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Trelleborg — Interim / Quarterly Report 2021
Apr 22, 2021
2985_10-q_2021-04-22_8fbe46f1-fc06-400b-88f4-c992877b00d3.pdf
Interim / Quarterly Report
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INTERIM REPORT JANUARY–MARCH 2021
STRONG START TO THE YEAR
Continuing operations
- ◼ Organic sales increased 5 percent in the quarter compared with the preceding year. Net sales during the quarter declined 3 percent, impacted by currencies, and amounted to SEK 8,219 M (8,482).
- ◼ EBIT, excluding items affecting comparability, rose 15 percent to SEK 1,350 M (1,173), corresponding to an EBIT margin of 16.4 percent (13.8). This was the best quarter to date for both EBIT and the EBIT margin.
- ◼ Operating cash flow amounted to SEK 962 M (732). The cash conversion ratio for the most recent 12-month period amounted to 128 percent (103).
- ◼ Items affecting comparability for the quarter amounted to SEK 99 M (neg: 36) and pertained to restructuring costs of SEK 45 M and the capital gain on the sale of properties of SEK 144 M.
- ◼ Earnings per share, excluding items affecting comparability, totaled SEK 3.77 (3.04). For the Group as a whole, earnings per share were SEK 4.07 (3.05).
- ◼ The Businesses Under Development reporting segment was discontinued at the end of the quarter since its operations have been largely divested or are intended to be divested during 2021. The new organization is reflected in this report. Refer to page 9. The key figures in this report relate to continuing operations, unless otherwise stated.
| SEK M | Q1 2021 | Q1 2020 | Change, % | R12 2021 | 12M 2020 |
|---|---|---|---|---|---|
| Continuing operations | |||||
| Net sales | 8,219 | 8,482 | -3 | 29,995 | 30,258 |
| Organic sales, % | 5 | -8 | -6 | -9 | |
| EBIT, excluding items affecting comparability | 1,350 | 1,173 | 15 | 4,272 | 4,095 |
| EBIT-margin, % | 16.4 | 13.8 | 14.2 | 13.5 | |
| Restructuring costs | -45 | -36 | -327 | -318 | |
| Capital gain on real estates | 144 | - | 144 | - | |
| Items affecting comparability | 99 | -36 | -183 | -318 | |
| EBIT | 1,449 | 1,137 | 27 | 4,089 | 3,777 |
| Profit before tax, continuing operations | 1,417 | 1,081 | 31 | 3,847 | 3,511 |
| Net profit, discontinuing operations | 4 | 37 | 17 | 50 | |
| Net profit, Group | 1,104 | 827 | 33 | 2,988 | 2,711 |
| Earnings per share, SEK | |||||
| Continuing operations | 4.06 | 2.91 | 40 | 10.96 | 9.81 |
| Discontinuing operations | 0.01 | 0.14 | -93 | 0.06 | 0.19 |
| Group | 4.07 | 3.05 | 33 | 11.02 | 10.00 |
| Continuing operations, excluding items affecting comparability | 3.77 | 3.04 | 24 | 11.18 | 10.45 |
| Operating cash flow | 962 | 732 | 31 | 5,457 | 5,227 |
| Cash conversion ratio R12, % | 128 | 103 | 128 | 128 |
As a result of the reorganization in March 2021, comparative figures have been restated. For further information about Group's key figures, including discontinued operations, see pages 17-18.
STRONG START TO THE YEAR
"The Group had a strong start to the year. During the first quarter, organic sales increased by 5 percent compared with the preceding year. Exchange rate effects had a negative impact on sales of 8 percentage points.
EBIT, excluding items affecting comparability, increased 15 percent, corresponding to an operating margin of 16.4 percent (13.8). This was the best quarter to date for both EBIT and the EBIT margin, despite the continued impact of the pandemic in some segments. Operating cash flow, in relation to operating profit, was very strong. The earnings improvement was enabled by higher volumes in combination with the implemented structural enhancements, continued cost control and effective price discipline at all levels of the Group.
Demand for most of our products and solutions increased gradually during the quarter, with expanding order books as a result. In some areas, demand was surprisingly favorable and created challenges in meeting the customers' increasing needs in some units. In several geographies, local restrictions related to the pandemic remained. It created high employee absenteeism and challenges in meeting the increasing order intake quickly enough, which dampened sales growth in parts of the operations.
Within Trelleborg Industrial Solutions, sales to most market segments increased, above all to the automotive industry and construction-related industries. Order intake grew gradually in the majority of segments during the quarter. Sales to aircraft and train manufacturers were lower year on year, still affected by the Coronavirus pandemic and the restrictions that remain in place.
Trelleborg Sealing Solutions noted favorable organic development in most segments during the period, at the same time as order intake improved. Sales to the aerospace industry continued to be negatively impacted by the ongoing pandemic, but order intake in this segment is also beginning to slowly improve from low levels.
Within Trelleborg Wheel Systems, a distinct and sharp increase in demand for tires for agricultural machinery was noted in most geographical markets, which could not be fully satisfied through existing inventories and increased production. Sales growth was also dampened to some extent by periodically high absenteeism among staff and challenging conditions for freight in certain units caused by the pandemic. Sales of tires for material handling and off-highway vehicles gradually improved during the period, but remained lower than in the corresponding period in 2020. However, the order intake in this market segment points toward increasing deliveries going forward.
The Businesses Under Development reporting segment was discontinued at the end of the quarter, since its operations have been largely divested or are intended to be divested during 2021. During the quarter, the offshore operation in the UK was divested and discussions with external stakeholders regarding other units in the reporting segment are at an advanced stage.
At the beginning of the second quarter, our challenges are different in many ways to what they were a year ago. At that time, demand fell sharply due to the pandemic. Today, we are grappling with the challenge of being able to produce and deliver in pace with the order intake. The availability of some raw materials and transport capacity is becoming more constricted than we have experienced in a long time. This change of scenario also emerged rapidly and strongly, which again underlines the importance of our agile and flexible organizational structure.
We continue to adapt to the constantly changing conditions. Our general assessment in the current situation is that demand for the second quarter will be better compared with the first quarter."
Peter Nilsson, President and CEO
MARKET OUTLOOK FOR THE SECOND QUARTER OF 2021
Demand is expected to be better than in the first quarter of 2021, adjusted for seasonal variations. Uncertainty regarding the pandemic's impact on the coming quarters remains.
Market outlook from the interim report published on February 10, 2021, relating to the first quarter of 2021 Demand is expected to be slightly better than in the fourth quarter of 2020, adjusted for seasonal variations.
NET SALES AND RESULT¹
| SEK M | Q1 2021 | Q1 2020 | Change, % | R12 2021 | 12M 2020 |
|---|---|---|---|---|---|
| Continuing operations | |||||
| Net sales | 8,219 | 8,482 | -3 | 29,995 | 30,258 |
| Change total, % | -3 | -3 | -10 | -10 | |
| Organic sales, % | 5 | -8 | -6 | -9 | |
| Structural change, % | 0 | 2 | 1 | 1 | |
| Currency effects, % | -8 | 3 | -5 | -2 | |
| EBIT, excluding items affecting comparability | 1,350 | 1,173 | 15 | 4,272 | 4,095 |
| EBIT-margin, % | 16.4 | 13.8 | 14.2 | 13.5 | |
| Restructuring costs | -45 | -36 | -327 | -318 | |
| Capital gain on real estates | 144 | - | 144 | - | |
| Items affecting comparability | 99 | -36 | -183 | -318 | |
| EBIT | 1,449 | 1,137 | 27 | 4,089 | 3,777 |
| Financial income and expenses | -32 | -56 | 43 | -242 | -266 |
| Profit before tax | 1,417 | 1,081 | 31 | 3,847 | 3,511 |
| Taxes | -317 | -291 | -9 | -876 | -850 |
| Net profit, continuing operations | 1,100 | 790 | 39 | 2,971 | 2,661 |
| Net profit, discontinuing operations | 4 | 37 | -89 | 17 | 50 |
| Net profit, Group | 1,104 | 827 | 33 | 2,988 | 2,711 |
| Earnings per share, SEK | |||||
| Continuing operations | 4.06 | 2.91 | 40 | 10.96 | 9.81 |
| Discontinuing operations | 0.01 | 0.14 | -93 | 0.06 | 0.19 |
| Group | 4.07 | 3.05 | 33 | 11.02 | 10.00 |
| Continuing operations, excluding items affecting comparability | 3.77 | 3.04 | 24 | 11.18 | 10.45 |
Net sales during the first quarter of 2021 amounted to SEK 8,219 M (8,482). Organic sales increased 5 percent compared with the year-earlier period. Exchange rate effects were negative 8 percent compared with the year-earlier period.
Sales per market. Organic sales increased 5 percent compared with the preceding year. In Europe, organic sales increased by 4 percent compared with the preceding year. Organic sales in North America declined 10 percent. In South and Central America, the organic sales increase was 26 percent, while in Asia and other markets, organic sales increased by 30 percent compared with the preceding year.
EBIT, excluding items affecting comparability, totaled SEK 1,350 M (1,173), corresponding to a margin of 16.4 percent (13.8).
The total exchange rate effect on EBIT, excluding items affecting comparability, from the translation of foreign subsidiaries had a negative impact of SEK 100 M on earnings compared with the year-earlier period.
Items affecting comparability for the quarter amounted to SEK 99 M (neg: 36) and pertained to restructuring costs of SEK 45 M (cost: 36) and the capital gain on the sale of properties of SEK 144 M.
EBIT, including items affecting comparability, amounted to SEK 1,449 M (1,137) for the quarter.
The net financial expense was SEK 32 M (expense: 56). The lower financial expenses are due to reduced net debt and nonrecurring costs attributable to a strengthening of the Group's liquidity in the preceding year. Net interest income in relation to net debt for the Group amounted to 2.2 percent (2.0).
Net profit was SEK 1,100 M (790).
The tax rate for the quarter, excluding items affecting comparability, amounted to 22 percent (26), while the tax expense for the preceding year was impacted by withholding taxes related to internal dividends from subsidiaries. These withholding taxes may vary between individual quarters.
Earnings per share, excluding items affecting comparability, totaled SEK 3.77 (3.04). For the Group in total, earnings per share were SEK 4.07 (3.05).
¹ The key figures in this report relate to continuing operations, unless otherwise stated. Continuing operations pertains to the business areas Trelleborg Industrial Solutions, Trelleborg Sealing Solutions, Trelleborg Wheel Systems and Group Activities.
CASH FLOW AND NET DEBT
| SEK M | Q1 2021 | Q1 2020 | Change, % | R12 2021 | 12M 2020 |
|---|---|---|---|---|---|
| EBIT, excluding items affecting comparability | 1,350 | 1,173 | 15 | 4,272 | 4,095 |
| Depreciation/write-down, property, plant and equipment | 342 | 351 | 1,413 | 1,422 | |
| Amortization/write-down, intangible assets | 86 | 93 | 358 | 365 | |
| EBITDA | 1,778 | 1,617 | 6,043 | 5,882 | |
| Capital expenditure | -240 | -339 | 29 | -1,014 | -1,113 |
| Sold non-current assets | 78 | 104 | 124 | 150 | |
| Amortization of lease liabilities | -99 | -100 | -400 | -401 | |
| Change in working capital | -717 | -521 | 540 | 736 | |
| Dividend from associated companies | 0 | 0 | 1 | 1 | |
| Non cash-flow affecting items | 162 | -29 | 163 | -28 | |
| Operating cash flow, continuing operations | 962 | 732 | 31 | 5,457 | 5,227 |
| Cash conversion ratio R12, % | 128 | 103 | 128 | 128 | |
| Operating cash flow, discontinuing operations | 90 | -44 | 305 | 239 | 105 |
| Operating cash flow, Group | 1,052 | 688 | 53 | 5,696 | 5,332 |
| SEK M | Q1 2021 | Q1 2020 | 12M 2020 |
|---|---|---|---|
| Net debt, opening balance | -10,026 | -14,914 | -14,914 |
| Operating cash flow | 1,052 | 688 | 5,332 |
| Cash impact from items affecting comparability | -76 | -104 | -325 |
| Financial items | -80 | -70 | -319 |
| Paid tax | -171 | -259 | -772 |
| Free cash flow | 725 | 255 | 3,916 |
| Acquisitions | -157 | -3 | 3 |
| Disposed operations | -12 | 27 | 147 |
| Capital increase associated companies | -8 | - | - |
| Dividend - equity holders of the parent company | - | - | - |
| Sum net cash flow | 548 | 279 | 4,066 |
| Exchange rate differences | -433 | -1,006 | 732 |
| Lease liability according to IFRS 16 1 | 15 | -3 | 141 |
| Pension liability 1 | 16 | - | -51 |
| Net debt, closing balance | -9,880 | -15,644 | -10,026 |
| Of which: | |||
| Pension liability 2 | -592 | -637 | -603 |
| Lease liability according to IFRS 16 2 | -2,110 | -2,442 | -2,049 |
| Net debt, excluding effect of lease and pension liability | -7,178 | -12,565 | -7,374 |
| Debt/equity ratio, % | 32 | 51 | 35 |
| Net debt/EBITDA 3 | 1.6 | 2.6 | 1.7 |
1Pertains to non-cash items.
2Net debt including, as of 2019, lease liability in accordance with IFRS 16 and pension liability.
3 EBITDA including items affecting comparability.
Operating cash flow for the quarter amounted to SEK 962 M (732), positively affected by the higher earnings generation. Investments were lower than in the preceding year, while working capital for the period increased in relation to the yearearlier period, driven by higher sales. The cash conversion ratio for the most recent 12-month period amounted to 128 percent (103).
Free cash flow for the year was SEK 725 M (255). Net cash flow amounted to SEK 548 M (279). Net cash flow for the year was impacted by effects from acquisitions of negative SEK 157 M (neg: 3) and effects from divested operations of negative SEK 12 M (pos: 27).
Net debt at the end of the first quarter amounted to SEK 9,880 M (15,644) and was impacted by the year's net cash flow of SEK 548 M, negative exchange rate differences of SEK 433 M and non-cash adjustments of lease and pension liabilities totaling SEK 31 M.
The debt/equity ratio was 32 percent (51). Net debt in relation to EBITDA was 1.6 (2.6).
RETURN ON CAPITAL EMPLOYED AND RETURN ON EQUITY
| % | R12 2021 | R12 2020 |
|---|---|---|
| Return on capital employed, continuing operations | ||
| Excluding items affecting comparability | 10.6 | 10.4 |
| Including items affecting comparability | 10.2 | 7.8 |
| Return on equity, Group | ||
| Excluding items affecting comparability | 10.1 | 10.6 |
| Including items affecting comparability | 9.7 | -0.7 |
Capital employed, including items affecting comparability, declined year on year to SEK 39,849 M (44,900), impacted by exchange rate effects, reduced working capital, divestments and the net of the investments and depreciation/amortization for the year.
The return on capital employed, excluding items affecting comparability, was 10.6 percent (10.4).
Shareholders' equity for the Group at the close of the period amounted to SEK 31,027 M (30,764), positively impacted by exchange rate effects.
Equity per share amounted to SEK 114 (113). The equity/assets ratio was 56 percent (51). The return on shareholders' equity for the Group, excluding items affecting comparability, totaled 10.1 percent (10.6).
KEY FIGURES AND TRENDS
EBIT excl. items affecting comparability, SEK M / EBIT %, R12
Trelleborg Industrial Solutions is a leading supplier of polymer-based critical solutions in selected industrial application areas and infrastructure projects.
| Excluding items affecting comparability, SEK M | Q1 2021 | Q1 2020 | Change, % | R12 2021 | 12M 2020 |
|---|---|---|---|---|---|
| Net sales | 2,616 | 2,748 | -5 | 10,203 | 10,335 |
| Change total, % | -5 | -1 | -11 | -10 | |
| Organic sales, % | 3 | -7 | -7 | -9 | |
| Structural change, % | 0 | 4 | 0 | 1 | |
| Currency effects, % | -8 | 2 | -4 | -2 | |
| EBIT | 315 | 217 | 45 | 1,195 | 1,097 |
| EBIT, % | 12.1 | 7.9 | 11.7 | 10.6 | |
| Capital employed, closing balance | 11,011 | 12,381 | 11,007 | 10,328 | |
| Return on capital employed R12, % | 10.9 | 10.0 | 10.9 | 9.7 |
Additional key ratios on pages 16 - 18
Organic sales for the quarter rose by 3 percent year on year. Sales grew in Europe and Asia, but declined in North America. Deliveries to most of the market segments increased, above all to the automotive industry and construction-related industries. Sales to the aerospace industry and train manufacturers remained negative year on year, still clearly affected by the Coronavirus pandemic and the restrictions that remain in place, but are expected to gradually improve during the year.
EBIT and the EBIT margin increased year on year, due primarily to improved demand and cost savings initiated during the preceding year. Exchange rate effects from the translation of foreign subsidiaries had a negative impact of SEK 17 M on EBIT.
Net sales per market segment and per geographic market are based on full-year 2020, adjusted for the new reporting structure. Historically, the percentages have not fluctuated significantly between the quarters and, accordingly, the full-year values for 2020 are a good approximation.
Trelleborg Sealing Solutions is a leading global supplier of polymer-based critical sealing solutions and components deployed in general industry, automotive and aerospace.
| Net sales | 3,133 | 3,209 | -2 | 10,816 | 10,892 |
|---|---|---|---|---|---|
| Change total, % | -2 | 3 | -12 | -10 | |
| Organic sales, % | 6 | -3 | -8 | -10 | |
| Structural change, % | - | 2 | 1 | 2 | |
| Currency effects, % | -8 | 4 | -5 | -2 | |
| EBIT | 734 | 706 | 4 | 2,165 | 2,137 |
| EBIT, % | 23.4 | 22.0 | 20.0 | 19.6 | |
| Capital employed, closing balance | 14,326 | 16,209 | 14,340 | 13,471 | |
| Return on capital employed R12, % | 15.1 | 18.0 | 15.1 | 14.4 |
Additional key ratios on pages 16 - 18
Organic sales for the quarter rose by 6 percent year on year. Organic sales grew in Europe and particularly in Asia, while sales in North America remained low. Sales to general industry declined in North America, but were positive in Europe and Asia. Deliveries to the automotive industry and to healthcare & medical increased in all geographical regions. Sales to the aerospace industry continued to be subject to a negative impact from the ongoing pandemic, but are expected to gradually improve during the year.
EBIT and the EBIT margin increased year on year, due primarily to higher deliveries and strict cost control. Exchange rate effects from the translation of foreign subsidiaries had a negative impact of SEK 52 M on EBIT.
Net sales per market segment and per geographic market are based on full-year 2020. Historically, the percentages have not fluctuated
Trelleborg Wheel Systems is a leading global supplier of tires and complete wheels for off-highway vehicles and specialty applications.
| Net sales | 2,397 | 2,459 | -3 | 8,703 | 8,765 |
|---|---|---|---|---|---|
| Change total, % | -3 | -10 | -7 | -9 | |
| Organic sales, % | 6 | -12 | -2 | -7 | |
| Structural change, % | - | 0 | 0 | 0 | |
| Currency effects, % | -9 | 2 | -5 | -2 | |
| EBIT | 359 | 297 | 21 | 1,112 | 1,050 |
| EBIT, % | 15.0 | 12.1 | 12.8 | 12.0 | |
| Capital employed, closing balance | 13,891 | 15,648 | 14,239 | 13,650 | |
| Return on capital employed R12, % | 7.8 | 5.6 | 7.8 | 7.2 |
Additional key ratios on pages 16 - 18
Organic sales for the quarter rose by 6 percent year on year. A distinct and sharp increase in demand for tires for agricultural machinery was noted in most geographical markets. The demand could not be fully satisfied through existing inventories and increased production, partly due to a shortage of available labor in some regions. Actions to increase the production rate during the second quarter have been initiated.
Sales of tires for material handling and off-highway vehicles gradually improved during the period but remained decidedly lower compared with the corresponding period last year. The order intake in this market segment for delivery later in the year was strengthened significantly.
EBIT and the EBIT margin increased as a result of higher sales volumes, structural measures implemented earlier and effective cost control. Exchange rate effects from the translation of foreign subsidiaries had a negative impact of SEK 35 M on EBIT.
Net sales per market segment and per geographic market are based on full-year 2020. Historically, the percentages have not fluctuated
SIGNIFICANT EVENTS DURING THE QUARTER
Halved CO2 emissions relative to sale by 2025. Trelleborg launched a new climate target, "50 by 25", meaning that the Group will reduce its CO2 emissions by 50 percent relative to sales by 2025. This is in conjunction with a vision statement to achieve complete climate neutrality, or net zero emissions, in its own operations by the end of 2035.
More information about Trelleborg's climate work and sustainability strategy can be found at trelleborg.com.
The press release was published on February 4, 2021
UK offshore oil & gas operation divested. Trelleborg signed an agreement and finalized the divestment of its offshore operation in Skelmersdale, England. The company was part of the overall offshore operation in what was the Businesses Under Development reporting segment. The buyers were individuals holding senior positions in the UK offshore business being sold. The divestment is part of Trelleborg's strategy to focus on selected market segments.
The divested company had annual sales of approximately SEK 580 M in 2020.
The business was deconsolidated as of March 1, 2021. The transaction does not have a material impact on the Group's net profit.
The press release was published on March 2, 2021.
Acquisition of leading supplier of composite hoses.
Trelleborg signed an agreement and finalized the acquisition of the Dutch company, Gutteling Group BV. The company develops and sells composite hoses to the chemical industry. The acquisition complements Trelleborg's industrial hose, and specifically, composite hose, offering. Composite hoses are mainly used for aggressive chemicals, such as chlorine, sulfuric acid, biofuels and LNG.
Gutteling has its head office and production in Rotterdam, the Netherlands, with production in the Czech Republic, as well as a sales office in the US. Total sales amounted to about SEK 115 M in 2020.
The transaction was consolidated as of March 4, 2021.
The press release was published on March 5, 2021.
Businesses Under Development reporting segment
discontinued. Trelleborg's Businesses Under Development reporting segment was discontinued, since its operations have been largely divested or are intended to be divested during 2021.
The other operations within the reporting segment are reported as follows as of this quarterly report:
Assets held for sale:
The Norwegian oil and gas operation, the printing blankets operations and the Czech technical rubber products operations, are reported as assets held for sale. Trelleborg's current assessment is that it is highly probable that these will be divested during 2021. These operations had annual sales of approximately SEK 2,000 M in 2020. Capital employed amounted to SEK 1,900 M end of March 2021.
Integrated in Trelleborg Industrial Solutions:
Three operations were integrated into the Trelleborg Industrial Solutions business area. One is a microspheres product area; components that are included in high-quality composite materials for a wide range of uses. Another is an operation focusing on solutions in polyurethane for a range of industrial niche applications. The third, is a bearings and sealing solutions product area whose components are deployed in engineered polymer solutions, for example, in installations of offshore wind applications. The common denominator for these operations is that they have improved their profitability and positions and fit well with Trelleborg's strategy of securing leading positions in selected segments and niches. These operations had annual sales of approximately SEK 580 M in 2020.
Group activities:
In the Czech molded components operation, which has a large exposure to the automotive industry, investments and structural improvements are ongoing. These are expected to lead to a clearly improved profitability and a better market position. Until these structural improvements are fully carried out, the operation is reported within Group activities (formerly known as Group items). The operation had annual sales of approximately SEK 420 M in 2020.
The press release was published on March 26, 2021. The press release on the restated key figures was published on April 12, 2021.
SIGNIFICANT EVENTS AFTER THE CLOSE OF THE PERIOD
No significant events were reported after the close of the period.
OTHER
PRODUCTS AND SOLUTIONS NEWS
Trelleborg launched GoldLine® Premium 38, a new, high-
quality natural rubber sheeting for processing operations. The sheeting is a highly robust barrier that protects equipment and piping from wear and tear from wet and abrasive slurries.
Trelleborg launched FoodProTM E75F1, a new elastomer sealing material, the formula of which complies with the most comprehensive regulations for food applications. It is
engineered for universal use in food and beverage processing applications, reducing the complexity for machine manufacturers, who no longer need to specify sealing
materials for each piece of equipment dependent on geographical use, process media and cleaning regimes.
Trelleborg is to expand its range of radial tires for loaders
and dumpers during the spring through the ERM 1042 and ERM 1051 ranges. Both tires have a tread design that provides superior traction. They also have reinforced carcass and sidewall protection to extend tire life and increase rider comfort.
Virtual tire showroom. Trelleborg launched an innovative showroom, at which customers can experience Trelleborg's tires for agriculture, construction and material handling as 3D models in a 360-degree environment. The purpose is to make it easy to do business with Trelleborg and, accordingly, the showroom also offers the possibility to book meetings with representatives from Trelleborg. In addition, there will be a conference center that offers training and various presentations. Visit the showroom here.
SUSTAINABILITY
Trelleborg's initiative to eliminate disposable plastic bottles from all of its workplaces all over the world has been
successfully implemented in 80 percent of relevant local companies, and approximately 850,000 fewer half-liter plastic bottles have been thrown in the trash worldwide. All companies and units have organized the venture themselves since the solutions vary widely depending on local conditions. The work is continuing at Trelleborg to reduce pressure on the environment from plastic waste that is disseminated and finds its way into seas and nature.
RISK MANAGEMENT
Trelleborg serves a broad range of customers in a variety of market segments and niches. The business has a wide geographic spread. The Group has operations in about 50 countries, sales are conducted in just over 150 countries worldwide and manufacturing operations are carried out at more than 100 production sites. The business is diversified, which provides Trelleborg with an effective underlying risk spread.
Demand for the Group's products and solutions largely moves in line with fluctuations in global industrial production. Trelleborg focuses on maintaining an exposure to its market segments that has a good balance between early and late cyclical industry, meaning general as well as capital-intensive industry, the demands from which often balance each other out. Seasonal effects occur in the various market segments, particularly in the agricultural segment, which normally experiences higher demand for tires for agricultural machines during the first half of the year. For the Group, demand is usually higher in the first half of the year than in the second half of the year.
Long-term risks. Trelleborg has identified the relevant areas based on strategic risks, operational risks, regulatory compliance risks and financial risks that may result in damage or loss with substantial impact on the entire Group and therefore justify management of the risk exposure at Group level.
For information regarding the Group's risks, risk exposure and risk management, refer to the latest Trelleborg Annual Report, www.trelleborg.com.
Short-term risks. The Coronavirus pandemic and the measures taken by various countries to prevent the spread of the virus have impacted the Group. In addition to the known effects, the macroeconomic uncertainty is causing a reduction in economic activity and the long-term impact on the Group's operations is currently unknown. The scope and length of this pandemic are uncertain, but are expected to affect Trelleborg further. The most important risks resulting from the current uncertain situation relating to the pandemic are:
- ◼ Supply chain: The Group's access to components and the ability to transport finished products to customers could be affected.
- ◼ Earnings and profitability: Trelleborg's revenue could be affected by individual countries' decisions on extraordinary measures and customer behavior resulting from the Coronavirus pandemic.
This report has not been subject to review by the company's auditor.
Trelleborg, April 22, 2021 Board of Directors of Trelleborg AB (publ)
NOTES
This report has been prepared in accordance with IAS 34 Interim Financial Reporting and the applicable rules of the Swedish Annual Accounts Act. Disclosures in accordance with IAS 34.16A appear in addition to the financial statements and their accompanying notes also in other parts of the interim report. The Parent Company applies recommendation RFR 2, Accounting for Legal Entities of the Swedish Financial Reporting Board and Chapter 9 of the Swedish Annual Accounts Act, Interim Reports.
The accounting policies applied by the Group and Parent Company correspond to the accounting policies applied in the preparation of the most recent annual report.
In addition, IASB has published amendments to standards effective from 1 January 2021 or later. These amended standards have not had any material impact on Trelleborg's financial reports.
Condensed Income Statements
| Income Statements, SEK M | Q1 2021 | Q1 2020 | R12 2021 | 12M 2020 |
|---|---|---|---|---|
| Net sales | 8,219 | 8,482 | 29,995 | 30,258 |
| Cost of goods sold | -5,412 | -5,646 | -20,048 | -20,282 |
| Gross profit | 2,807 | 2,836 | 9,947 | 9,976 |
| Selling expenses | -638 | -755 | -2,460 | -2,577 |
| Administrative expenses | ||||
| -698 | -754 | -2,624 | -2,680 | |
| Research and development costs | -132 | -151 | -524 | -543 |
| Other operating income/expenses | 9 | -5 | -65 | -79 |
| Profit from associated companies | 2 | 2 | -2 | -2 |
| EBIT, excluding items affecting comparability | 1,350 | 1,173 | 4,272 | 4,095 |
| Items affecting comparability | 99 | -36 | -183 | -318 |
| EBIT | 1,449 | 1,137 | 4,089 | 3,777 |
| Financial income and expenses | -32 | -56 | -242 | -266 |
| Profit before tax | 1,417 | 1,081 | 3,847 | 3,511 |
| Tax | -317 | -291 | -876 | -850 |
| Net profit, continuing operations | 1,100 | 790 | 2,971 | 2,661 |
| Net profit, discontinuing operations | 4 | 37 | 17 | 50 |
| Net profit, Group | 1,104 | 827 | 2,988 | 2,711 |
| - equity holders of the parent company | 1,104 | 827 | 2,989 | 2,712 |
| - non-controlling interest | 0 | 0 | -1 | -1 |
| Earnings per share, SEK ¹ | Q1 2021 | Q1 2020 | R12 2021 | 12M 2020 |
| Continuing operations | 4.06 | 2.91 | 10.96 | 9.81 |
| Discontinuing operations | 0.01 | 0.14 | 0.06 | 0.19 |
| Group | 4.07 | 3.05 | 11.02 | 10.00 |
| Continuing operations, excluding items affecting comparability | 3.77 | 3.04 | 11.18 | 10.45 |
| ¹ No dilution effects arose. | ||||
| Number of shares | ||||
| End of period | 271,071,783 | 271,071,783 | 271,071,783 | 271,071,783 |
| Average number | 271,071,783 | 271,071,783 | 271,071,783 | 271,071,783 |
| Statements of comprehensive income, SEK M | Q1 2021 | Q1 2020 | ||
| R12 2021 | 12M 2020 | |||
| Net profit, Group | 1,104 | 827 | 2,988 | 2,711 |
| Other comprehensive income | ||||
| Items that will not be reclassified to the income statement | ||||
| Reassessment of net pension obligation | 16 | - | -35 | -51 |
| Income tax relating to components of other comprehensive income | -3 | - | 3 | 6 |
| Total | 13 | - | -32 | -45 |
| Items that may be reclassified to the income statement | ||||
| Cash flow hedges | 29 | -127 | 107 | -49 |
| Hedging of net investment | -242 | -665 | 1,002 | 579 |
| Translation difference | 1,176 | 1,841 | -3,672 | -3,007 |
| Income tax relating to components of other comprehensive income | -6 | 27 | -130 | -97 |
| Total | 957 | 1,076 | -2,693 | -2,574 |
| Other comprehensive income, net of tax Total comprehensive income |
970 2,074 |
1,076 1,903 |
-2,725 263 |
-2,619 92 |
| Total comprehensive income attributable to: | ||||
| - equity holders of the parent company | 2,074 | 1,903 | 264 | 93 |
| - non-controlling interest | 0 | 0 | -1 | -1 |
| EBIT specification, continuing operations, SEK M | Q1 2021 | Q1 2020 | R12 2021 | 12M 2020 |
| Excluding items affecting comparability: | ||||
| EBITDA | 1,778 | 1,617 | 6,043 | 5,882 |
| Depreciation/write-down, property, plant and equipment | -342 | -351 | -1,413 | -1,422 |
| EBITA | 1,436 | 1,266 | 4,630 | 4,460 |
| Amortization/write-down, intangible assets EBIT |
-86 1,350 |
-93 1,173 |
-358 4,272 |
-365 4,095 |
Items affecting comparability 99 -36 -183 -318 EBIT 1,449 1,137 4,089 3,777
Condensed Balance Sheets
| Balance Sheets, SEK M | Mar 31 2021 |
Mar 31 2020 |
Dec 31 2020 |
|---|---|---|---|
| Property, plant and equipment | 11,311 | 13,794 | 11,928 |
| Goodwill | 18,423 | 20,325 | 17,867 |
| Other intangible assets | 4,499 | 5,530 | 4,675 |
| Participations in associated companies | 39 | 110 | 104 |
| Financial non-current assets | 12 | 46 | 62 |
| Deferred tax assets | 591 | 964 | 742 |
| Total non-current assets | 34,875 | 40,769 | 35,378 |
| Inventories | 5,099 | 6,675 | 5,263 |
| Current operating receivables | 7,023 | 7,821 | 6,250 |
| Current tax assets | 887 | 1,144 | 884 |
| Interest-bearing receivables | 80 | 211 | 233 |
| Cash and cash equivalents | 4,788 | 4,102 | 5,756 |
| Total current assets | 17,877 | 19,953 | 18,386 |
| Assets held for sale | 2,848 | - | - |
| Total assets | 55,600 | 60,722 | 53,764 |
| Share capital | 2,620 | 2,620 | 2,620 |
| Other capital contributions | 226 | 226 | 226 |
| Other reserves | 1,339 | 4,031 | 382 |
| Profit brought forward | 25,730 | 23,050 | 23,005 |
| Net profit for the year | 1,104 | 827 | 2,712 |
| Total | 31,019 | 30,754 | 28,945 |
| Non-controlling interests | 8 | 10 | 8 |
| Equity | 31,027 | 30,764 | 28,953 |
| Interest-bearing non-current liabilites | 9,747 | 13,603 | 10,718 |
| Other non-current liabilities | 223 | 301 | 272 |
| Pension obligations | 580 | 640 | 619 |
| Other provisions | 137 | 199 | 149 |
| Deferred tax liabilites | 796 | 1,150 | 899 |
| Total non-current liabilities | 11,483 | 15,893 | 12,657 |
| Interest-bearing current liabilities | 4,362 | 5,718 | 4,706 |
| Current tax liabilites | 1,262 | 1,294 | 1,138 |
| Other current liabilites | 6,246 | 6,684 | 5,987 |
| Other provisions | 288 | 369 | 323 |
| Total current liabilities | 12,158 | 14,065 | 12,154 |
| Liabilites held for sale | 932 | - | - |
| Total equity and liabilities | 55,600 | 60,722 | 53,764 |
| Specification of changes in equity, SEK M | Mar 31 | Mar 31 | Dec 31 |
|---|---|---|---|
| 2021 | 2020 | 2020 | |
| Opening balance, January 1 | 28,953 | 28,861 | 28,861 |
| Total net profit | 1,104 | 827 | 2,711 |
| Other comprehensive income | 970 | 1,076 | -2,619 |
| Dividend | - | - | - |
| Closing balance | 31,027 | 30,764 | 28,953 |
| Specification of capital employed, SEK M | Mar 31 2021 |
Mar 31 2020 |
Dec 31 2020 |
|---|---|---|---|
| Total assets, Group total | 55,600 | 60,722 | 53,764 |
| Less: | |||
| Interest-bearing receivables | 114 | 233 | 275 |
| Cash and cash equivalents | 4,893 | 4,102 | 5,756 |
| Tax assets | 1,615 | 2,108 | 1,626 |
| Operating liabilities | 7,218 | 7,195 | 6,408 |
| Capital employed | 41,760 | 47,084 | 39,699 |
| Of which discontinuing operations | 1,911 | 2,184 | 1,831 |
| Continuing operations | 39,849 | 44,900 | 37,868 |
Cash-flow statements
| Cash flow statements, SEK M | Q1 2021 | Q1 2020 | R12 2021 | 12M 2020 |
|---|---|---|---|---|
| Operating activities | ||||
| EBIT incl part in associated companies | 1,449 | 1,137 | 4,089 | 3,777 |
| Adjustments for items not included in cash flow from operating activities: | ||||
| Depreciation, property, plant and equipment | 334 | 365 | 1,373 | 1,404 |
| Amortization, intangible assets | 86 | 93 | 358 | 365 |
| Impairment losses, property, plant and equipment | 8 | -15 | 80 | 57 |
| Impairment losses, intangible assets | 0 | 0 | 1 | 1 |
| Dividend from associated companies | 0 | - | 1 | 1 |
| Participations in associated companies and other non cash-flow affecting items | -2 | -28 | 20 | -6 |
| Interest received and other financial items | 24 | 9 | 83 | 68 |
| Interest paid and other financial items | -99 | -74 | -388 | -363 |
| Taxes paid | -202 | -268 | -718 | -784 |
| Cash flow from operating activities before changes in working capital | 1,598 | 1,219 | 4,899 | 4,520 |
| Cash flow from changes in working capital | ||||
| Change in inventories | -159 | -104 | 396 | 451 |
| Change in operating receivables | -1,181 | -676 | -654 | -149 |
| Change in operating liabilities | 623 | 259 | 798 | 434 |
| Change in items affecting comparability | 11 | -35 | 64 | 18 |
| Cash flow from operating activities | 892 | 663 | 5,503 | 5,274 |
| Investing activities | ||||
| Acquisitions | -157 | -3 | -151 | 3 |
| Disposed/discontinuing operations | - | 27 | - | 27 |
| Capital increase associated companies | -8 | - | -8 | - |
| Capital expenditure, property, plant and equipment | -215 | -302 | -916 | -1,003 |
| Capital expenditure, intangible assets | -25 | -37 | -98 | -110 |
| Sale of non-current assets | 78 | 104 | 124 | 150 |
| Cash flow from investing activities | -327 | -211 | -1,049 | -933 |
| Financing activities | ||||
| Change in interest-bearing investments | 163 | 76 | 118 | 31 |
| Change in interest-bearing liabilities | -396 | -539 | -399 | -542 |
| New/utilized loans | - | 2,395 | 725 | 3,120 |
| Amortized loans | -1,485 | -1,084 | -4,138 | -3,737 |
| Dividend - equity holders of the parent company | - | - | - | - |
| Cash flow from financing activities | -1,718 | 848 | -3,694 | -1,128 |
| Total cash flow, continuing operations | -1,153 | 1,300 | 760 | 3,213 |
| Total cash flow, discontinuing operations | 208 | 45 | 251 | 88 |
| Cash flow for the period, Group | -945 | 1,345 | 1,011 | 3,301 |
| Cash and cash equivalents | ||||
| At beginning of the period | 5,756 | 2,694 | 4,102 | 2,694 |
| Exchange rate differences | 83 | 63 | -219 | -239 |
| Cash and cash equivalents at end of period | 4,894 | 4,102 | 4,894 | 5,756 |
| Change in liabilities from financing activities, SEK M | Non-cash changes | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Dec 31 2020 |
Transfer between long term and short term loans |
Cash changes |
Acqui sitions |
Translation differences |
Fair value changes |
Lease liabilities according to IFRS 16 |
Pension liabilities |
Mar 31 2021 |
|
| Long-term loans | 9,015 | -1,051 | -58 | - | 222 | - | - | - | 8,128 |
| Current loans | 4,128 | 1,051 | -1,427 | - | 24 | - | - | - | 3,776 |
| Other non-current financial liabilities | 23 | - | 1 | - | 0 | - | - | - | 24 |
| Other current financial liabilities | 209 | - | -168 | - | 184 | - | - | - | 225 |
| Lease liabilities according to IFRS 16 | 2,049 | - | -104 | - | 77 | - | 88 | - | 2,110 |
| Pension obligations | 618 | - | -1 | - | 7 | - | - | -16 | 608 |
| Total | 16,042 | - | -1,757 | - | 514 | - | 88 | -16 | 14,871 |
Key figures
Trelleborg employs a number of alternative performance measures related to financial position, including: return on equity and capital employed, net debt, debt/equity ratio and equity/assets ratio. The Group deems the key figures useful for the readers of its financial reports as a complement for assessing the possibility of dividends, implementing strategic investments and considering the Group's ability to meet its financial commitments. In addition, Trelleborg uses the cash-flow measurements of operating cash flow and free cash flow to provide an indication of the funds the operations generate to be able to implement strategic investments, make amortizations and pay returns to the shareholders. Trelleborg uses the performance metrics of EBITDA, EBITA and EBIT excluding items affecting comparability, which the Group considers to be relevant for investors seeking to understand its earnings generation before items affecting comparability.
For further description and calculation of key figures, see https://www.trelleborg.com/en/investors/financial-definitions.
| SEK M | Q1 2021 | Q1 2020 | R12 2021 | 12M 2020 |
|---|---|---|---|---|
| Net sales | ||||
| Trelleborg Industrial Solutions | 2,616 | 2,748 | 10,203 | 10,335 |
| Trelleborg Sealing Solutions | 3,133 | 3,209 | 10,816 | 10,892 |
| Trelleborg Wheel Systems | 2,397 | 2,459 | 8,703 | 8,765 |
| Group Activities | 120 | 112 | 413 | 405 |
| Eliminations | -47 | -46 | -140 | -139 |
| Continuing operations | 8,219 | 8,482 | 29,995 | 30,258 |
| Discontinuing operations | 598 | 835 | 2,459 | 2,696 |
| Eliminations | -44 | -31 | -131 | -118 |
| Group | 8,773 | 9,286 | 32,323 | 32,836 |
| EBIT, excluding items affecting comparability | ||||
| Trelleborg Industrial Solutions | 315 | 217 | 1,195 | 1,097 |
| Trelleborg Sealing Solutions | 734 | 706 | 2,165 | 2,137 |
| Trelleborg Wheel Systems | 359 | 297 | 1,112 | 1,050 |
| Group Activities | -58 | -47 | -200 | -189 |
| Continuing operations | 1,350 | 1,173 | 4,272 | 4,095 |
| Discontinuing operations | 30 | 62 | 155 | 187 |
| Group | 1,380 | 1,235 | 4,427 | 4,282 |
| EBIT %, excluding items affecting comparability | ||||
| Trelleborg Industrial Solutions | 12.1 | 7.9 | 11.7 | 10.6 |
| Trelleborg Sealing Solutions | 23.4 | 22.0 | 20.0 | 19.6 |
| Trelleborg Wheel Systems | 15.0 | 12.1 | 12.8 | 12.0 |
| Continuing operations | 16.4 | 13.8 | 14.2 | 13.5 |
| Discontinuing operations | 4.9 | 7.4 | 6.3 | 7.0 |
| Group | 15.7 | 13.3 | 13.7 | 13.0 |
| Net sales per market continuing operations, organic growth, % | Q1 2021 | Q1 2020 | 12M 2020 |
|---|---|---|---|
| Western Europe (47) | 4 | -11 | -11 |
| Other Europe (9) | 4 | 3 | 2 |
| North America (24) | -10 | -5 | -15 |
| South and Central America (3) | 26 | 10 | -3 |
| Asia and other markets (17) | 30 | -10 | -1 |
| Total (100% refer to share 2020) | 5 | -8 | -9 |
TRELLEBORG AB – FIRST QUARTER 2021
| Q1 2020, SEK M |
Organic sales, % |
Structural change, % |
Currency effects, % |
Q1 2021, SEK M |
|---|---|---|---|---|
| 2,748 | 3 | 0 | -8 | 2,616 |
| 3,209 | 6 | - | -8 | 3,133 |
| 2,459 | 6 | - | -9 | 2,397 |
| 112 | 17 | - | -10 | 120 |
| -46 | - | - | - | -47 |
| 8,482 | 5 | 0 | -8 | 8,219 |
| Exchange rate differences impacting EBIT excluding items affecting comparability ¹, SEK M | Q1 2021 |
|---|---|
| Trelleborg Industrial Solutions | -17 |
| Trelleborg Sealing Solutions | -52 |
| Trelleborg Wheel Systems | -35 |
| Group activities | 4 |
| Continuing operations | -100 |
¹ Impact on EBIT excluding items affecting comparability in translation of foreign subsidiaries.
| SEK M | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 |
|---|---|---|---|---|---|---|---|---|---|
| Net sales | |||||||||
| Trelleborg Industrial Solutions | 2,616 | 2,622 | 2,504 | 2,461 | 2,748 | 2,963 | 2,858 | 2,864 | 2,772 |
| Trelleborg Sealing Solutions | 3,133 | 2,672 | 2,513 | 2,498 | 3,209 | 2,952 | 2,982 | 3,090 | 3,118 |
| Trelleborg Wheel Systems | 2,397 | 2,185 | 2,075 | 2,046 | 2,459 | 2,182 | 2,188 | 2,536 | 2,723 |
| Group activities | 120 | 155 | 93 | 45 | 112 | 104 | 121 | 140 | 149 |
| Eliminations | -47 | -41 | -33 | -19 | -46 | -39 | -42 | -43 | -45 |
| Continuing operations | 8,219 | 7,593 | 7,152 | 7,031 | 8,482 | 8,162 | 8,107 | 8,587 | 8,717 |
| Discontinuing operations | 598 | 569 | 612 | 680 | 835 | 911 | 755 | 817 | 700 |
| Eliminations | -44 | -44 | -22 | -21 | -31 | -54 | -32 | -43 | -39 |
| Group | 8,773 | 8,118 | 7,742 | 7,690 | 9,286 | 9,019 | 8,830 | 9,361 | 9,378 |
| EBIT, excluding items affecting comparability | |||||||||
| Trelleborg Industrial Solutions | 315 | 391 | 274 | 215 | 217 | 332 | 296 | 327 | 297 |
| Trelleborg Sealing Solutions | 734 | 511 | 455 | 465 | 706 | 626 | 668 | 710 | 724 |
| Trelleborg Wheel Systems | 359 | 225 | 272 | 256 | 297 | 97 | 148 | 319 | 349 |
| Group items | -58 | -49 | -35 | -58 | -47 | -67 | -53 | -64 | -67 |
| Continuing operations | 1,350 | 1,078 | 966 | 878 | 1,173 | 988 | 1,059 | 1,292 | 1,303 |
| Discontinuing operations | 30 | 27 | 34 | 64 | 62 | 18 | -23 | 30 | -9 |
| Group | 1,380 | 1,105 | 1,000 | 942 | 1,235 | 1,006 | 1,036 | 1,322 | 1,294 |
| EBIT %, excluding items affecting comparability | |||||||||
| Trelleborg Industrial Solutions | 12.1 | 14.9 | 10.9 | 8.7 | 7.9 | 11.2 | 10.4 | 11.4 | 10.7 |
| Trelleborg Sealing Solutions | 23.4 | 19.1 | 18.1 | 18.6 | 22.0 | 21.2 | 22.4 | 23.0 | 23.2 |
| Trelleborg Wheel Systems | 15.0 | 10.3 | 13.1 | 12.5 | 12.1 | 4.4 | 6.8 | 12.6 | 12.8 |
| Continuing operations | 16.4 | 14.2 | 13.5 | 12.5 | 13.8 | 12.1 | 13.1 | 15.0 | 14.9 |
| Discontinuing operations | 4.9 | 4.7 | 5.7 | 9.4 | 7.4 | 2.1 | -3.1 | 3.7 | -1.2 |
| Group | 15.7 | 13.6 | 12.9 | 12.3 | 13.3 | 11.2 | 11.7 | 14.1 | 13.8 |
TRELLEBORG AB – FIRST QUARTER 2021
| Condensed Income Statements, SEK M | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 |
|---|---|---|---|---|---|---|---|---|---|
| Net sales | 8,219 | 7,593 | 7,152 | 7,031 | 8,482 | 8,162 | 8,107 | 8,587 | 8,717 |
| Cost of goods sold | -5,412 | -5,009 | -4,847 | -4,780 | -5,646 | -5,504 | -5,498 | -5,679 | -5,780 |
| Gross profit Selling expenses |
2,807 -638 |
2,584 -636 |
2,305 -598 |
2,251 -588 |
2,836 -755 |
2,658 -726 |
2,609 -709 |
2,908 -744 |
2,937 -732 |
| Administrative expenses | -698 | -699 | -594 | -633 | -754 | -777 | -702 | -714 | -726 |
| Research and development costs | -132 | -143 | -120 | -129 | -151 | -147 | -140 | -144 | -140 |
| Other operating income/costs | 9 | -27 | -26 | -21 | -5 | -19 | -1 | -14 | -35 |
| Profit from associated companies | 2 | -1 | -1 | -2 | 2 | -1 | 2 | 0 | -1 |
| EBIT, excluding items affecting comparability | 1,350 | 1,078 | 966 | 878 | 1,173 | 988 | 1,059 | 1,292 | 1,303 |
| Items affecting comparability | 99 | -139 | -82 | -61 | -36 | -877 | -113 | -94 | -15 |
| EBIT | 1,449 | 939 | 884 | 817 | 1,137 | 111 | 946 | 1,198 | 1,288 |
| Financial income and expenses | -32 | -68 | -66 | -76 | -56 | -80 | -51 | -102 | -112 |
| Profit before tax | 1,417 | 871 | 818 | 741 | 1,081 | 31 | 895 | 1,096 | 1,176 |
| Tax | -317 | -265 | -88 | -206 | -291 | -103 | -235 | -283 | -309 |
| Net profit, continuing operations | 1,100 | 606 | 730 | 535 | 790 | -72 | 660 | 813 | 867 |
| Net profit, discontinuing operations | 4 | 54 | -77 | 36 | 37 | -2446 | 1 | -6 | -16 |
| Net profit, Group | 1,104 | 660 | 653 | 571 | 827 | -2,518 | 661 | 807 | 851 |
| - equity holders of the parent company | 1,104 | 661 | 653 | 571 | 827 | -2,518 | 661 | 807 | 851 |
| - non-controlling interest | 0 | -1 | 0 | 0 | 0 | 0 | - | - | - |
| Continuing operations | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 |
| Net sales, SEK M | 8,219 | 7,593 | 7,152 | 7,031 | 8,482 | 8,162 | 8,107 | 8,587 | 8,717 |
| Organic sales, % | 5 | 0 | -7 | -20 | -8 | -2 | -1 | 0 | 2 |
| EBITDA, excl items affecting comparability, SEK M | 1,778 | 1,518 | 1,395 | 1,352 | 1,617 | 1,465 | 1,511 | 1,734 | 1,725 |
| EBITDA, excl items affecting comparability, % | 21.6 | 20.0 | 19.5 | 19.3 | 19.0 | 18.0 | 18.6 | 20.2 | 19.8 |
| EBITA, excl items affecting comparability, SEK M | 1,436 | 1,168 | 1,054 | 972 | 1,266 | 1,075 | 1,151 | 1,373 | 1,385 |
| EBITA, excl items affecting comparability, % | 17.4 | 15.4 | 14.7 | 13.8 | 14.9 | 13.2 | 14.2 | 16.0 | 15.9 |
| EBIT, excl items affecting comparability, SEK M | 1,350 | 1,078 | 966 | 878 | 1,173 | 988 | 1,059 | 1,292 | 1,303 |
| EBIT, excl items affecting comparability, % | 16.4 | 14.2 | 13.5 | 12.5 | 13.8 | 12.1 | 13.1 | 15.0 | 14.9 |
| Items affecting comparability, SEK M | 99 | -139 | -82 | -61 | -36 | -877 | -113 | -94 | -15 |
| EBIT, SEK M | 1,449 | 939 | 884 | 817 | 1,137 | 111 | 946 | 1,198 | 1,288 |
| Earnings per share, excluding items affecting comparability SEK |
3.77 | 2.63 | 2.60 | 2.18 | 3.04 | 2.57 | 2.78 | 3.31 | 3.30 |
| Operating cash flow, excl items affecting comp., SEK M | 962 | 1,740 | 1,352 | 1,403 | 732 | 1,494 | 1,328 | 1,095 | 313 |
| Cash conversion ratio, excl items affecting comp., R12, % | 128 | 128 | 124 | 121 | 103 | 91 | 94 | 81 | 82 |
| Capital employed, closing balance, SEK M | 39,849 | 37,868 | 40,775 | 41,735 | 44,900 | 42,258 | 43,945 | 42,153 | 41,660 |
| Return on capital employed R12, % | 10.2 | 9.1 | 6.9 | 6.9 | 7.8 | 8.3 | 10.5 | 11.4 | 11.9 |
| Group total | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 |
| Earnings per share, excl items affecting comparability, SEK | 3.82 | 2.90 | 2.31 | 2.47 | 3.21 | 2.45 | 2.83 | 3.36 | 3.25 |
| Earnings per share, Group, SEK | 4.07 | 2.43 | 2.41 | 2.11 | 3.05 | -9.29 | 2.44 | 2.98 | 3.14 |
| Free cash flow, SEK M | 725 | 1,397 | 1,165 | 1,099 | 255 | 1,235 | 1,101 | 630 | -282 |
| Net debt, closing balance, SEK M | -9,880 | -10,026 | -12,129 | -13,399 | -15,644 | -14,914 | -15,860 | -15,307 | -15,766 |
| Net debt/EBITDA | 1.6 | 1.7 | 2.2 | 2.4 | 2.6 | 2.5 | 2.6 | 2.5 | 2.5 |
| Debt/equity ratio % | 32 | 35 | 41 | 45 | 51 | 52 | 49 | 50 | 53 |
| Return on equity, % | 9.7 | 9.4 | -1.5 | -1.5 | -0.7 | -0.7 | 9.5 | 10.1 | 10.6 |
| Equity/assets ratio, % | 56 | 54 | 51 | 50 | 51 | 51 | 53 | 53 | 52 |
Acquisitions
Carrying amounts of identifiable acquired assets and assumed liabilities
2021
Trelleborg has, through its Trelleborg Industrial Solutions business area, signed an agreement and finalized the acquisition of the Dutch company Gutteling Group BV. The company develops and sells composite hoses to the chemical industry and is market leader in hoses for LNG ship-to-ship transfer.
2020
No acquisitions were carried out in 2020.
Certain adjustments were made to acquisition analyses attributable to acquisitions made in 2019.
| Acquisitions, SEK M | Q1 2021 | Q1 2020 |
|---|---|---|
| Acquired 2021 | Adjustments to Acquisitions 2019 | |
| Developed technology ¹ | - | 6 |
| Trademarks ² | - | - |
| Customer relationships ³ | 50 | -8 |
| Other intangible assets | 7 | - |
| Property, plant and equipment | 2 | - |
| Deferred tax assets | 0 | - |
| Shares in associated companies | - | - |
| Interest-bearing receivables | 19 | - |
| Inventories | 24 | -1 |
| Operating receivables | 23 | -1 |
| Current tax asset | 1 | 1 |
| Cash and cash equivalents | 22 | - |
| Deferred tax liabilities | -12 | -1 |
| Interest-bearing liabilities | -19 | - |
| Post employment benefits | - | - |
| Provision obligations | - | - |
| Current tax liability | -2 | -2 |
| Operating liabilities | -23 | 0 |
| Net assets | 92 | -6 |
| Goodwill | 87 | 9 |
| Total purchase price | 179 | 3 |
| Cash and other net debt in acquired operations | -22 | - |
| Impact shown in cash flow statement | 157 | 3 |
¹ Excess value of developed technology is amortized over 10-12 years.
² Trademarks have an indefinite useful life, no amortization takes place.
³ Excess value of customer relationships are amortized over 10-12 years.
The goodwill recognized above for 2021 was primarily attributable to synergy effects expected after the acquisition. The fair value of acquired, identifiable, intangible assets is preliminary pending final measurement of these assets.
Financial instruments – classification and valuation
A description of how fair value is calculated is provided below and in Accounting policies in the latest Annual Report.
| At March 31, 2021, SEK M | Assets at fair value in profit and loss |
Derivatives used for hedging purposes |
||||
|---|---|---|---|---|---|---|
| Assets measured at amortized cost |
Carrying amount |
Measurement level |
Carrying amount |
Measurement level |
Total | |
| Assets in the balance sheet | ||||||
| Derivative instruments | - | 61 | 2 | 40 | 2 | 101 |
| Financial non-current assets | 2 | - | - | 2 | ||
| Accounts receivable | 5,995 | - | - | 5,995 | ||
| Interest-bearing receivable | 17 | - | - | 17 | ||
| Cash and cash equivalents | 4,894 | - | - | 4,894 | ||
| Total | 10,908 | 61 | 40 | 11,009 |
| Liabilities at fair value in profit and loss |
Derivatives used for hedging purposes |
|||||
|---|---|---|---|---|---|---|
| Liabilities measured at amortized cost |
Carrying amount |
Measurement level |
Carrying amount |
Measurement level |
Total | |
| Liabilities in the balance sheet | ||||||
| Derivative instruments | - | 53 | 2 | 363 | 2 | 416 |
| Interst-bearing non-current liabilities | 8,131 | 21 | 3 | - | 8,152 | |
| Interst-bearing current liabilities | 3,789 | 22 | 3 | - | 3,811 | |
| Lease liabilities according to IFRS 16 | 2,110 | - | - | 2,110 | ||
| Accounts payable | 3,607 | - | - | 3,607 | ||
| Total | 17,637 | 96 | 363 | 18,096 |
Measurement techniques used to calculate fair value of level 2 assets
Level 2 derivatives comprise currency futures and interest swaps and are primarily used for hedging purposes, but also for trading. Measurement of the fair value of currency futures is based on the published forward rates in an active market and on the discounted contractual cash flows. Measurement of interest swaps is based on forward interest rates prepared on the basis of observable Swedish interest curves and discounting of the contractual cash flows.
Measurement techniques used to calculate fair value of level 3 assets
Interest-bearing non-current and current liabilities include earnouts according to contract in an amount of SEK 21 M (41) and SEK 22 M (41), respectively. An assessment of the most probable outcome was made and the present value of this calculated.
Disclosure on fair value of borrowings and other financial instruments
Financial interest-bearing liabilities, except for financial derivatives that adjust loans and earnouts according to contract, are recognized at amortized cost. Changes in interest-rate levels and credit margins create differences between fair value and amortized cost. Measurement at fair value would increase the Group's non-current loans by SEK 88 M. No remeasurement was made for current loans because the carrying amount is regarded as a good estimate of the fair value due to their short term.
| At March 31, 2020, SEK M | Assets at fair value in profit and loss |
Derivatives used for hedging purposes |
||||
|---|---|---|---|---|---|---|
| Assets measured at amortized cost |
Carrying amount |
Measurement level |
Carrying amount |
Measurement level |
Total | |
| Assets in the balance sheet | ||||||
| Derivative instruments | - | 192 | 2 | 12 | 2 | 204 |
| Financial non-current assets | 2 | - | - | 2 | ||
| Accounts receivable | 6,396 | - | - | 6,396 | ||
| Interest-bearing receivable | 20 | - | - | 20 | ||
| Cash and cash equivalents | 4,102 | - | - | 4,102 | ||
| Total | 10,520 | 192 | 12 | 10,724 |
| Liabilities at fair value in profit and loss |
Derivatives used for hedging purposes |
|||||
|---|---|---|---|---|---|---|
| Liabilities measured at amortized cost |
Carrying amount |
Measurement level |
Carrying amount |
Measurement level |
Total | |
| Liabilities in the balance sheet | ||||||
| Derivative instruments | - | 197 | 2 | 709 | 2 | 906 |
| Interst-bearing non-current liabilities | 11,532 | 41 | 3 | - | 11,573 | |
| Interst-bearing current liabilities | 4,674 | 41 | 3 | - | 4,715 | |
| Lease liabilities according to IFRS 16 | 2,442 | - | - | 2,442 | ||
| Accounts payable | 3,667 | - | - | 3,667 | ||
| Total | 22,315 | 279 | 709 | 23,303 |
Parent Company
| Condensed Income statements, SEK M | Q1 2021 | Q1 2020 | R12 2021 | 12M 2020 |
|---|---|---|---|---|
| Net sales | 97 | 131 | 428 | 462 |
| Administrative expenses | -66 | -74 | -287 | -295 |
| Other operating income | 1 | 1 | 6 | 6 |
| Other operating expenses | -28 | -31 | -265 | -268 |
| EBIT | 4 | 27 | -118 | -95 |
| Financial income and expenses | 494 | -173 | 1,138 | 471 |
| Profit before tax | 498 | -146 | 1,020 | 376 |
| Appropriations | - | - | 134 | 134 |
| Tax | 14 | 11 | -31 | -34 |
| Net profit | 512 | -135 | 1,123 | 476 |
| Condensed Balance sheets, SEK M | Mar 31 | Mar 31 | Dec 31 |
|---|---|---|---|
| 2021 | 2020 | 2020 | |
| Property, plant and equipment | 11 | 13 | 12 |
| Intangible assets | 21 | 24 | 22 |
| Financial assets | 36,914 | 36,043 | 36,777 |
| Total non-current assets | 36,946 | 36,080 | 36,811 |
| Current receivables | 153 | 207 | 83 |
| Current tax asset | 4 | 1 | 3 |
| Interest-bearing receivables | - | 0 | 134 |
| Cash and cash equivalents | 0 | - | - |
| Total current assets | 157 | 208 | 220 |
| Total assets | 37,103 | 36,288 | 37,031 |
| Equity | 8,537 | 7,415 | 8,025 |
| Interest-bearing non-current liabilities | 187 | 92 | 85 |
| Other non-current liabilities | 47 | 50 | 45 |
| Total non-current liabilities | 234 | 142 | 130 |
| Interest-bearing current liabilities | 28,245 | 28,633 | 28,718 |
| Current tax liabilities | - | - | - |
| Other current liabilities | 87 | 98 | 158 |
| Total current liabilities | 28,332 | 28,731 | 28,876 |
| Total equity and liabilities | 37,103 | 36,288 | 37,031 |
Other
Related parties. No material changes occurred for the Group or the Parent Company in relations or transactions with related parties, compared with what is described in Note 12 of the 2020 Annual Report.
ABOUT TRELLEBORG
Trelleborg is a world leader in engineered polymer solutions. We seal, damp and protect critical applications in demanding environments. Our innovative solutions accelerate performance for customers in a sustainable way.
Business concept
Trelleborg's business concept is to seal, damp and protect in demanding industrial environments.
Strategy
Trelleborg's strategy is to secure leading positions in selected segments. This means that Trelleborg seeks segments, niches and product categories that – by virtue of the Group's market insights, core competencies and offering of advanced products and solutions – provide market leadership. In this manner, long-term shareholder value and added value are generated for customers. Trelleborg works with the strategy, both Groupwide and in the business areas, supported by four strategic cornerstones that – individually and in combination – underpin the strategy. The strategic cornerstones are: Geographic balance, Portfolio optimization, Structural improvements and Excellence.
Value drivers
Polymer engineering. Trelleborg should be best at developing polymer-based solutions that optimize and accelerate customers' applications and processes. Local presence, global reach. Trelleborg leverages global strength and capabilities, while acting as a local partner to customers.
Application expertise. Trelleborg should be best at understanding customers' applications, thereby adding the most value.
Customer integration. Trelleborg makes it easy to do business with the Group and integrates in close partnerships with its customers.
Business accelerator. Powered by these core capabilities, the aim is always to improve, accelerate and grow customers' businesses. Trelleborg grows with its customers.
Trelleborg's market segments:
| Business area/Segment distribution | General industry |
Transport | Infrastructure | Capital intensive industry |
Light Vehicles |
|||
|---|---|---|---|---|---|---|---|---|
| Oil & gas | equipment | Agriculture | construction | Aerospace | ||||
| Trelleborg Industrial Solutions | 47% | 5% | 12% | 24% | 4% | 45% | 8% | |
| Trelleborg Sealing Solutions | 47% | 3% | 10% | 4% | 14% | 31% | 22% | |
| Trelleborg Wheel Systems | 37% | 63% | 100% | |||||
| Continuing operations | 33% | 3% | 19% | 20% | 8% | 6% | 56% | 11% |
Net sales per market segment and business area based on full-year 2020. Historically, these percentages have not changed substantially between the quarters, the full-year figures of 2020 will therefore give a good approximation.
TELEPHONE CONFERENCE ON APRIL 22
A telephone conference will be held on April 22, at 3:00 p.m. CEST. To participate in the telephone conference, call +46 8 505 583 53 (Sweden), +44 333 3009 030 (UK) or +1 844 6251 570 (US). Code: "Trelleborg". The conference will also be streamed in realtime on the Internet. Visit our website www.trelleborg.com for the Internet link and presentation material.
FINANCIAL CALENDER
Annual General Meeting 2021 April 22, 2021 Interim report April-June 2021 July 22, 2021 Interim report July-September 2021 October 27, 2021 Year-end report 2021 February 4, 2022 Interim report January-March 2022 April 27, 2022
FOR FURTHER INFORMATION
Investors/analysts Media
Christofer Sjögren, VP Investor Relations Karin Larsson, VP Media Relations Phone: +46 (0)410 - 670 68 Phone: +46 (0)410 - 670 15 Mobile: +46 (0)708 - 66 51 40 Mobile: +46 (0)733 - 74 70 15 E-mail: [email protected] E-mail: [email protected]
For information about the Trelleborg Group, Annual Reports, the stakeholder magazine T-TIME and other information, please visit the Group's website www.trelleborg.com.
Trelleborg AB (publ) Corp. Reg. No. 556006-3421 PO Box 153, SE-231 22 Trelleborg, Sweden. Phone: +46 (0)410-670 00 www.trelleborg.com
This report contains forward-looking statements that are based on the current expectations of the management of Trelleborg. Although management believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove correct. Accordingly, results could differ materially from those implied in the forwardlooking statements as a result of, among other factors, changes in economic, market and competitive conditions, changes in the regulatory environment and other government actions, fluctuations in exchange rates and other factors.
This information is information that Trelleborg AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 1:00 p.m. CET on April 22, 2021.