Agri OE Sector Weakness Affect Trelleborg Tyre Sales

Speaking on Trelleborg AG’s performance during the first three months of the year, company president and CEO Peter Nilsson stated “the first quarter of 2010 is showing that we are building a stronger Trelleborg and that we are constantly moving towards growing and profitable segments The implemented action programmes continue to give positive effects and we are gradually growing in to a more efficient structure.”

Trelleborg Wheel systems recorded net sales of SEK of 725 million (£65.8 million) in the quarter, down from SEK 950 million a year earlier. According to Nilsson, continued weakness in the agricultural tyre OEM segment, which makes up two-thirds of the unit’s business, has led to this 18 per cent drop in organic sales and 24 per cent in total net sales. Operating profit declined 25 per cent to SEK 76 million (£6.9 million). The unit’s industrial tyre business faired better during the three-month period. “We see a slim improvement in the industrial tyre market,” Nilsson noted “We have completed the move from US to Sri Lanka, so we are seeing the benefits from a more efficient structure.”

Overall company sales grew 2.57 per cent per cent to SEK 7,054 million (£640.5 million) during the quarter, and operating profit rose year-on-year from SEK 46 million to SEK 501 million (£45.5 million). Profit during the January to March 2010 period increase 349 per cent from SEK 65 million to SEK 292 million (£26.5 million).

“The increasing volumes during the quarter give a good leverage resulting in higher margins. The EBITDA margin improved and was 11.3 per cent for the quarter, compared to 5.0 per cent during the year-earlier period, or 10.4 per cent in the fourth quarter of 2009,” Nilsson continued. “The demand scenario remains uncertain. We now have greater flexibility to swiftly address market movements. Our priorities include continuing our efforts to improve the group’s structure and geographic balance, increasing synergies and continue to develop the product portfolio.” 

Looking forward, company CEO Bo Jacobsson said Trelleborg expects increased sales and improved margins in the second quarter, and overall demand is expected to remain in line with or slightly better than the first quarter. Bo added that the company intends to focus on long-term positioning, and will continue the geographical shift in its footprint.