Increased demand for all units in Q1 – Trelleborg

Increased demand for all units in Q1 – Trelleborg
20 April 2011

Trelleborg, Sweden -- First quarter organic sales at Trelleborg grew by 19 percent as the company reported a continued increase in demand across all segments.

Net sales in Q1 were SEK 7226 million (euro 812 million), up from SEK 6556 million during the same period in 2010. Operating profit was SEK 645 million, up from 488 million year-on-year, the Swedish company said in a 20 April conference call.

EBITDA, rose to 12.1 percent, which the company linked to extra sales. In the conference call, Trelleborg ceo Peter Nilsson noted that an increase in raw materials prices had affected earnings but said the company expected to compensate for this when the price of raw materials “flattened out.”

And although demand was still far away from the peak of 2007-08, Nilsson said, there were continued improvements in business areas such as agriculture, which was picking up from a dramatic drop the previous year.

The greatest increase in sales was seen in the Wheel Systems unit, which saw organic sales jump by 36 percent, from SEK 725 million in 2010 to SEK 950 million this year. Nilsson noted that the recent acquisition of Watts Tyre Group consolidated Trelleborg’s position and opened up some interesting sales concepts for the company.

In the Automotive sector, where sales for Q1 2011 were SEK 2291 million, up from SEK 2120 million in 2010, Trelleborg reported an 18-percent increase in organic sales.

Nilsson mentioned the letter of intent that had been signed with Freudenberg in January for a joint venture in antivibration solutions. The executive said Trelleborg was in the middle of due diligence, which would cost the company about euro 1-2 million per quarter. When pressed, he said he was unable to give any further information but that the negotiations were expected to be full concluded by the end of the year.

Trelleborg’s Sealing Solutions business recorded an “all time high,” with organic sales increasing by 29 percent. However, Nilsson noted that there was a lack of capacity and the company had not been able to build up an inventory.

Looking to the future, Nilsson said that demand is expected to remain in line with or somewhat better than the first quarter of 2011, adjusted for season variations. He admitted that the company were being careful with predictions but that Trelleborg’s forecast for the near future was positive.