Emerging market interest in value-generating products key to expansion – Trelleborg

Emerging markets such as the BRIC countries are expected to drive growth for Trelleborg Wheel Systems over the next few years. In the Trelleborg Group’s 2010 annual report, Maurizio Vischi, president of the business area responsible for producing industrial and agricultural tyres, said “emerging markets as Brazil, China and Russia have begun to show more interest in high-tech products and products that generate value. This provides significant expansion potential through greater presence in these markets.” Vischi admitted that that Trelleborg expects only “restricted” growth in Western Europe and North America, where the business area already counts as “one of the principal players.”

Last year the Trelleborg Wheel Systems business generated net sales of SEK 2.99 billion (£293 million), 11 per cent of the company’s group total and approximately the same as net sales in 2009. Trelleborg notes, however, that the business unit’s organic sales rose seven per cent. Demand for industrial tyres improved gradually during the year while demand for agricultural tyres was weaker than in 2009, the company adds. Operating profit amounted to SEK 263 million (£25.8 million) in 2010, ten per cent of the group total and a seven per cent year-on-year decrease. Trelleborg admits that weaker demand for agricultural tyres in the first part of the year impacted operating profit, however it claims that, excluding exchange rate effects, operating profit was actually slightly better than in 2009.

“While demand in the agricultural segment remained weak in 2010, the recovery in the industrial segment was strong. In both segments, raw materials prices rose dramatically,” said Vischi. “Despite this, the business area succeeded in maintaining its historically high profitability, an EBITDA margin of 12 per cent, thanks to continued focus on implementing measures to offset these price increases.”

Maurizio Vischi added that both the industrial and agricultural tyre segments “remain highly attractive” due to favourable macroeconomic trends such as rapid population growth, greater demand for biofuels and the global rise in the need for transport. He reports the Trelleborg Wheel Systems business area” continues to further develop its leading positions through organic growth and strategic acquisitions,” such as the Watts Group acquisition late last year.