Interim report April - June 2018

"Continued earnings improvement"

“Trelleborg continues to perform well. During the second quarter of the year, sales increased 6 percent, with organic sales accounting for 2 percent of the increase. Excluding project transactions, which mainly comprises offshore oil & gas operations, organic sales increased 4 percent, impacted by improved demand in many market segments and most geographic regions. EBIT, adjusted for items affecting comparability, increased 19 percent to its highest level on record for a single quarter.

General industry is continuing to perform well in all regions. Our presence in Asia continues to strengthen. The demand for our tires for both the agricultural sector and for industrial and construction vehicles is still growing. In this context, it is important to underline that the demand for our agricultural tires is developing stronger than the underlying market, driven mainly by increased deliveries to OEMs of agricultural machinery. In comparison, European tractor registration – an important indicator for us – declined by about 3 percent during the period.

Our oil & gas operation experienced a continued weak market, mainly affecting the business area Trelleborg Offshore & Construction, which again reported a loss for the quarter. However, this operation only had a minor impact on our quarterly earnings from a Group perspective. Meanwhile, we are now seeing clear signs of increased activity in this segment, which is expected to lead to increased deliveries with a certain time lag, depending on the nature of the business.

During the summer we have finalized two acquisitions, one in the U.S. and one in New Zealand. The focus remains on organic initiatives, but we are continuing to seek out bolt-on acquisitions that will further strengthen our niche positions.

The degree of capacity utilization is high in parts of our operations, which we are addressing by taking various measures and this is reflected in, for example, a higher rate of investment.

At the beginning of June, we held a Capital Markets Day in Stockholm, Sweden, at which we presented the Group’s overall strategy. The presidents of the business areas were also given extensive scope to demonstrate the strong innovative energy that exists across the Group. This was exemplified by a number of smart products and offerings. In recent years we have received a number of awards for our value-creating, innovative solutions.

To summarize, during the period, we have seen a positive demand situation in most of our segments and we are entering the third quarter with strengthened optimism. That said, political and economic tensions in the global arena have intensified, which may impact trade and the willingness to invest more than we see today.

In the third quarter, our overall assessment is that demand will be in line with the second quarter of the year, with the reservation that the third quarter is a seasonally weak one due to the vacation period in Europe. We continue to follow economic developments closely and are well prepared to manage the shifting market conditions,” says Peter Nilsson, President and CEO.

Second quarter

Net sales for the second quarter of 2018 rose 6 percent to SEK 8,786 M (8,265).

Organic sales increased 2 percent. Excluding project deliveries, the corresponding increase was 4 percent.

EBIT, excluding items affecting comparability, rose 19 percent to SEK 1,293 M (1,089), which was equivalent to an EBIT margin of 14.7 percent (13.2). EBIT was the highest on record for the Group.

Items affecting comparability for the quarter were a negative SEK 32 M (neg: 76), in line with information previously communicated.

Earnings per share for continuing operations excluding items affecting comparability totaled SEK 3.40 (2.92).

Operating cash flow amounted to SEK 1,069 M (1,096). The cash conversion ratio for the most recent 12-month period was 82 percent (98), impacted by a slightly higher level of capital expenditure.

Market outlook for the third quarter 2018
Demand is expected to be on a par with the second quarter of 2018, adjusted for seasonal variations.

Market outlook from the interim report published on April 25, 2018, relating to the second quarter of 2018
Demand is expected to be on a par with the first quarter of 2018, adjusted for seasonal variations.

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 information is information that Trelleborg AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 07:45 a.m. CET on July 20, 2018.

Trelleborg is a world leader in engineered polymer solutions that seal, damp and protect critical applications in demanding environments. Its innovative solutions accelerate performance for customers in a sustainable way. The Trelleborg Group has annual sales of about SEK 32 billion and operations in about 50 countries. The Group comprises five business areas: Trelleborg Coated Systems, Trelleborg Industrial Solutions, Trelleborg Offshore & Construction, Trelleborg Sealing Solutions and Trelleborg Wheel Systems. The Trelleborg share has been listed on the Stock Exchange since 1964 and is listed on Nasdaq Stockholm, Large Cap. 
www.trelleborg.com

About Us

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