Trelleborg Reports on ‘Turbulent’ 2008

In publishing the Trelleborg Group’s 2008 annual report, company president and CEO Peter Nilsson has commented that Trelleborg faces major challenges, but it can draw strength from its enhanced market positions. “2008 was a turbulent year in many ways,” said Nilsson. “An economic slowdown was anticipated by many, but nobody could foresee how rapid it would be. Following a favourable trend in the first three quarters of 2008, the downturn in the fourth quarter was dramatic.

“Overall, the rapid decline in the market in the fourth quarter of 2008 had a significant impact on Trelleborg,” he continued. “Sales for the year amounted to SEK 31,263 million (£2.65 billion), and operating profit in continuing operations, excluding items affecting comparability, totalled SEK 1,798 million (£152.4 million). The Group reported a net loss of SEK 258 million (£21.9 million) for the year.”

The company’s Wheel Systems unit recorded net sales of SEK 3,708 million (£314.3 million) in 2008, an increase of 14.2 per cent on the previous year. The company reports that the sales of agricultural and forest tyres “experienced good growth” during the year and accounted for 64 per cent of sales, while those of industrial tyres, representing 36 per cent of total sales, were in line with 2007. European sales accounted for 73 per cent of the unit’s business, North and South America 21 per cent, Asia 2 per cent and the rest of the world 4 per cent. Operating profit, excluding items affecting comparability, was SEK 363 million (£30.8 million), up 26 per cent on the previous year.

Maurizio Vischi, business area president at Trelleborg Wheel Systems, commented that the aspect most pleasing to him in 2008 was the favourable financial result achieved by the business area. “It is important to remember that this was accomplished despite a tougher economic climate over much of the period,” he said. “We can now use this new situation as a springboard to further develop our operations.

“The macroeconomic trends in the medium to long term appear positive for our business, both with regard to agricultural tyres and solid industrial tyres,” he continued. “The most important factors behind this are the growing global population, which is driving demand, and thus the production of food, and the continued rise in the production of biofuels. Regardless of the trend in oil prices, the need for biofuels in the world will expand, thanks largely to legislation in many regions.”

Vischi also said that, while long-term trends look promising for the business unit, 2009 will be a “turbulent year” as a result of the general economic decline. Therefore, he said, it is important to intensify focus on cost control and control of capital employed. He believes the most important strategic priorities for the business area in the next few years are to “continue along the established path and not be tempted to look in other directions that may disrupt our solid performance.”