October December 206 Peter Nilsson, President & CEO Ulf Berghult, Chief Financial Officer
Highlights Business areas Financials Summary & Q 207 outlook Q&A 2 207-02-0
New platform - focus on profitable growth 206 highlights Organic Y/Y sales decline by 4 percent, mainly driven by expected lower project deliveries to the oil/gas segment Reported sales increase of 25 percent, mainly driven by the CGS acquisition Good market positions, cost control, F/X and contributing acquisitions improved the EBIT to the highest level for a fourth quarter to date Trelleborg s EBIT-margin at.3% impacted by integration of acquired businesses and exposure to depressed agriculture and oil/gas markets Strong operating cash flow, R2M cash conversion at 99 percent Two acquisitions adding annual sales of approx. SEK 690 M 3 207-02-0
Organic growth initiatives and acquisitions Recap of 206 events Acquisition of Schwab Vibration Control, a German and Swiss leading manufacturer of antivibration components and systems mainly for the rail market. The transaction was consolidated as of October, 206 Acquisition of subsidiary of CoorsTek, a U.S.-based subsidiary manufacturing precision seals mainly for the aerospace industry. The transaction was consolidated as of 2 November, 206 Launched Seals-Shop.com, an e-commerce platform focusing primarily on hydraulic seals for the MRO market and smaller OEM customers in Europe 4 207-02-0
Organic growth initiatives and acquisitions Post 206 events Agreement to acquire Carolina Seal, a U.S.-based distributer of polymer seals mainly to the transportation equipment market segment. The transaction is expected to be finalized in the first quarter of 207 Board decision of major investment in Trelleborg Wheel Systems tire operation in Serbia, to improve footprint and increase production capacity to accommodate additional future sales 5 207-02-0
New platform - focus on profitable growth Group financial highlights, 206 Net sales Sales: +25%; Organic: -4%; Structure: +26%; Currency 3% Earnings Highest EBIT to date Positive FX impact Integration of acquisitions Cash flow Strong operating cash flow R2M cash conversion at 99% Proposed DPS of SEK 4.25 SEK M 206 205 Change, % Net sales 7 434 5 927 25 Organic, % -4 0 Structural, % 26 2 Exchange rate, % 3 4 EBITA, excl. items affecting comparability 96 736 24 EBITA-margin, % 2.3% 2.4% -0. p.p. EBIT, excl. items affecting comparability 84 705 9 EBIT-margin, %.3.9-0.6 p.p. Items affecting comparability -8-90 Reported EBIT 723 65 8 Operating cash flow 2 33 854 56 Consists of restructuring charges of SEK -8 M (-90) 2 Continuing business 6 207-02-0
Highlights Business areas Financials Summary & Q 207 outlook Q&A 7 207-02-0
Ongoing measures brings higher earnings Trelleborg Coated Systems Organic sales: +5% Positive organic sales partly impacted by one-off project Coated fabrics growth in all regions but Asia Printing blankets growth on the back of good development in Asia SEK M 206 205 Change, % Net sales 67 602 Organic, % 5 0 Structural, % - 5 Exchange rate, % 6 6 EBIT 87 74 8 EBIT, % 2.9 2.3 0.6 p.p. EBIT higher as a result of higher sales and ongoing measures 8 207-02-0 Note: Excl. items affecting comparability
Mixed market conditions Trelleborg Industrial Solutions Organic sales: 0% Mixed market segment sales development strong sales to LV Low activity in oil/gas actions ongoing to adjust cost base Both Europe and North America declined, while Asia improved SEK M 206 205 Change, % Net sales 390 204 5 Organic, % 0-9 Structural, % 3 - Exchange rate, % 2 3 EBIT 55 4 0 EBIT, %.2.7-0.5 p.p. Unfavorable sales mix impacted EBIT-margin Schwab acquisition finalized 9 207-02-0 Note: Excl. items affecting comparability
Challenging market conditions Trelleborg Offshore & Construction Organic sales: -27% Market situation in offshore oil/gas remains challenging Mixed development in infrastructure projects EBIT-margin impacted by lower sales and adverse mix SEK M 206 205 Change, % Net sales 893 49-22 Organic, % -27 9 Structural, % 3 4 Exchange rate, % 2 7 EBIT 7 77-78 EBIT, %.9 6.6 4.7 p.p. Expected FY7 organic sales drop of ~0-20% - as per earlier guidance Continued uncertainty ahead ongoing actions to adjust cost base 0 207-02-0 Note: Excl. items affecting comparability
Back to organic growth Trelleborg Sealing Solutions Organic sales: +2% Mixed geographical and market segment development Moderate organic sales increase to general industry, automotive strong Solid development due to market positioning and operational control SEK M 206 205 Change, % Net sales 2 64 909 3 Organic, % 2-2 Structural, % 7 0 Exchange rate, % 4 5 EBIT 434 40 8 EBIT, % 20. 2.0-0.9 p.p. Consolidation of new acquisitions weighs somewhat on margins Acquisition of CoorsTek subsidiary plus launch of Seals-Shop.com 207-02-0 Note: Excl. items affecting comparability
Strong integration focus Trelleborg Wheel Systems Organic sales: 0%, but CGS boosting sales Agri OE sales decreased in Europe, but improved for us in N.A. and Asia Agri aftermarket sales increased marginally in all regions Industrial & construction tires slightly down; up in Europe but down in N.A. SEK M 206 205 Change, % Net sales 883 020 85 Organic, % 0-2 Structural, % 80 3 Exchange rate, % 5 4 EBIT 74 95 83 EBIT, % 9.2 9.3-0. p.p. EBIT impacted by seasonality, integration and inventory adjustments in line with customers 2 207-02-0 Note: Excl. items affecting comparability
Inventory adjustments solid order book Rubena Savatech Reported separately during a transition period - operations will be integrated into existing business areas in 207 Sales solid in a seasonally weaker quarter project business muted SEK M 206 Net sales 447 EBIT 3 EBIT, % 7.0 Inventory adjustments alongside customers underabsorption of fixed costs EBIT temporarily impacted Ongoing investment projects to increase production capacity and prepare for integration into Industrial Solutions and Coated Systems 3 207-02-0 Note: Excl. items affecting comparability
Highlights Business areas Financials Summary & Q 207 outlook Q&A 4 207-02-0
Sales growth driven by acquisitions Sales development 5 927 +25% 7 434 October - December [%] Organic -4 Structural 26 Currency 3 Total 25 5 6 24 803 +9% 27 45 January - December [%] Organic -5 Structural 5 Currency - Total 9 2M 5 2M 6 5 207-02-0
Structural and organic sales growth Target: 5-8% over a business cycle 25% 20% % 9 22 5% 0% 5% 0% -5% 5 2-0 2 3-2 -3 3 3 Q 4 Q2 4 Q3 4 4 Q 5 Q2 5 Q3 5 5 Q 6 Q2 6 Q3 6 6 Of which organic growth, %: Organic 0 2 - -3-2 -4 - -3 - -4-6 -5-4 growth: 6 207-02-0
CGS consolidation boosts sales development Sales per business area October - December January - December SEK M 206 205 Change % Organic % 206 205 Change % Organic % 67 602 5 Coated Systems 2 526 2 559 - -2 390 204 5 0 Industrial Solutions 5 93 5 7-2 893 49-22 -27 Offshore & Construction 3 467 4 33-20 -23 2 64 909 3 2 Sealing Solutions 8 559 8 302 3 883 020 85 0 Wheel Systems 6 354 4 35 47 447 - Rubena Savatech 063-6 Other items 339 505-75 -68 Eliminations -356-326 7 434 5 927 25-4 Continuing operations 27 45 24 803 9-5 7 207-02-0
Record sales through structural development SEK M 8 000 7 000 6 000 5 000 4 000 3 000 2 000 000 Sales development, R2M SEK M 30 000 27 500 25 000 22 500 20 000 7 500 5 000 2 500 0 2 Q 3 Q2 3 Q3 3 3 Q 4 Q2 4 Q3 4 4 Q 5 Q2 5 Q3 5 5 Q 6 Q2 6 Q3 6 6 0 000 Quarter (LHS) R2M (RHS) 8 207-02-0
Organic sales development by geography Picture distorted by project-related business Total Group Oct-Dec 6 Oct-Dec 5-4% 0% North America Share Oct-Dec 6 Oct-Dec 5 23% -4% -8% Western Europe Share Oct-Dec 6 Oct-Dec 5 47% -4% -2% Other Europe Share Oct-Dec 6 Oct-Dec 5 9% 0% 9% Asia & Other markets Share Oct-Dec 6 Oct-Dec 5 7% -2% % South and Other America Share Oct-Dec 6 Oct-Dec 5 4% -25% 7% Share = Actual 206 9 207-02-0
Organic sales development by geography Organic sales excl. project-related business Total Group Oct-Dec 6 Oct-Dec 5 2% -2% North America Share Oct-Dec 6 Oct-Dec 5 24% -6% -7% Western Europe Share Oct-Dec 6 Oct-Dec 5 49% 0% -2% Other Europe Share Oct-Dec 6 Oct-Dec 5 % 6% 9% Asia & Other markets Share Oct-Dec 6 Oct-Dec 5 4% 9% -2% South and Other America Share Oct-Dec 6 Oct-Dec 5 3% 23% % Share = Actual 206 20 207-02-0 Project deliveries refer to the whole of Trelleborg Offshore & Construction and minor parts of Trelleborg Industrial Solutions operations
Record EBIT, despite mixed markets EBIT development EBIT EBIT-margin 705 +9% 84.9% -0.6.3% Oct - Dec 5 6 5 6 +9% -0. 3 29 3 496 3.0% 2.9% Jan - Dec 2M 5 2M 6 2M 5 2M 6 2 207-02-0 Excluding items affecting comparability
Record EBIT, despite mixed markets Group EBIT per business area October - December January - December SEK M 206 205 Change % 206 205 Change % 87 74 8 Coated Systems 323 37 2 55 4 0 Industrial Solutions 54 560-3 7 77-78 Offshore & Construction 08 99-46 434 40 8 Sealing Solutions 903 885 74 95 83 Wheel Systems 720 468 54 3 - Rubena Savatech 2 - -57-83 Other items -2-20 84 705 9 Continuing operations 3 496 3 29 9 22 207-02-0 Excluding items affecting comparability
Fifteen quarters of improved profits EBIT and margin, R2M MSEK 4 000 3 500 3 000 2 500 2 000 500 000 500 % 6 4 2 0 8 6 4 2 0 2 Q 3 Q2 3 Q3 3 3 Q 4 Q2 4 Q3 4 4 Q 5 Q2 5 Q3 5 5 Q 6 Q2 6 Q3 6 6 0 ROS % EBIT 23 207-02-0 Excluding items affecting comparability
Total Group Profit & Loss statement October - December SEK M January - December 206 205 Change % 206 205 Change % 84 705 9 EBIT, excl. items affecting comparability 3 496 3 29 9.3%.9% -0.6 p.p. EBIT-margin 2.9% 3.0% -0. p.p. -8-90 Items affecting comparability -39-257 723 65 8 EBIT 3 05 2 962 5-53 -43 Financial income and expense -209-53 670 572 7 Profit before tax 2 896 2 809 3-5 -32 Tax, Group total -680-73 59 440 8 Net Profit, continuing operations 2 26 2 096 6 0 04 Net Profit, discontinuing operations 4 369 509 59 544-5 Net Profit, Total Group 6 585 2 605 53 24 207-02-0 Refers to Vibracoustic
EPS increased by 9 percent, due to acquistions and restructuring measures Earnings per share fourth quarter 2.5 2.0.5 % 2.00-4%.92.62 +9%.92.84 +2% 2.23.0 0.5 0.0 Group, Total Continuing operations Continuing operations excl. items affecting comparability 5 6 25 207-02-0
Cash flow driven by higher earnings and WC improvements Operating cash flow 73 33 236 68 854 5 EBITDA 2 Net capex Working capital 6 26 207-02-0 Excluding items affecting comparability 2 Including other non cash flow affecting items
Improved cash conversion Operating cash flow, R2M MSEK % 4 000 20 3 500 3 000 2 500 96 00 97 96 83 92 90 88 90 78 78 77 7 76 83 89 99 00 80 2 000 60 500 40 000 500 20 0 2 Q 3 Q2 3 Q3 3 3 Q 4 Q2 4 Q3 4 4 Q 5 Q2 5 Q3 5 5 Q 6 Q2 6 Q3 6 6 0 Cash conversion % Operating cash flow 27 207-02-0 Excluding items affecting comparability
Recent acquisitions increase net debt Net debt development -8 369-6 409-6 425-5 360-5 637-7 95-6 282-2 706-2 25 2008 2009 200 20 202 203 204 205 206 28 207-02-0 Total Group
Somewhat increased gearing level Net debt / EBITDA R2M and gearing development 40 20 % 24 7 6 X 6.9 00 80 68 5 4 4.3 60 40 53 48 38 38 40 34 48 3 2 2..8.4.8.9.4.4 20 0 08 09 0 2 3 4 5 6 0 08 09 0 2 3 4 5 6 Net debt / Equity Net debt / EBITDA 2 29 207-02-0 Total Group 2 206 includes capital gain from Vibracoustic divestment
Total leverage reduced by Vibracoustic capital gain Net debt / EBITDA, R2M 3.0 2.5 X +80% 2.7 2.5 2.0.5.4 0%.4.5.0 0.5 0.0 Group, Total Continuing operations excl. items affecting comparability Proforma continuing operations, incl. items affecting comparability and acquisitions 2 5 6 30 207-02-0 206 includes capital gain from Vibracoustic divestment 2 The proforma calculation is based on available information with a certain degree of uncertainty as regards to differences in accounting principles and methodology
ROE to improve once CGS is included for a full year Return On Equity, R2M 32 % +5.8 30. 4 2 0 4.3.5 -.4 0. 2.5 -..4 8 6 4 2 0 Group, Total Continuing operations Continuing operations excl. items affecting comparability 5 6 3 207-02-0 206 includes capital gain from Vibracoustic divestment
Financial guidelines for full-year 207 Capex: SEK ~,500-,700 M Restructuring costs: SEK ~350-450 M Underlying tax rate: ~26% Amortization of intangible assets : SEK ~300 M 32 207-02-0 Major part explained by purchase price allocation (PPA)
Highlights Business areas Financials Summary & Q 207 outlook Q&A 33 207-02-0
New platform - focus on profitable growth 206 highlights Organic Y/Y sales decline by 4 percent, mainly driven by expected lower project deliveries to the oil/gas segment Reported sales increase of 25 percent, mainly driven by the CGS acquisition Good market positions, cost control, F/X and contributing acquisitions improved the EBIT to the highest level for a fourth quarter to date Trelleborg s EBIT-margin at.3% impacted by integration of acquired businesses and exposure to depressed agriculture and oil/gas markets Strong operating cash flow, R2M cash conversion at 99 percent Two acquisitions adding annual sales of approx. SEK 690 M 34 207-02-0
Continued focus on growth and excellence 207 priorities Manage uncertain market conditions Continued focus on innovation, profitable growth, selected segments and geographies Manage margin development through operational excellence and improved customer integration Continued portfolio management to improve leading positions Integration of CGS and other recent acquisitions 35 207-02-0
Outlook Q 207 Demand is expected to be slightly improved compared with the fourth quarter of 206, adjusted for seasonal variations 36 207-02-0
Highlights Business areas Financials Summary & Q 207 outlook Q&A 37 207-02-0
38 207-02-0