Continued good market trend

Transcription

1 Interim report April-June Continued good market trend Net sales for the second quarter of rose 26 percent to SEK 8,265 M (6,544). Organic sales increased 3 percent. Excluding project deliveries, the corresponding increase was 5 percent. Effects of structural changes made a positive contribution of 2 percent to net sales, with the acquisition of CGS accounting for the main part of this increase. EBIT, excluding items affecting comparability, rose 21 percent to SEK 1,89 M (899), equivalent to an EBIT margin of 13.2 percent (13.7). Items affecting comparability for the quarter were a negative SEK 76 M (neg: 17), in line with information previously communicated. Earnings per share for continuing operations excluding items affecting comparability totaled SEK 2.92 (2.31), up 26 percent The second quarter of included net profit for discontinuing operations of SEK 4,369 M related to Vibracoustic. Operating cash flow amounted to SEK 1,96 M (835), up 31 percent. The cash conversion ratio for the most recent 12- month period was 98 percent (83). SEK M Change, % 6M 6M Change, % Net sales 8,265 6, ,563 12, Organic sales, % EBITA, excluding items affecting comparability 1, ,39 1,84 32 EBITA margin, % EBIT, excluding items affecting comparability 1, ,243 1,74 29 EBIT margin, % Items affecting comparability ¹ EBIT 1, ,533 1, Profit before tax ,426 1,48 72 Net profit, discontinuing operations ² - 4,369-4,369 Net profit, Group 737 4, ,966 5, Earnings per share, SEK Continuing operations, excluding items affecting comparability Continuing operations Group Operating cash flow ³ 1, ,513 1,63 42 ¹ 6M includes capital gain from the divestment of the compounding operation in Lesina, Czech Republic, with SEK 472 M, and restructuring expenses of SEK -182 M. ² Relates to Vibracoustic. ³ Continuing operations. Published on July 2, 1(27)

2 TRELLEBORG AB SECOND QUARTER Continued good market trend During the second quarter of the year, sales increased by 26 percent, of which acquired units contributed 2 percentage points. Organic sales rose 3 percent. Excluding project businesses, comprising mainly offshore oil & gas-related operations which are currently experiencing a difficult market situation organic sales rose 5 percent, driven by improved demand in most market segments and in all geographic regions. General industry continued to develop well in all regions, and continued highly favorable organic trend was noted in Asia. Demand for our tires for both the agricultural sector and industrial and construction machinery is continuing to grow. Following a scenario during which the prices for the majority of raw materials dramatically skyrocketed over the course of a few months, these have subsequently fallen to approximately the same levels as during last summer. Our premium position has limited the impact these turbulent movements had on our earnings. We are continuing to work with pricing to offset the effect of this, and the outcome moving forward is largely dependent on how the players in the various stages of the market react. The market for our operations in oil & gas remains weak, which mainly affects the Trelleborg Offshore & Construction business area, which reported a minor loss for the quarter. The market situation is similar to the first quarter, with intense price pressure for the small number of outstanding project transactions. However, this business had only a minor impact on our quarterly earnings from a Group perspective. We are continuing to adapt the oil & gas business to the lower level of activity, and these efforts are aimed at building a long-term attractive structure that will be ready when the market outlook improves. We have completed a number of acquisitions in past year and we are working hard to ensure that the integration of these new units is carried out in a long-term and structured fashion. This could mean that we may decide to recognize costs in individual quarters aimed at generating synergies and thus providing scope for improved earnings in the future. It is also of the utmost importance that, during the integration work, we do not lose focus on the daily sales work, and I believe that we have been successful in that regard. We have talked a lot about digitalization recently, and I can t emphasize enough how important it is that we are at the forefront of our industry to respond to the changes brought about by new technology in terms of how we do business with customers. A key word we use internally is easy. We want to make it as easy as possible for customers to do business with Trelleborg. If we also combine this with our strong niche positions, and continue to offer the highest product quality and smartest comprehensive solutions, then we as a Group have an exciting future ahead of us. In summary, we saw a general improvement in the demand situation in most of our segments during the quarter. For the third quarter, our overall assessment is that demand will be in line with the second quarter of the year. We are continuing to carefully monitor economic developments and maintain a high level of preparedness to manage fluctuating market conditions. Peter Nilsson, President and CEO Market outlook for the third quarter Demand is expected to be in line with the second quarter of, adjusted for seasonal variations. Market outlook from the interim report published on April 27,, relating to the second quarter of Demand is expected to be in line with, or slightly higher than, the first quarter of, adjusted for seasonal variations. Published on July 2, 2(27)

3 TRELLEBORG AB SECOND QUARTER Second quarter Net sales SEK M, growth 6M 6M R12 12M Net sales 8,265 6,544 16,563 12,639 31,69 27,145 Change total, % Organic sales, % Structural change, % Currency effects, % Net sales for the second quarter of amounted to SEK 8,265 M (6,544). Organic sales increased by 3 percent during the quarter, impacted by improved demand in most market segments. Effects from structural changes contributed a positive 2 percent, with the acquisition of CGS accounting for the main part of this increase. Exchange rate effects accounted for a positive 3 percent contribution to sales compared with the year-earlier period. Excluding project deliveries¹: The Group s organic sales increased 5 percent year on year. Organic sales in Western Europe rose 3 percent compared with the year-earlier period. In the rest of Europe, organic sales increased by 6 percent. Organic sales rose by 5 percent in North America, while an increase of 6 percent was noted in South & Central America. Asia and other markets reported an increase in organic sales of 11 percent. ¹ Project deliveries refer to the whole of Trelleborg Offshore & Construction and minor parts of Trelleborg Industrial Solutions operations. Overall, project deliveries account for approximately 1 percent of the Group's net sales. Result SEK M Change, % 6M 6M Change, % EBITA, excluding items affecting comparability 1, ,39 1,84 32 EBITA margin, % EBIT, excluding items affecting comparability 1, ,243 1,74 29 EBIT margin, % Items affecting comparability ¹ EBIT 1, ,533 1, Financial income and expenses Profit before tax ,426 1,48 72 Taxes Net profit, discontinuing operations ² - 4,369-4,369 Net profit, Group 737 4, ,966 5, ¹ 6M includes capital gain from the divestment of the compounding operation in Lesina, Czech Republic, with SEK 472 M, and restructuring expenses of SEK -182 M. ² Relates to Vibracoustic. EBITA, excluding items affecting comparability, totaled SEK 1,163 M (935), corresponding to a margin of 14. percent (14.3). EBIT, excluding items affecting comparability, amounted to SEK 1,89 M (899) for the second quarter, a year-on-year increase of 21 percent. The total exchange rate effects on EBIT, excluding items affecting comparability, from the translation of foreign subsidiaries had a positive impact of SEK 37 M on earnings compared with the year-earlier period. The EBIT margin, excluding items affecting comparability, amounted to 13.2 percent (13.7). The integration of operations acquired continued during the quarter. The acquired operations performed well and contributed positively to the Group s earnings. EBIT was charged with amortization of surplus values totaling SEK 74 M, an increase of SEK 38 M compared with the year-earlier period, primarily related to completed acquisitions and principally in Trelleborg Wheel Systems. The quarter was charged with items affecting comparability amounting to an expense of SEK 76 M (expense: 17). EBIT for the quarter, including items affecting comparability, amounted to SEK 1,13 M (792), up 28 percent. The net financial expense was SEK 56 M (expense: 63), corresponding to an interest rate of 1.9 percent (2.3). Comparative figures in the year-earlier period for net profit in discontinuing operations related to Vibracoustic. Net profit for the Group totaled SEK 737 M (4,96). Excluding items affecting comparability, the tax rate for the quarter was 23 percent (25), impacted by a favorable country mix. Published on July 2, 3(27)

4 TRELLEBORG AB SECOND QUARTER Return on capital employed % R12 R12 12M Excluding items affecting comparability Including items affecting comparability Capital employed for continuing operations increased year on year to SEK 37,922 M (35,663). The return on capital employed, excluding items affecting comparability, was 1.6 percent (13.6), impacted by acquisitions. Cash flow SEK M Change, % 6M 6M Change, % EBITDA, operating profit before depreciation 1,416 1, ,894 2, Capital expenditure Sold non-current assets Change in working capital Dividend from associated companies Non cash-flow affecting items Operating cash flow 1, ,513 1,63 42 Cash impact from items affecting comparability Financial items Paid tax Free cash flow Acquisitions -3-11, ,981 Disposed/discontinuing operations ¹ Dividend - equity holders of the parent company -1,152-1,84-1,152-1,84 Sum net cash flow , , ¹ Relates to divestment of compounding operation in Lesina, Czech Republic. Operating cash flow during the second quarter amounted to SEK 1,96 M (835). A higher year-on-year EBITDA had a positive impact on cash flow, while the change in working capital during the period was on a par with the preceding year. The cash conversion ratio for the most recent 12-month period was 98 percent (83). Free cash flow amounted to SEK 785 M (562). Acquisitions negatively impacted cash flow in the amount of SEK 3 M (neg: 11,81). The second quarter of included the acquisition of CGS. The net cash flow amounted to a negative SEK 397 M (neg: 12,323) following deduction for a dividend of SEK 1,152 M (deduction: 1,84). Published on July 2, 4(27)

5 TRELLEBORG AB SECOND QUARTER Net debt Change in net debt, SEK M 6M 6M 12M Net debt, opening balance -12,125-6,282-6,282 Net cash flow for the period ,536-5,931 Exchange rate differences Receivable related to the divestment of Vibracoustic - 6,9 685 Net debt, closing balance -11,554-12,87-12,125 Debt/equity ratio, % Net debt/ebitda Continuing operations, excluding items affecting comparability Continuing operations, including items affecting comparability Total Group Since the beginning of the year, net debt has decreased by SEK 571 M, affected by net cash flow for the year and positive exchange rate differences. The debt/equity ratio at the end of the period was 45 percent (52). Net debt in relation to EBITDA, excluding items affecting comparability, amounted to 2.2 (2.9). The ratio for the Group as a whole was 2.1 (1.5). Return on equity % R12 R12 12M Continuing operations, excluding items affecting comparability Continuing operations, including items affecting comparability Total Group ¹ ¹ key figures include the capital gain from the disposal of Vibracoustic. Shareholders equity for the Group at the close of the period amounted to SEK 25,939 M (25,137 at January 1, ). Equity per share amounted to SEK 96 (86), up 12 percent. The equity/assets ratio was 53 percent (44). The total return on shareholders equity for the Group was 12.7 percent (31.8), with the year-earlier period being positively affected by the capital gain in connection with the divestment of Vibracoustic. Published on July 2, 5(27)

6 TRELLEBORG AB SECOND QUARTER Earnings per share Earnings per share, SEK 6M 6M R12 12M Continuing operations Discontinuing operations Group, total Continuing operations, excluding items affecting comparability Earnings per share for continuing operations excluding items affecting comparability during the second quarter totaled SEK 2.92 (2.31). For the Group in total, earnings per share amounted to SEK 2.72 (18.1), with the year-earlier period being positively affected by the capital gain in connection with the divestment of Vibracoustic. Net sales, SEK M EBIT excl. items affecting comparability, SEK M / EBIT %, R12 1, 32, 1, ,5 24, 1, , 16, ,5 8, quarter (LHS) R12 (RHS) EBIT, SEK M (LHS) EBIT %, R12 (RHS) 1,4 Operating cash flow, SEK M 4,2 3.5 Earnings per share, continuing operations excl. items affecting comparability, SEK ,2 3, , 3, 8 2, , , quarter (LHS) R12 (RHS) quarter (LHS) R12 (RHS) Published on July 2, 6(27)

7 TRELLEBORG AB SECOND QUARTER January-June Net sales for the first six months of totaled SEK 16,563 M (12,639), up 31 percent year on year. EBIT for the first six months of amounted to SEK 2,533 M (1,518), which includes a capital gain of SEK 472 M from the divestment of the compounding operation in Lesina in the Czech Republic. The financial net expense was SEK 17 M (expense: 11), corresponding to an average interest rate of 1.8 percent (2.4). Profit before tax totaled SEK 2,426 M (1,48). The first six months of included net profit for discontinuing operations relating to Vibracoustic in the amount of SEK 4,369 M. Net profit for the Group totaled SEK 1,966 M (5,435). Total earnings per share for the Group were SEK 7.25 (2.5). Significant events during the quarter Acquisition of manufacturer of advanced composite components. Trelleborg Sealing Solutions signed an agreement to acquire the U.S.-based privately-owned Automated Dynamics that specializes in the manufacturing of advanced composite components for particularly demanding applications. These composites are a strategic, adjacent technology for Trelleborg with high potential in a multiple of industries such as aerospace and chemical applications, and in the long term also for other markets. Completion of the transaction is subject to the approval of the relevant authorities. The company is located in Niskayuna, New York. Sales amounted to approximately SEK 65 M in. This bolt-on acquisition is part of Trelleborg s strategy to strengthen its positions in attractive market segments. The transaction is expected to be finalized in the third quarter of. The press release was published on June 23,. Significant events after the close of the period No significant events were reported after the close of the period. Risk management Trelleborg serves a broad range of customers in a variety of market segments and niches. Sales are made to approximately 15 countries worldwide and the Group has manufacturing operations at 12 production units in around 5 countries. Although the business is diversified, deploying several business models and operating a number of production units, and has an effective underlying spread of financial risks, a number of risks remain. Trelleborg has identified nine major risks in five areas. These include 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, and the information published in this interim report. Published on July 2, 7(27)

8 TRELLEBORG AB SECOND QUARTER Board of Directors assurance This interim report provides a fair overview of the operations, position and results of the Parent Company and the Group, and describes material risks and uncertainties faced by the Parent Company and the companies that are included in the Group. Trelleborg, July 2, Trelleborg AB (publ) Sören Mellstig Hans Biörck Gunilla Fransson Chairman of the Board Board Member Board Member Johan Malmquist Peter Nilsson Anne Mette Olesen Board Member Board Member and Board Member President/CEO Bo Risberg Board Member Susanne Pahlén Åklundh Board Member Göran Andersson Peter Larsson Mikael Nilsson Employee representative Employee representative Employee representative This report has been prepared in accordance with IAS 34 Interim Financial Reporting and the applicable rules of the Swedish Annual Accounts Act. 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 Report. 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. New and amended standards applied from January 1, New and amended standards are not considered to have had a material impact on the Group s or Parent Company s earnings or financial position. This report was not subject to special review by the company s auditor. Published on July 2, 8(27)

9 TRELLEBORG AB SECOND QUARTER Trelleborg Coated Systems is a leading global supplier of unique customer solutions for polymer-coated fabrics deployed in several industrial applications. Excluding items affecting comparability, SEK M Change, % 6M 6M Change, % Net sales ,318 1,259 5 Change total, % Organic sales, % Structural change, % Currency effects, % EBIT EBIT, % Additional key ratios on pages Organic sales for the quarter declined by 3 percent year on year. Coated fabrics declined compared with the year-earlier period, impacted by lower demand in individual market segments. Demand from general industry and the aerospace industry was generally favorable, while sales to the automotive industry demonstrated a more subdued trend. Printing blankets noted slightly lower organic sales, with sales to Europe and North and South America showing weaker development at the same time as Asia was more stable. EBIT and EBIT margin declined compared with the corresponding period in, with production disturbances in one of the business area s units in North America continuing to have a negative impact. Exchange rate effects from the translation of foreign subsidiaries had a positive impact of SEK 6 M on earnings compared with the year-earlier period. Net sales, SEK M EBIT excl. items affecting comparability, SEK M / EBIT %, R12 8 2, , , quarter (LHS) R12 (RHS) EBIT, SEK M (LHS) EBIT %, R12 (RHS) Published on July 2, 9(27)

10 TRELLEBORG AB SECOND QUARTER Trelleborg Industrial Solutions is a leading supplier of polymer-based critical solutions in such industrial application areas as selected hose and sealing systems and antivibration solutions for rail vehicles, vessels and industrial equipment. Excluding items affecting comparability, SEK M Change, % 6M 6M Change, % Net sales ¹ 1,468 1, ,896 2, Change total, % Organic sales, % Structural change, % Currency effects, % EBIT ¹ EBIT, % Additional key ratios on pages ¹ Certain operations previously reported in the Trelleborg Industrial Solutions business area have, January 1, been transferred to the Trelleborg Sealing Solutions business area. The previous year's key ratios have been adjusted. Total turnover moved from Trelleborg Industrial Solutions amounted to SEK 269 M for the full year and for EBIT SEK 16 M. Organic sales for the quarter increased 2 percent year on year. Sales to most market segments increased, although the favorable trend was hampered by fewer oil & gas-related deliveries. Sales to general industry and the automotive industry rose, while deliveries to the construction-related industry were unchanged. Europe, North America and Asia reported higher organic sales. EBIT increased year on year due to higher organic sales and contributions from acquired units. The EBIT margin was maintained at the same level as in the year-earlier period. Exchange rate effects from the translation of foreign subsidiaries had a positive impact of SEK 4 M on earnings compared with the year-earlier period. The work on strengthening our position within antivibration outside the light vehicles segment continues, where, among other things, the integration of the previously acquired Schwab Vibration Control, is proceeding well and according to plan. Net sales, SEK M EBIT excl. items affecting comparability, SEK M / EBIT %, R12 1,6 5, ,4 1,2 1, 4,9 4,2 3, , , , quarter (LHS) R12 (RHS) EBIT, SEK M (LHS) EBIT %, R12 (RHS) Published on July 2, 1(27)

11 TRELLEBORG AB SECOND QUARTER Trelleborg Offshore & Construction is a leading global project supplier of polymer-based critical solutions deployed in highly demanding offshore oil & gas and infrastructure construction environments. Excluding items affecting comparability, SEK M Change, % 6M 6M Change, % Net sales ,529 1, Change total, % Organic sales, % Structural change, % Currency effects, % EBIT EBIT, % Additional key ratios on pages Organic sales for the quarter declined by 9 percent year on year. The decline was mainly the result of fewer project transactions in the offshore oil & gas segment as well as lower sales in the infrastructure construction segment. EBIT and EBIT margin were negative during the quarter on account of fewer deliveries and intensified competition for outstanding project businesses. Exchange rate effects from the translation of foreign subsidiaries had a negative impact of SEK 2 M on earnings compared with the year-earlier period. The market price of oil remains at a level that confirms a scenario of continued uncertainty moving forward. The business area s efforts to proactively adapt the operation are continuing and aim to build a long-term attractive structure that will be ready when the market outlook improves. Net sales, SEK M EBIT excl. items affecting comparability, SEK M / EBIT %, R12 1,2 4, , 4, , ,4 1, quarter (LHS) R12 (RHS) EBIT, SEK M (LHS) EBIT %, R12 (RHS) Published on July 2, 11(27)

12 TRELLEBORG AB SECOND QUARTER Trelleborg Sealing Solutions is a leading global supplier of polymer-based critical sealing solutions deployed in demanding general industry, light vehicle and aerospace environments. Excluding items affecting comparability, SEK M Change, % 6M 6M Change, % Net sales ¹ 2,596 2, ,219 4,36 2 Change total, % Organic sales, % Structural change, % 9 8 Currency effects, % EBIT ¹ ,229 1,13 21 EBIT, % Additional key ratios on pages ¹ Certain operations previously reported in the Trelleborg Industrial Solutions business area have, January 1, been transferred to the Trelleborg Sealing Solutions business area. The previous year's key ratios have been adjusted. Total turnover moved to Trelleborg Sealing Solutions amounted to SEK 212 M for the full year and for EBIT SEK 16 M. Organic sales for the quarter increased by 6 percent year on year. Sales increased in all geographic regions. Deliveries to general industry increased in all geographic regions, but primarily in Asia. The positive sales trend to the automotive industry continued during the quarter, driven by stronger performance in Europe and Asia. Deliveries to the aerospace industry were also satisfactory, with sales to North America and Asia displaying favorable growth, at the same time as Europe demonstrated a mixed trend among various subsegments. EBIT increased compared with the corresponding period in, primarily due to the organic sales growth as well as acquisitions. The EBIT margin remained at the same level as in the preceding year, despite consolidation of units with lower margins. Exchange rate effects from the translation of foreign subsidiaries had a positive impact of SEK 18 M on earnings compared with the year-earlier period. During the quarter, an agreement was signed to acquire a company specialized in the manufacture of advanced composite components for particularly demanding applications. These composites have high potential for Trelleborg in several industries, including aerospace and chemical applications, as well as other markets in the long term. Refer to page 7. Net sales, SEK M EBIT excl. items affecting comparability, SEK M / EBIT %, R12 2,8 1, ,1 7, ,4 5, , quarter (LHS) R12 (RHS) EBIT, SEK M (LHS) EBIT %, R12 (RHS) Published on July 2, 12(27)

13 TRELLEBORG AB SECOND QUARTER Trelleborg Wheel Systems is a leading global supplier of tires and complete wheels for agricultural and forestry machines, materials handling and construction vehicles and two-wheeled vehicles. Excluding items affecting comparability, SEK M Change, % 6M 6M Change, % Net sales 2,36 1, ,688 2, Change total, % Organic sales, % Structural change, % Currency effects, % EBIT EBIT, % Additional key ratios on pages Organic sales for the quarter increased 8 percent year on year. Sales of agricultural tires increased to both OEMs and the aftermarket in all geographic regions. Sales of tires for materials handling vehicles and construction equipment increased slightly during the quarter. Sales increased in both Europe and North America. EBIT increased year on year on account of the consolidation of the CGS tire operation as of June 1,, and higher volumes in primarily agricultural tires. The significant fluctuations in raw material prices in the first six months had a negative impact on earnings and the EBIT margin. Efforts to compensate for this are underway, but were unable to fully offset the effects in the second quarter. In the late spring and summer, raw material prices have fallen significantly, which has created uncertainty concerning the strategies of the various operators in the market. Exchange rate effects from the translation of foreign subsidiaries had a positive impact of SEK 9 M on earnings compared with the year-earlier period. During the quarter, the business area launched a more market-oriented organizational structure aimed at leveraging, in the long term, the new opportunities brought about by the acquisition of the CGS tire operation. In the spring, the business area s VIP system was introduced featuring variable inflation pressure on a broader scale, which offers several advantages, including lower soil compaction, increased traction and lower fuel consumption. Net sales, SEK M EBIT excl. items affecting comparability, SEK M / EBIT %, R12 2,8 9, ,4 2, 7,8 6, ,6 5, ,2 3, ,6 1, quarter (LHS) R12 (RHS) EBIT, SEK M (LHS) EBIT %, R12 (RHS) Published on July 2, 13(27)

14 TRELLEBORG AB SECOND QUARTER Rubena Savatech is a leading supplier of engineered polymer solutions to the general and automotive industries. The business, which was acquired as part of CGS, will be recognized separately from Trelleborg s business areas during a transition period, before being gradually integrated into Trelleborg Industrial Solutions and Trelleborg Coated Systems business areas. Excluding items affecting comparability, SEK M ¹ Change, % 6M 6M ¹ Change, % Net sales , Change total, % Organic sales, % Structural change, % Currency effects, % EBIT EBIT, % Additional key ratios on pages ¹ Key ratios include only the month of June. Sales of niche products to both the automotive industry and general industry were satisfactory for the quarter. Capacity utilization for most product lines was high. The volume of publicly awarded projects remained subdued. The order situation for the third quarter is satisfactory, although volumes will be impacted by normal seasonal variations. The number of signed long-term delivery agreements for components is at a stable level. EBIT and EBIT margin were adversely impacted by the sharp movements in raw material prices during the spring. Integration activities with Trelleborg Industrial Solutions and Trelleborg Coated Systems are progressing according to plan, and Rubena Savatech is scheduled to be integrated into the above-mentioned business areas as of /218. In preparation for this integration, investment projects are underway aimed at increasing manufacturing capacity, in addition to other efficiency-enhancement measures. Earnings for the quarter were charged with certain non-recurring costs related to these actions. Published on July 2, 14(27)

15 TRELLEBORG AB SECOND QUARTER Income Statements Income Statements, SEK M 6M 6M R12 12M Net sales 8,265 6,544 16,563 12,639 31,69 27,145 Cost of goods sold -5,586-4,269-11,151-8,253-2,977-18,79 Gross profit 2,679 2,275 5,412 4,386 1,92 9,66 Selling expenses ,327-1,82-2,547-2,32 Administrative expenses ,575-1,37-3,16-2,955 Research and development costs Other operating income/expenses Profit from associated companies EBIT, excluding items affecting comparability 1, ,243 1,74 3,999 3,496 Items affecting comparability ¹ EBIT 1, ,533 1,518 4,12 3,15 Financial income and expenses Profit before tax ,426 1,48 3,914 2,896 Tax Net profit in continuing operations ,966 1,66 3,116 2,216 Net profit in discontinuing operations ² - 4,369-4,369-4,369 Total net profit 737 4,96 1,966 5,435 3,116 6,585 - equity holders of the parent company 737 4,96 1,966 5,435 3,116 6,585 ¹ 6M includes capital gain from the divestment of the compounding operation in Lesina, Czech Republic, with SEK M 472, and restructuring expenses of SEK M ² Relates to Vibracoustic. Earnings per share, SEK 6M 6M R12 12M Continuing operations Discontinuing operations Group, total Continuing operations, excluding items affecting comparability Number of shares End of period 271,71, ,71, ,71, ,71, ,71, ,71,783 Average number 271,71, ,71, ,71, ,71, ,71, ,71,783 Statements of comprehensive income, SEK M 6M 6M R12 12M Total net profit 737 4,96 1,966 5,435 3,116 6,585 Other comprehensive income Items that will not be reclassified to the income statement Reassessment of net pension obligation Total Items that may be reclassified to the income statement Cash flow hedges Hedging of net investment Translation difference ,552 Income tax relating to components of other comprehensive income Other comprehensive income relating to disposed / discontinuing operations Total ,6 Other comprehensive income, net of tax ,14 Total comprehensive income 782 5,223 1,954 5,73 3,823 7,599 EBIT specification, SEK M 6M 6M R12 12M EBITDA, excluding items affecting comparability 1,416 1,127 2,894 2,172 5,287 4,565 Depreciation, property, plant and equipment ,2-866 EBITA, excluding items affecting comparability 1, ,39 1,84 4,286 3,7 Amortization, intangible assets EBIT, excluding items affecting comparability 1, ,243 1,74 3,999 3,496 Items affecting comparability EBIT 1, ,533 1,518 4,12 3,15 Published on July 2, 15(27)

16 TRELLEBORG AB SECOND QUARTER Balance Sheets Balance Sheets, SEK M Jun 3 Jun 3 Dec 31 Property, plant and equipment 9,45 9,69 9,435 Intangible assets 23,62 21,189 23,23 Other financial assets 861 1,311 1,289 Total non-current assets 32,968 31,569 33,927 Inventories 5,191 4,869 5,6 Current operating receivables 7,82 7,41 6,71 Current interest-bearing receivables 459 7, Cash and cash equivalents 2,96 1,675 1,879 Total current assets 15,566 21,63 14,427 Total assets 48,534 52,632 48,354 Equity 25,939 23,268 25,137 Non-current interest-bearing liabilities 8,745 7,779 9,852 Other non-current liabilities 1,79 1,817 1,832 Total non-current liabilities 1,535 9,596 11,684 Interest-bearing current liabilities 5,368 13,435 5,282 Other current liabilities 6,692 6,333 6,251 Total current liabilities 12,6 19,768 11,533 Total equity and liabilities 48,534 52,632 48,354 Specification of changes in equity, SEK M Jun 3 Jun 3 Dec 31 Opening balance, January 1 25,137 18,622 18,622 Total comprehensive income 1,954 5,73 7,599 Dividend -1,152-1,84-1,84 Closing balance 25,939 23,268 25,137 Specification of capital employed, SEK M Jun 3 Jun 3 Dec 31 Total assets 48,534 52,632 48,354 Less: Interest-bearing receivables ¹ 477 7,479 1,137 Cash and cash equivalents 2,96 1,675 1,879 Tax assets 1,546 1,53 1,57 Operating liabilities 6,573 6,447 6,18 Capital employed 37,842 35,528 37,588 of which discontinuing operations Capital employed excluding discontinuing operations 37,922 35,663 37,67 ¹ Including receivable relating to disposal of Vibracoustic. Published on July 2, 16(27)

17 TRELLEBORG AB SECOND QUARTER Cash-flow statements Cash flow statements, SEK M 6M 6M R12 12M Operating activities EBIT incl part in associated companies 1, ,533 1,518 4,12 3,15 Adjustments for items not included in cash flow from operating activities: Depreciation, property, plant and equipment ,3 868 Amortization, intangible assets Impairment losses, property, plant and equipment Impairment losses, intangible assets Dividend from associated companies Participations in associated companies and other non cashflow affecting items Cash-flow effects from items affecting comparability Interest received and other financial items Interest paid and other financial items Taxes paid Cash flow from operating activities before changes in working capital 1, ,193 1,651 4,7 3,465 Cash flow from changes in working capital: Change in inventories Change in operating receivables , ,47 Change in operating liabilities ,33 Change in items affecting comparability Cash flow from operating activities 1, , ,833 3,479 Investing activities Acquisitions -3-11, ,981-1,53-13,38 Disposed/ discontinuing operations ,814 6,165 Capital expenditure, property, plant and equipment ,116-1,74 Capital expenditure, intangible assets Sale of non-current assets Cash flow from investing activities , ,372 4,182-8,326 Financing activities Change in interest-bearing investments Change in interest-bearing liabilities 54 12, ,693-7,26 5,457 Dividend - equity holders of the parent company -1,152-1,84-1,152-1,84-1,152-1,84 Cash flow from financing activities ,317-1,13 1,528-7,68 4,5 Cash flow for the period Cash and cash equivalents: At beginning of the period 2,23 1,547 1,879 2,552 1,675 2,552 Exchange rate differences Cash and cash equivalents at end of period 2,96 1,675 2,96 1,675 2,96 1,879 Published on July 2, 17(27)

18 TRELLEBORG AB SECOND QUARTER Key figures SEK M 6M 6M R12 12M Net sales Trelleborg Coated Systems ,318 1,259 2,585 2,526 Trelleborg Industrial Solutions ¹ 1,468 1,25 2,896 2,459 5,361 4,924 Trelleborg Offshore & Construction ,529 1,737 3,259 3,467 Trelleborg Sealing Solutions ¹ 2,596 2,176 5,219 4,36 9,63 8,771 Trelleborg Wheel Systems 2,36 1,472 4,688 2,616 8,426 6,354 Rubena Savatech ² , ,914 1,63 Group items/eliminations Total 8,265 6,544 16,563 12,639 31,69 27,145 EBIT, excluding items affecting comparability Trelleborg Coated Systems Trelleborg Industrial Solutions ¹ Trelleborg Offshore & Construction Trelleborg Sealing Solutions ¹ ,229 1,13 2,135 1,919 Trelleborg Wheel Systems Rubena Savatech ² Group items Total 1, ,243 1,74 3,999 3,496 EBIT %, excluding items affecting comparability Trelleborg Coated Systems Trelleborg Industrial Solutions ¹ Trelleborg Offshore & Construction Trelleborg Sealing Solutions ¹ Trelleborg Wheel Systems Rubena Savatech ² Total ¹ Certain operations previously reported in the Trelleborg Industrial Solutions business area have, January 1, been transferred to the Trelleborg Sealing Solutions business area. The previous year's key ratios have been adjusted for this internal allocation. Total turnover moved from Trelleborg Industrial Solutions amounted to SEK 269 M for the full year and for EBIT SEK 16 M. ² Key ratios include only the month of June. Net sales per market, share and organic growth, % 6M 6M Western Europe (47%) Other Europe (9%) North America (23%) South and Central America (4%) Asia and other markets (17%) Total (1% refer to share ) Net sales per market excluding project related ³, organic growth, % 6M 6M Western Europe Other Europe North America South and Central America Asia and other markets Total ³ Project deliveries refer to the whole of Trelleborg Offshore & Construction and minor parts of Trelleborg Industrial Solutions operations. Published on July 2, 18(27)

19 TRELLEBORG AB SECOND QUARTER SEK M Net sales Trelleborg Coated Systems Trelleborg Industrial Solutions ¹ 1,468 1,428 1,326 1,139 1,25 1,29 1,136 1,152 1,281 Trelleborg Offshore & Construction ,149 1,19 1,174 Trelleborg Sealing Solutions ¹ 2,596 2,623 2,216 2,195 2,176 2,184 1,981 2,125 2,29 Trelleborg Wheel Systems 2,36 2,328 1,883 1,855 1,472 1,144 1,2 1,37 1,136 Rubena Savatech ² Group items/eliminations Total 8,265 8,298 7,434 7,72 6,544 6,95 5,927 5,975 6,531 EBIT, excluding items affecting comparability Trelleborg Coated Systems Trelleborg Industrial Solutions ¹ Trelleborg Offshore & Construction Trelleborg Sealing Solutions ¹ Trelleborg Wheel Systems Rubena Savatech ² Group items Total 1,89 1, EBIT %, excluding items affecting comparability Trelleborg Coated Systems Trelleborg Industrial Solutions ¹ Trelleborg Offshore & Construction Trelleborg Sealing Solutions ¹ Trelleborg Wheel Systems Rubena Savatech ² Total Items affecting comparability EBIT 1,13 1, ¹ Certain operations previously reported in the Trelleborg Industrial Solutions business area have, January 1, been transferred to the Trelleborg Sealing Solutions business area. The previous year's key ratios have been adjusted. Total turnover moved from Trelleborg Industrial Solutions amounted to SEK 269 M for the full year and for EBIT SEK 16 M. ² Key ratios include only the month of June. Bridge net sales SEK M, %, SEK M Organic sales, % Structural change, % Currency effects, %, SEK M Trelleborg Coated Systems Trelleborg Industrial Solutions 1, ,468 Trelleborg Offshore & Construction Trelleborg Sealing Solutions 2, ,596 Trelleborg Wheel Systems 1, ,36 Rubena Savatech Group items/eliminations Total 6, ,265 Exchange rate differences impacting EBIT excluding items affecting comparability ², SEK M 6M Trelleborg Coated Systems 6 12 Trelleborg Industrial Solutions 4 8 Trelleborg Offshore & Construction -2-4 Trelleborg Sealing Solutions Trelleborg Wheel Systems 9 12 Rubena Savatech 2 2 Group items -1 Total ³ Impact on EBIT excluding items affecting comparability in translation of foreign subsidiaries. Published on July 2, 19(27)

20 TRELLEBORG AB SECOND QUARTER Income Statements, SEK M Net sales 8,265 8,298 7,434 7,72 6,544 6,95 5,927 5,975 6,531 Cost of goods sold -5,586-5,565-5,77-4,749-4,269-3,984-3,956-3,983-4,332 Gross profit 2,679 2,733 2,357 2,323 2,275 2,111 1,971 1,992 2,199 Selling expenses Administrative expenses Research and development costs Other operating income/costs Profit from associated companies EBIT, excluding items affecting comparability 1,89 1, Items affecting comparability EBIT 1,13 1, Financial income and expenses Profit before tax 957 1, Tax Net profit in continuing operations 737 1, Net profit in discontinuing operations , Total net profit 737 1, , equity holders of the parent company 737 1, , non-controlling interest Earnings per share, SEK Continuing operations Discontinuing operations Group, total Continuing operations, excluding items affecting comparability Published on July 2, 2(27)

21 TRELLEBORG AB SECOND QUARTER Acquisitions Carrying amounts of identifiable acquired assets and assumed liabilities First six months of Trelleborg Sealing Solutions signed an agreement and finalized the acquisition of the privately owned U.S.-based Carolina Seal Inc during the first quarter. The business specializes in the distribution of polymer seals such as O-rings, hydraulic seals and specialty kitting. The largest market segment is in transportation equipment, including the fast-growing sub-segment for transportation of chemicals. In addition, final settlement of earlier acquisitions and certain adjustments to acquisition analyses attributable to acquisitions in were conducted. First six months of On May 31,, Trelleborg finalized the acquisition of 1 percent of the shares in CGS Holding a.s., a privately owned company with leading positions in agricultural, industrial and specialty tires as well as engineered polymer solutions. CGS Holding includes the businesses Mitas, Rubena and Savatech. The total cash consideration amounted to approximately SEK 1.9 billion on a cash and debt-free basis. In addition to CGS, two additional acquisitions were carried out during the year. In the first quarter, Trelleborg finalized the acquisition of 1 percent of Loggers Rubbertechniek B.V., a privately owned engineering company based in the Netherlands, which offers specially developed antivibration solutions, mainly for marine applications. In the second quarter, Trelleborg finalized the acquisition of 1 percent of Specialty Silicone Fabricators Inc. (SSF), a U.S.-based privately owned manufacturer of highprecision silicone components for medical technology original equipment manufacturers (OEMs). Acquisitions, SEK M Acquired Adjustm. to acquisitions Acquisitions 6M 6M 6M Adjustment Book value to fair value Fair value Adjustment Book value to fair value Fair value Adjustment Book value to fair value Fair value Developed technology ¹ Trademarks ² ,296 1,31 Customer relationships ³ ,222 1,222 Other intangible assets Property, plant and equipment 2 2 2, ,532 Deferred tax assets Shares in associated companies Interest-bearing receivables Inventories Operating receivables ,82 1,82 Current tax asset Cash and cash equivalents Deferred tax liabilities Interest-bearing liabilities Post employment benefits Provision obligations Current tax liability Operating liabilities ,574-1,574 Net assets ,167 2,321 6,488 Goodwill ,862 Total purchase price ,35 Cash and other net debt in acquired operations Impact shown in cash flow statement ,981 ¹ Excess value of developed technology is amortized over 1 years ² The majority have an indefinite useful life, no amortization takes place. ³ Excess value of customer relationships are amortized over years. The above goodwill for is attributable to acquired non-separable customer relationships and synergy effects expected after the acquisition. The fair value of acquired, identifiable, intangible assets is provisional pending final measurement of these assets. Published on July 2, 21(27)

22 TRELLEBORG AB SECOND QUARTER Financial assets and liabilities measured at fair value At June 3,, SEK M Derivatives valued at fair value in profit and loss Derivatives used for hedging purposes Carrying amount Measurement level Carrying amount Measurement level Other financial non-current assets Accounts receivable and other receivables Current interest-bearing receivables Total assets Total Other non-current liabilities Interest-bearing non-current liabilities Accounts payable and other liabilities Interest-bearing current liabilities Total liabilities At June 3,, SEK M Derivatives valued at fair value in profit and loss Carrying amount Measurement level Derivatives used for hedging purposes Carrying amount Measurement level Accounts receivable and other receivables Current interest-bearing receivables Total assets Total Other non-current liabilities Interest-bearing non-current liabilities Accounts payable and other liabilities Interest-bearing current liabilities Total liabilities Valuation techniques used to derive Level 2 fair values Level 2 derivatives comprise forward foreign contracts and interest rate swaps and are used mainly for hedging purposes but also for proprietary trading. These forward foreign exchange contracts have been fair valued using forward exchange rates that are quoted in an active market. Interest rate swaps are fair valued using forward interest rated extracted from observable yield curves. The effects of discounting are generally insignificant for level 2 derivatives. Disclosure of fair value for debt and other financial instruments The majority of the Group s loans carry a variable interest rate, meaning that the carrying amount of the total loan liability is considered to represent a good estimation of the fair value due to the short maturity. For other financial instruments the recognized amounts are also deemed to correspond to their fair value. The outstanding receivable of approximately SEK 224 M, related to Vibracoustic s realized sales development in, has been classified in accordance with level 3 of the fair value hierarchy due to inputs derived from unobservable market data, including the counterparty s credit risk. Published on July 2, 22(27)

23 TRELLEBORG AB SECOND QUARTER Parent Company Income statements, SEK M 6M 6M R12 12M Administrative expenses Other operating income Other operating expenses EBIT Financial income and expenses Profit before tax Appropriations Tax Net profit Statements of comprehensive income, SEK M 6M 6M R12 12M Net profit Total comprehensive income Balance sheets, SEK M Jun 3 Jun 3 Dec 31 Property, plant and equipment Intangible assets Financial assets 35,536 35,639 35,533 Total non-current assets 35,552 35,659 35,551 Current receivables Current tax asset Interest-bearing receivables Cash and cash equivalents Total current assets Total assets 35,626 35,795 36,237 Equity 9,632 1,336 1,311 Interest-bearing non-current liabilities 4,374 4,374 4,374 Other non-current liabilities Total non-current liabilities 4,393 4,392 4,398 Interest-bearing current liabilities 21,47 2,885 21,374 Other current liabilities Total current liabilities 21,61 21,67 21,528 Total equity and liabilities 35,626 35,795 36,237 Published on July 2, 23(27)

24 TRELLEBORG AB SECOND QUARTER Financial definitions Trelleborg uses the following alternative performance measures relating to its financial position, return on shareholders equity and capital employed, net debt, debt/equity ratio and equity/assets ratio. The Group believes that these performance measures can be utilized by users of the financial statements as a supplement in assessing the possibility of dividends, making strategic investments and assessing the Group s ability to meet its financial commitments. Trelleborg also uses the cash flow metrics of operating cash flow and free cash flow to provide an indication of the funds generated by the operations in order to conduct strategic investments, carry out amortizations and generate a return for its 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. The Group defines its key figures as follows. Capital employed Total assets less interest-bearing financial assets and non-interest-bearing operating liabilities (including pension liabilities) and excluding tax assets and tax liabilities¹. Cash conversion ratio Operating cash flow as a percentage of EBIT. Debt/equity ratio, % Net debt divided by total equity. Discontinuing operations Profit from discontinuing operations is recognized net in the consolidated income statement under the item Net profit in discontinuing operations. Earnings per share Net profit for the period, attributable to shareholders of the Parent Company, divided by the average number of shares outstanding. EBIT Operating profit including items affecting comparability. EBIT, excluding items affecting comparability Operating profit excluding items affecting comparability. EBIT margin excluding items affecting comparability, % EBIT excluding items affecting comparability as a percentage of net sales. EBITA Operating profit excluding amortization and impairment of intangible assets and excluding items affecting comparability. EBITA margin, % EBITA as a percentage of net sales. EBITDA Operating profit excluding depreciation and impairment of PPE and amortization and impairment of intangible assets and excluding items affecting comparability. Equity/assets ratio, % Total equity divided by total assets. Equity method Shares in associated companies and joint ventures are recognized according to the equity method, in which the initial participation is adjusted to reflect the Group s participation in the profit of the company and any dividends. Free cash flow Operating cash flow reduced by cash flow from financial items, taxes and the effect of restructuring measures on cash flow. Items affecting comparability The total of the restructuring costs approved by the Board of Directors and major nonrecurring items. Net debt Interest-bearing liabilities less interest-bearing assets and cash and cash equivalents¹. Net debt/ebitda Net debt divided by EBITDA. Operating cash flow EBITDA excluding other non-cash items, investments, sold non-current assets and changes in working capital. In the key figure, cash flow from items affecting comparability is excluded. Organic growth The sales growth in comparable exchange rates that is generated by the Group itself on its own merits and in the existing structure. An acquisition is reported only as organic growth if it is included in an equal number of months in the current period and the corresponding period of the previous year. Otherwise, it is reported as structural growth. Pro forma Pro forma calculations include total Group consolidation from the most recent 12-month period plus acquisitions and divestments in order to reflect current continuing operations. Return on capital employed, % EBIT divided by the average capital employed. Return on shareholders equity, % Profit for the period, attributable to shareholders of the Parent Company as a percentage of average shareholders equity, excluding noncontrolling interests. ¹The remaining receivable for the divestment of Vibracoustic is recognized as a financial receivable and thus impacts the Group s net debt. Published on July 2, 24(27)

25 TRELLEBORG AB SECOND QUARTER Glossary OEM (Original Equipment Manufacturer) A company that manufactures an end-product that can be sold on the open market. The product often consists of a combination of proprietarily manufactured and purchased components from suppliers that are assembled by the OEM company to make the final product. Plastics can be divided into two main groups: Thermoplastics are non-cross-linked plastics that are solid at room temperature but become soft and moldable when heated, and Hard plastics are cross-linked plastics that disintegrate upon heating and do not regain their properties. Polymer The word is derived from the Greek poly, meaning many and meros meaning parts. Polymers are made up of many small molecules monomers that are linked in long chains. Examples of polymers are plastics and rubber. Polymer technology The technology relating to manufacturing processes for polymers in combination with their unique properties. Seasonal effects The various market segments are subject to seasonal effects. Demand for the Group is normally higher in the first six months of the year than in the last six months. Published on July 2, 25(27)

26 TRELLEBORG AB SECOND QUARTER About Trelleborg Trelleborg is a world leader in engineered polymer solutions that 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. Within our selected segments, we have pioneered applied polymer-engineering and materials technology for more than a century. Local presence, global reach. Wherever we conduct business, our teams act both as a local partner and leverage our global strength and capabilities. Application expertise. We have leading-edge technology and in-depth understanding of the challenges our customers must overcome to seal, damp and protect their critical applications. Customer integration. We always make it easy to do business with us, by integrating closely with markets and customers through multiple channels. Business accelerator. We work as a proactive and long-term business partner, delivering solutions based on market foresight, contributing to better business for our customers Trelleborg s market segments: Business area/segment distribution General industry Oil & gas Transport equipment Agriculture Infrastructure construction Aerospace Capital intensive industry Light Vehicles Trelleborg Coated Systems 8% 2% 16% 18% 2% Trelleborg Industrial Solutions 56% 3% 19% 12% 34% 1% Trelleborg Offshore & Construction 51% 49% 1% Trelleborg Sealing Solutions 47% 2% 7% 3% 15% 27% 26% Trelleborg Wheel Systems 43% 57% 1% Rubena Savatech 89% 4% 4% 7% Total 36% 7% 17% 16% 8% 6% 54% 1% Net sales per market segment and business area based on Annual accounts, including a proforma calculation on acquisitions carried out in. The Trelleborg Group s operations Continuing operations Refers to operations within Trelleborg s five business areas: Trelleborg Coated Systems, Trelleborg Industrial Solutions, Trelleborg Offshore & Construction, Trelleborg Sealing Solutions and Trelleborg Wheel Systems, as well as the Rubena Savatech operation. In addition, it includes central staff functions. Group in total The above parts consolidated sum up to the Trelleborg Group in total. Discontinuing operations Refers generally to operations that have been discontinued or are in the process of being divested. The joint venture Vibracoustic s historical comparative figures are included here, for example. Published on July 2, 26(27)