TRELLEBORG, Sweden--(BUSINESS WIRE)--Regulatory News:
"Earnings growth despite tougher markets"
“The third quarter was distinguished by weak organic sales growth, with the market situation in general industry in the majority of geographic markets losing further momentum compared with the first six months of the year. For agriculture and oil/gas, the challenging market conditions persisted, which was partially offset by effective cost control.
Operating profit reached its highest level for a third quarter, which is a sign of strength in light of the prevailing weaker economic trend. The operating margin also improved year-on-year, as a result of stringent cost control and strong market positions, and achieved its highest level for a third quarter.
The TrelleborgVibracoustic joint venture performed well, with healthy organic sales that outperformed the underlying market growth. The company achieved its highest operating margin to date for a single quarter. Activities aimed at preparing TrelleborgVibracoustic for a potential initial public offering are progressing according to plan.
We are continuing our efforts to create growth through organic initiatives and bolt-on acquisitions. We are also intently focused on making it easy for customers to do business with us. To achieve this, we need to be innovative and at the leading edge in the application of new technology in our cooperation with customers. This, combined with a focus on multi-dimensional innovation, forms the basis for increased value generation and our position as a premium partner to our customers.
In Europe, the markets continued to show relatively large disparities between the various regions and market segments. Overall, our organic sales trend in Europe was lower compared with the year-earlier period in 2014. The trend was also more subdued in other markets compared with the year-earlier period.
The low oil price and the weak performance of agricultural machinery has impeded parts of the Group. In this area, we do not foresee any improvement in the next few quarters. Other market segments, such as aerospace and the automotive industries, are continuing to perform at a satisfactory level. It is assessed that several customers have adapted their inventory levels as a result of the higher degree of uncertainty and this is expected to continue in the fourth quarter.
Our overall assessment is that demand will be on a par with, or slightly weaker, than the third quarter. We are continuously monitoring developments and are maintaining preparedness to adjust our various businesses to match fluctuating demand”, says Peter Nilsson, President and CEO.
Net sales for the third quarter of 2015 increased by 6 percent (6) to SEK 5,975 M (5,618). Sales were the Group’s highest to date for a third quarter. Organic sales declined by 3 percent (decline: 2). Effects of structural changes made a positive contribution of 1 percent (pos: 2), while the effects of exchange rate movements were a positive 8 percent (pos: 6).
Operating profit, excluding the participation in TrelleborgVibracoustic and items affecting comparability, rose 9 percent to SEK 798 M (730), equivalent to an operating margin of 13.4 percent (13.0). Both the operating profit and margin were the Group’s highest to date for a third quarter.
Items affecting comparability for the quarter amounted to an expense of SEK 109 M (expense: 41), and is in line with communicated full-year levels.
Operating profit in the quarter for TrelleborgVibracoustic, excluding items affecting comparability, increased 20 percent and amounted to EUR 45.9 M (38.4). This corresponded to an operating margin of 9.8 percent (8.8). The operating margin was the highest to date for the company for a single quarter.
Trelleborg’s participation in TrelleborgVibracoustic’s profit amounted to SEK 131 M after tax (110). Items affecting comparability amounted to an expense of SEK 15 M (expense: 20), and is in line with communicated full-year levels.
Earnings per share rose 6 percent to SEK 2.28 (2.15).
The operating cash flow was SEK 766 M (899). During the third quarter of 2014, a dividend of SEK 131 M was included from TrelleborgVibracoustic.
Market outlook for the fourth quarter of 2015
Demand is expected to be on a par with, or slightly weaker, than the third quarter of 2015, adjusted for seasonal variations.
Market outlook from the interim report published on July 21, 2015, relating to the third quarter of 2015
Demand is expected to be on a par with the second quarter of 2015, adjusted for seasonal variations.
This is information of the type that Trelleborg AB (publ) is obligated to disclose in accordance with the Swedish Securities Exchange and Clearing Operations Act and/or the Financial Instruments Trading Act. The information was issued for publication on Thursday, October 22, 2015, at 07:45 CET.
Trelleborg is a world leader in engineered polymer solutions that seal, damp and protect critical applications in demanding environments. Its innovative engineered solutions accelerate performance for customers in a sustainable way. The Trelleborg Group has annual sales of about SEK 22 billion in over 40 countries. The Group comprises five business areas: Trelleborg Coated Systems, Trelleborg Industrial Solutions, Trelleborg Offshore & Construction, Trelleborg Sealing Solutions and Trelleborg Wheel Systems. In addition, Trelleborg owns 50 percent of TrelleborgVibracoustic, a global leader within antivibration solutions for light and heavy vehicles, with annual sales of approximately SEK 16 billion in about 20 countries. The Trelleborg share has been listed on the Stock Exchange since 1964 and is listed on Nasdaq Stockholm, Large Cap.
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