Trelleborg AB: Interim report and year-end report 2023

A solid end to the year

"2023 was Trelleborg's best year to date, with the Group reporting its highest sales and earnings on record. During the year, we transformed and improved Trelleborg in a number of ways. We established the platform that we will continue to build on and which is characterized by higher growth and profitability. At the same time the business has become less cyclical and gained a better sustainability profile.

During the fourth quarter, sales increased by 4 percent. Organic sales remained unchanged and acquisitions contributed 3 percent. EBITA, excluding items affecting comparability, increased 6 percent, corresponding to an operating margin of 16.9 percent. Both sales and EBITA, with corresponding margin, were the best to date for a fourth quarter and represented a solid end to the year.

Trelleborg Industrial Solutions reported organic sales for the quarter that were marginally lower year-on-year. This minor decline was primarily due to lower sales in Asia and weaker construction markets. In contrast, sales to the marine segment remained strong, mainly supported by larger project transactions, while deliveries to the automotive industry increased. It was particularly gratifying that the business area further improved its profitability.

The performance of Trelleborg Sealing Solutions' market segments also varied. Overall, organic sales increased slightly year-on-year. The organic trend was primarily due to price adjustments for customers. Sales to general industry were weaker in Europe and North America. Deliveries to the automotive industry developed positively, while sales to healthcare & medical slowed slightly due to inventory adjustments among customers. Deliveries to the aerospace industry continued to perform strongly.

The integration of the acquired Minnesota Rubber & Plastics is progressing according to plan. A range of initiatives are in progress that will lead to greater sales synergies over time. During the quarter a new state-of-the-art facility was inaugurated in Vietnam, which will strengthen Trelleborg Sealing Solutions' presence and capacity, primarily in Southeast Asia.

In December, we signed an agreement to acquire the South Korean MNE Group, a leading manufacturer of precision seals for semiconductor production equipment. The acquisition brings new technology and provides a base in Asia in this attractive segment.

We maintained a high level of investment activity during the year in the form of new capacity and expansion of our presence in selected geographies and market segments. In 2024, we will continue to invest at a high rate. We will focus on fast-growing segments, for example aerospace, healthcare & medical, semiconductors and other selected industrial niches.

We find ourselves in a somewhat cooler macro environment compared to the beginning of 2023. However, the Group stands well equipped with a very strong balance sheet that enables both value-creating acquisitions and continued share repurchases. We look to the future with confidence.

Our general assessment in the current situation is that demand in the first quarter will be on a par with the fourth quarter", says Peter Nilsson, President and CEO.

Fourth quarter 2023 - continuing operations

• Net sales for the quarter increased 4 percent to SEK 8,421 M (8,113). Organic sales were unchanged compared with the preceding year, while structural changes increased sales by 3 percent and currency by 1 percent.

• EBITA, excluding items affecting comparability, increased 6 percent to SEK 1,424 M (1,340). The EBITA margin was 16.9 percent (16.5). Earnings and the margin were the highest to date for a fourth quarter.

• Operating cash flow amounted to SEK 1,321 M (1,678), down 21 percent. This was the second highest operating cash flow for a fourth quarter. The cash conversion ratio for the most recent 12-month period amounted to 92 percent (74).

• Items affecting comparability for the quarter were SEK -260 M (-115) and pertained to restructuring costs of SEK -173 M (-115) and a capital loss from the divestment of a US offshore oil & gas operation of SEK -87 M, in line with what was previously communicated.

• EBITA, including items affecting comparability, amounted to SEK 1,164 M (1,225) for the quarter.

• Earnings per share for continuing operations, excluding items affecting comparability, amounted to SEK 4.08 (3.40), up 20 percent. For the Group as a whole, earnings per share were SEK 3.40 (4.66). The comparable figure in the year-earlier quarter includes a contribution of SEK 1.68 from discontinuing operations.

• The Board of Directors proposes a cash dividend of SEK 6.75 per share (6.00).

• The key figures in this report relate to continuing operations, unless otherwise stated.

Full-year 2023 - continuing operations

• Net sales for the full-year 2023 increased 14 percent to SEK 34,286 M (30,095). Sales were the highest to date for a full year. Organic sales increased 2 percent, while structural changes increased sales by 7 percent and currency movements by 5 percent compared with the preceding year.

• EBITA, excluding items affecting comparability, increased 13 percent to SEK 6,002 M (5,334), corresponding to an EBITA margin of 17.5 percent (17.7). Earnings were the highest to date for a full year.

• Items affecting comparability were SEK -614 M (-241) and pertained to restructuring costs of SEK -527 M (-381) and a capital loss from the divestment of a US offshore oil & gas operation of SEK -87 M (2022 included a capital gain from the sale of assets of SEK 140 M). The relatively higher restructuring costs for 2023 are mainly attributable to adjustments to lower demand.

• Earnings per share, excluding items affecting comparability, amounted to SEK 16.64 (13.80), up 21 percent. For the Group as a whole, including discontinuing operations, earnings per share were SEK 40.24 (19.94), mainly impacted by the capital gain from divestments of the Group's tire and printing blanket operations. These were divested in the second quarter of 2023.

• Operating cash flow amounted to SEK 5,063 M (3,732), up 36 percent. This was the highest operating cash flow to date for a full year. The cash conversion ratio was 92 percent (74).

Market outlook for the first quarter of 2024
Demand is expected to be on a par with the fourth quarter of 2023, adjusted for seasonal variations. The geopolitical situation entails a heightened degree of uncertainty. For further information, refer to page 12.

Market outlook from the interim report published on October 26, 2023, relating to the fourth quarter of 2023
Demand is expected to be on a par with the third quarter of 2023, adjusted for seasonal variations. The geopolitical situation entails a heightened degree of uncertainty.

Dividend 2023
The Board of Directors proposes a cash dividend of SEK 6.75 per share (6.00).

This is a translation of the company's Interim Report in Swedish.

Contacts
Media: Vice President Communications Tobias Rydergren, [phone], [phone], [e-mail]
Investors/analysts: Vice President IR Christofer Sjögren, [phone], [phone], [e-mail]

About Us
Trelleborg is a world leader in engineered polymer solutions that seal, damp and protect critical applications in demanding environments. Its innovative solutions accelerate performance for customers in a sustainable way. In 2023, The Trelleborg Group had annual sales of approximately SEK 34 billion in around 40 countries. The Group comprises two business areas: Trelleborg Industrial Solutions and Trelleborg Sealing Solutions. The Trelleborg share has been listed on the Stock Exchange since 1964 and is listed on Nasdaq Stockholm, Large Cap. www.trelleborg.com

This information is information that Trelleborg is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2024-02-02 07:45 CET.