Interim report July - September 2018

"A solid quarter"

“During the third quarter, sales rose 14 percent, of which organic sales increased 4 percent. Excluding project business, which mainly comprises offshore oil & gas-related deliveries, organic sales increased 6 percent, impacted by improved demand in most market segments and geographic regions. EBIT, adjusted for items affecting comparability, increased by 23 percent to the highest level to date for a third quarter.

The Group continues to perform favorably. Most operations are growing at a good pace, with higher profitability and stronger order intake than a year ago. Synergy gains from previous acquisitions contribute according to plan. We continue to acquire complementary operations and during the quarter, we announced three acquisitions, of which two were finalized. Strategic investments remain at a high level and will contribute to better structure and sustainably higher profitability. 

Sales to general industry continued to grow in the third quarter. Deliveries to other market segments, such as the automotive and aerospace industries, also developed favorably. Demand for our tires for the agricultural sector, as well as for industrial and construction vehicles, continues to grow, mainly as a result of increased deliveries of agricultural machinery to OEMs.

In our project operations, orders received strengthened during the quarter for oil & gas, as well as the infrastructure segment. However, this pertains mainly to projects with delivery during next year. In the immediate future, several orders that were expected to be delivered in the current year have been postponed until 2019. Our assessment now is that the Trelleborg Offshore & Construction business area will also generate a loss for the final quarter of the year but is expected to see an earnings improvement with positive results in 2019, particularly during the second half of the year.

Our order books continued to grow during the third quarter, but the market outlook is associated with greater uncertainty than previously, with trade policy decisions potentially having further consequences for global economic development.

However, our overall assessment is that demand in the fourth quarter will be in line with the third quarter. As previously, we will follow economic developments closely and remain well prepared to manage shifting market conditions,” says Peter Nilsson, President and CEO.

Third quarter

Net sales for the third quarter of 2018 rose 14 percent to SEK 8,300 M (7,310).

Organic sales increased 4 percent. Excluding project deliveries, the corresponding increase was 6 percent.

EBIT, excluding items affecting comparability, rose 23 percent to SEK 1,133 M (920), which was equivalent to an EBIT margin of 13.6 percent (12.6). EBIT and the EBIT margin were the highest ever for the Group in a third quarter.

Items affecting comparability for the quarter were a negative SEK 28 M (neg: 45).

Earnings per share for continuing operations excluding items affecting comparability totaled SEK 2.98 (2.47).

Operating cash flow amounted to SEK 847 M (967). The cash conversion ratio for the most recent 12-month period was 76 percent (95), impacted primarily by a higher level of capital expenditure year on year.
 

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

Market outlook from the interim report published on July 20, 2018, relating to the third quarter of 2018
Demand is expected to be on a par with the second 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 October 31, 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

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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