Trelleborg announces interim report for second quarter from April to June 2014.
Net sales for the second quarter of 2014 increased by 2 percent (0) and totaled SEK 5,725 M (5,628). Organic sales declined by 1 percent (increase: 2). Effects of structural changes contributed 0 percent (pos: 4) while the effects of exchange-rate movements were a positive 3 percent (neg: 6).
Operating profit, excluding the participation in TrelleborgVibracoustic and items affecting comparability, rose by 11 percent to SEK 802 M (723), equivalent to an operating margin of 14.0 percent (12.8), the Group’s highest ever for a single quarter.
Items affecting comparability amounted to an expense of SEK 99 M (expense: 204), which was fully attributable to previously announced restructuring programs. The year-earlier period included an expense of SEK 155 M associated with process and dispute costs.
Operating profit in the quarter for TrelleborgVibracoustic, excluding items affecting comparability, rose 26 percent to EUR 39 M (31). This corresponded to an operating margin of 8.9 percent (6.9), the highest to date for the company for a single quarter.
Trelleborg’s participation in TrelleborgVibracoustic amounted to SEK 42 M before tax (97). The participation includes items affecting comparability in the negative amount of SEK 126 M (neg: 11) that were mainly attributable to the previously communicated restructuring projects.
Earnings per share rose 38 percent to SEK 1.95 (1.41). Operating cash flow amounted to SEK 539 M (531).
Market outlook for the third quarter of 2014
Demand is expected to be on a par with the second quarter of 2014, adjusted for seasonal variations.
Peter Nilsson, President and CEO, comments, “Trelleborg continued to improve earnings. Both operating profit and the operating margin are the highest levels ever for the Group for a single quarter. The Group also reported a stable cash flow.
“Net sales rose 2 percent while organic sales declined 1 percent. Sales performance was favorable in all geographic markets except for Europe. The negative trend in Europe was primarily due to a weaker OEM market for agricultural tires, delays of deliveries of projects and ongoing repositioning to more value-creating niches in certain product segments.
“We maintained our focus on value creation and generating growth via organic initiatives and bolt-on acquisitions. During the quarter, we decided on an investment in a production facility for agricultural tires in the U.S., which will provide us with local presence in North America and a global position in the market. Furthermore, Trelleborg acquired a company in Turkey, which consolidates our leading market position in industrial hoses.
“As yet, we have not received any indication of a general improvement in the demand situation, and we believe that third-quarter demand for the Group as a whole will be on par with the second quarter of the year. We are continuing to carefully monitor the economic developments and are maintaining high preparedness to address fluctuating market conditions.”