Agri OE business drags down Trelleborg’s organic tyre sales in 2015

Sweden’s Trelleborg AB reports that organic sales within its Trelleborg Wheel Systems business decreased by six per cent year-on-year in 2015, despite a four per cent rise in overall sales. Organic sales were pushed downwards by agriculture-related sales, which were impacted by markedly lower agricultural machinery production levels. The organic sales trend for tyres for materials handling vehicles was slightly negative for the full-year. Total net sales increased 3.6 per cent to SEK 4.3 billion (£349 million).

Operating profit and operating margin also declined, mainly due to lower volumes in certain segments. Operating profit for the full year amounted to SEK 468 million (£37.9 million), 6.9 per cent less than a year earlier, while the margin went down from 12.1 per cent to 10.8 per cent. Start-up costs for Trelleborg’s new agricultural tyre production facility in the US also had an impact on profit, however the plant will contribute to organic growth once deliveries begin to increase.

Trelleborg points out that the tougher market conditions that Trelleborg Wheel Systems encountered were partially offset by effective cost control and successful market positioning. Exchange rate effects from the translation of foreign subsidiaries had a positive impact of SEK 57 million on operating profit compared with 2014.

Net sales for the whole company increased 10.1 per cent in 2015, to SEK 24.8 billion (£2.0 billion). Operating profit, excluding the participation in TrelleborgVibracoustic, and items affecting comparability, rose 7.3 percent to SEK 3.2 billion (£260.6 million), while the operating margin rose from 13.0 to 13.3 per cent. Operating profit was the group’s highest full-year result to date.

“2015 turned out to be quite an eventful year, and despite the challenging market conditions in several segments, we once again succeeded in achieving record results for the full-year,” commented Peter Nilsson, president and CEO of Trelleborg. “Operating profit was the highest ever recorded for a fourth quarter, giving a stable end to a largely satisfactory year.
“However, organic sales growth was below our target,” noted Nilsson. “Organic sales were negative at two per cent for the full-year, but remained unchanged in the fourth quarter. With a relatively weak market situation in several segments and raw material prices that continued to decline, with a subsequent negative effect on our organic growth, the year proved challenging in terms of growth. Several initiatives are ongoing and others will be launched to address our sales growth going forward.”

Full details of Trelleborg’s Q4 and full year 2015 results can be found in our company profiles and reports section.