Interim report July - September 2017

"Stable earnings with good market trend"

“A favorable organic sales trend was noted by most business areas in the third quarter. Organic growth was 5 percent excluding the weak trend for project deliveries within the oil & gas segment.

In most geographic markets, market conditions for general industry improved further compared with the first half of the year. Challenging market conditions persisted in the oil & gas segment, which were partially offset through proactive cost adjustments. The European agricultural sector continued its recovery and posted a healthy trend, primarily in the OEM segment for agricultural machinery. In North America, the corresponding market trend remained weak, even if our volume trend continued to be positive.

The robust trend continued for the automotive industry. However, our aerospace industry deliveries declined slightly. Our assessment is that this is due to slightly restrained production rates at some aircraft manufacturers, which are linked to temporary capacity issues in the supply chain.

Operating profit reached its highest level for a third quarter, and given the negative result in the oil & gas segment, this is a sign of strength. The operating margin remained on a par with the year-earlier period as a result of stringent cost control and strong market positions. We have continuously worked to compensate for the higher raw material prices that prevailed for much of the year. During the later part of the quarter, we achieved compensation for raw material prices.

In terms of the individual regional markets, our business grew most in Asia. Growth was also healthy in Western Europe, North America and South America. We noted a slightly weaker sales trend for Eastern and Central Europe, partly due to our concentrated focus in the quarter on preparing our local manufacturing units related to the acquisition of CGS for the forthcoming integration with existing business areas which will take place from the beginning of next year.

The integration of the acquired CGS units has largely developed satisfactorily and a number of initiatives have been accelerated during the quarter. Investments continue to create a more efficient long-term structure.

The weak trend for our oil & gas-related operation has partly impeded development of the Group’s earnings. We are continuing to adjust the operation to lower demand with the aim of creating an operation that is well positioned for the long term.

Overall, our assessment is that the demand in the last quarter of the year will be on a par with, or slightly better than, the third quarter. As previously, we are carefully monitoring economic developments and continue to maintain a high level of preparedness to manage fluctuating market conditions”, says Peter Nilsson, President and CEO.

Third quarter 2017

Net sales for the third quarter of 2017 rose 3 percent to SEK 7,310 M (7,072).

Organic sales increased 3 percent. Excluding project deliveries, the corresponding increase was 5 percent. Effects of structural changes made a positive contribution of 2 percent to net sales.

EBIT, excluding items affecting comparability, rose 1 percent to SEK 920 M (915), equivalent to an EBIT margin of 12.6 percent (12.9).

Items affecting comparability for the quarter were a negative SEK 45 M (neg: 51) and refer to restructuring expenses, in line with information previously communicated.

Earnings per share for continuing operations excluding items affecting comparability totaled SEK 2.47 (2.46)

Operating cash flow amounted to SEK 967 M (1,066). The cash conversion ratio for the most recent 12-month period was 95 percent (89).

Market outlook for the fourth quarter 2017
Demand is expected to be on a par with, or slightly better than, the third quarter of 2017 adjusted for seasonal variations.

Market outlook from the interim report published on July 20, 2017, relating to the third quarter of 2017
Demand is expected to be on a par with the second quarter of 2017, adjusted for seasonal variations.

For further information, please contact:
Media: Vice President Media Relations Karin Larsson, +46 (0)410 67015, +46 (0)733 747015,
Investors/analysts: Vice President IR Christofer Sjögren, +46 (0)410 67068, +46 (0)708 665140,

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 October 27, 2017.

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 SEK 31 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, and the operations of Rubena and Savatech. The Trelleborg share has been listed on the Stock Exchange since 1964 and is listed on Nasdaq Stockholm, Large Cap.