Trelleborg, Sweden – Trelleborg managed costs in the third quarter of 2020 and was able to increase earnings, despite falling sales.
Overall sales were SEK7.7bn ($888.2m) in the third quarter, up 12.3% on the same period last year. EBIT reached SEK919m in the third quarter of 2020, 1% more than last year.
Nilsson: Second quarter was very challenging
'The stable level of earnings, given the circumstances, was achieved through a strong focus on strict cost control and good price discipline,' said CEO Peter Nilsson.
As far as polyurethanes are concerned, the biggest increase in EBIT came from the wheel systems business. Lower production and tight cost controls drove it up by 83% between Q3 2019 and 2020. In the most recent quarter, it reached SEK272m, on sales which were down 5% at SEK2.1bn. In the third quarter of 2019, sales were SEK2.2bn.
Nilsson said this was a result of deliveries of agricultural tyres to both OE manufacturers and aftermarket sales. ‘Sales of tyres for material handling and construction vehicles remained weaker,' he said.
Slowdowns in the construction and infrastructure sectors compared to the third quarter of 2019 hit led to a 13.5% fall in sales at the company's industrial solutions business, to SEK2.4bn in the most recent quarter. This compares with SEK2.7b in the equivalent period in 2019.
EBIT in the division fell by 9.3% to SEK262m in the third quarter of 2020. This compares with SEK289m in the equivalent period in 2019. Lower sales volumes because of coronavirus could not be offset by cost controls, with earnings suffering as a result. A stronger kroner made matters worse for the division.
Deliveries from the sealing solutions business to the aerospace industry were halved, contributing to a 15.8% fall in sales to SEK2.5bn in the third quarter of 2020. This compares with SEK2.98bn in last year's quarter.
Divisional EBIT fell 32.0% to SEK454m in the third quarter of 2020. The dramatic fall was because the business could not react sufficiently fast to the parts of its market that closed, leaving excess capacity. Trelleborg said it expects to sort this out next year.
It was not all bad news from the business, although there was a dramatic fall in aerospace demand. 'Sales to both general industry and the automotive segment improved, compared with the sharp fall during the second quarter. China stood out, in particular, with a positive trend,' Nilsson said.
Looking ahead, he added: 'We foresee a tougher climate during the fourth quarter of the year, not least in the oil & gas segment, and a recovery in the aerospace segment will not occur until further into the future. Demand for the fourth quarter will be on a par with the third quarter.'
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