand from the agricultural market.
The sale of tires for material handling vehicles and construction vehicles declined year on year, with the decrease most noticeable in North America.
Segment earnings fell 15% to SEK297 million as a result of lower sales volumes, which were partially offset by a positive sales mix.
According to Nilsson, cost saving measures were initiated at TWS during the quarter to help maintain the results “at a healthy level considering the circumstances.”
He did not elaborate on the cost-cutting measures.