Fourth quarter and Year-end report 2014

"Strong finish to the year"

“Trelleborg posted strong earnings for the fourth quarter of 2014 considering the market situation. The organic sales trend remained below our level of ambition, mainly due to a strong decline in the OEM market for agricultural tires and weaker market conditions in certain niches in Europe. Our ambition of maintaining strict margin control partially affected volumes negatively and, as a consequence, also organic growth. Despite the organic sales trend, the operating profit and margin were the highest to date for the Group in a fourth quarter. Acquired operations had a positive impact on earnings.

During the year, Trelleborg continued to strengthen its positions, in spite of a challenging market situation in several markets and segments. Net sales 2014 rose and the operating profit and margin were the highest to date for the Group. The organic sales trend was marginally negative for the full year, thereby reflecting the sluggish nature of the global economic recovery, primarily in Europe. Acquisitions implemented during the year will contribute approximately 5 percent to structural growth on rolling twelve months. TrelleborgVibracoustic performed well and according to plan, continuing to outperform the underlying market in terms of growth.

As we enter 2015, there are signs of an improvement in the market in certain geographies, while the situation for parts of our business is substantially more challenging than it was one year ago. The sharp fall in oil prices has increased uncertainty and is impacting the profitability of primarily our project deliveries in the offshore oil/gas segment, which hopefully can be offset by the positive effects that lower oil prices create in other parts of the Group. Our agricultural tire operation continues to be affected by the difficult climate for agricultural machinery manufacturers, a factor that will negatively impact our sales in the segment.

Our overall assessment is that demand in the first quarter of 2015 will be on a par with the fourth quarter of 2014. We are continuously monitoring developments and are maintaining preparedness to adjust our various businesses to fluctuating demand”, says Peter Nilsson, President and CEO.

Continuing operations, fourth quarter

Net sales for the fourth quarter of 2014 increased by 8 percent (4) and totaled SEK 5,582 M (5,145). Organic sales declined by 2 percent (increase: 2). Effects of structural changes made a positive contribution of 3 percent (pos: 3), while the effects of exchange-rate movements were a positive 7 percent (neg: 1).

Operating profit, excluding the participation in TrelleborgVibracoustic and items affecting comparability, rose 23 percent to SEK 690 M (563), equivalent to an operating margin of 12.4 percent (11.0). Both operating profit and operating margin were the highest to date for a fourth quarter.

Items affecting comparability for the quarter amounted to an expense of SEK 68 M (expense: 68), which was fully attributable to previously announced restructuring programs.

Operating profit in the quarter for TrelleborgVibracoustic, excluding items affecting comparability, was in line with the year-earlier period and amounted to EUR 34 M (35). This corresponded to an operating margin of 7.6 percent (8.2).

Trelleborg’s participation in TrelleborgVibracoustic amounted to SEK 72 M after tax (81). The participation includes items affecting comparability amounting to an expense of SEK 11 M (expense: 3) and is in line with communicated full-year levels.

Earnings per share rose 26 percent to SEK 1.84 (1.46).

Operating cash flow increased 19 percent to SEK 1,031 M (867).

Continuing operations, full year

Net sales for the full-year increased by 5 (pos: 1) percent and totaled SEK 22,515 M (21,473). Organic sales declined by 1 percent (increase: 1). Effects of structural changes made a positive contribution of 2 percent (pos: 4), while the effects of exchange-rate movements were a positive 4 percent (neg: 4).

Operating profit, excluding the participation in TrelleborgVibracoustic and items affecting comparability, rose 15 percent to SEK 3,001 M (2,613), equivalent to an operating margin of 13.3 percent (12.2). Both operating profit and operating margin were the highest to date for a full year.

Operating profit for the full year for TrelleborgVibracoustic, excluding items affecting comparability, rose 21 percent to EUR 151 M (125), corresponding to an operating margin of 8.5 percent (7.3). Trelleborg’s participation in TrelleborgVibracoustic amounted to SEK 298 M (237) after tax.

Earnings per share rose 35 percent to SEK 8.23 (6.08).

Operating cash flow increased 31 percent to SEK 2,836 M (2,162). The cash conversion ratio was 90 percent (83), excluding dividends from TrelleborgVibracoustic.

Market outlook for the first quarter of 2015

Demand is expected to be on a par with the fourth quarter of 2014, adjusted for seasonal variations.

Proposed dividend 2014

The Board of Directors and President propose a cash dividend of SEK 3.75 per share (3.25).

For further information, please contact:
Media: Vice President Media Relations Karin Larsson, +46 (0)410 67015, +46 (0)733 747015, karin.larsson@trelleborg.com
Investors/analysts: Vice President IR Christofer Sjögren, +46 (0)410 67068, +46 (0)708 665140, christofer.sjogren@trelleborg.com

This is information of the type that Trelleborg AB (publ) is obligated to disclose in accordance with the Swedish Securities Exchange and Clearing Operations Act and/or the Financial Instruments Trading Act. The information was issued for publication on Friday, February 13, 2015, at 07:45 CET.

Trelleborg is a world leader in engineered polymer solutions that seal, damp and protect critical applications in demanding environments. Its innovative engineered solutions accelerate performance for customers in a sustainable way. The Trelleborg Group has annual sales of about SEK 21 billion in over 40 countries. The Group comprises five business areas: Trelleborg Coated Systems, Trelleborg Industrial Solutions, Trelleborg Offshore & Construction, Trelleborg Sealing Solutions and Trelleborg Wheel Systems. In addition, Trelleborg owns 50 percent of TrelleborgVibracoustic, a global leader within antivibration solutions for light and heavy vehicles, with annual sales of approximately SEK 15 billion in about 20 countries. The Trelleborg share has been listed on the Stock Exchange since 1964 and is listed on Nasdaq Stockholm, Large Cap.
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Trelleborg is a world leader in engineered polymer solutions that seal, damp and protect critical applications in demanding environments. Its innovative engineered solutions accelerate performance for customers in a sustainable way. www.trelleborg.com