Trelleborg AB: Interim report January-March 2024

Improved margin despite somewhat lower sales

"Organic growth decreased by 3 percent while structural changes led to a 2-percent reduction in sales. The Easter holiday fell during the first quarter of the year, which meant fewer workdays than the preceding year. This impacted organic growth negatively by close to 2 percent.

EBITA, excluding items affecting comparability, decreased 2 percent, but the corresponding margin improved to 18.1 percent (17.5). Operating cash flow improved significantly compared with the preceding year.

Organic sales for Trelleborg Industrial Solutions slowed somewhat. The construction industry remains under pressure in several markets, and we also noted weaker demand in certain industrial segments. Meanwhile, project transactions for LNG-related solutions continued to grow significantly, and sales to the automotive industry were also positive. Despite the somewhat lower volumes, the margin and return on capital employed continued to improve, primarily due to operational and structural improvements as well as a positive sales mix.

During the quarter, we established Trelleborg Medical Solutions, a new business area focusing on healthcare and medical. At the same time, we signed an agreement to acquire Baron Group, a leading Australian-Chinese manufacturer of advanced precision silicon components. This acquisition strengthens our application expertise and manufacturing capacity and positions us as a leading global partner in medical devices.

Trelleborg Medical Solutions is currently experiencing a challenging market. The aftermath of the pandemic has led to a protracted period of destocking in the medtech industry, and we have now also been affected by significant destocking by a few major customers. We believe that this will continue for at least another quarter. However, underlying demand remains healthy, and we expect a much stronger second half of 2024.

Organic sales for Trelleborg Sealing Solutions declined slightly, with the Easter effect explaining the absolute majority of this decrease. Organic sales to general industry declined overall, although development in Asia was positive. Deliveries to the automotive industry were unchanged, while sales to the aerospace industry continued to increase sharply. As previously communicated, acquisitions with lower margins have impacted profitability. The integration of Minnesota Rubber & Plastics is continuing and the work to achieve synergies from this major acquisition will gradually result in higher sales and profitability in the years ahead.

For several quarters now, we have noted that the performance in several market segments is more subdued. At the same time, we have quickly adapted those parts of the Group that are impacted by the lower demand. We, therefore, see it as a sign of strength that we were able to display a margin improvement despite lower volumes during the quarter. Our long-term efforts to improve the Group's structure mean that our margin target of 20 percent will be well within reach.

Earnings per share improved by 16 percent due to the ongoing share repurchase program and lower financial expenses. The Group's strong balance sheet allows for the continued repurchase of shares, and we will continue to invest in organic capacity-increasing initiatives and acquisitions in selected fast-growing niches. Our general assessment of the current situation is that demand in the second quarter will be on a par with the first quarter", says Peter Nilsson, President and CEO.

First quarter 2024 - continuing operations

• Net sales for the quarter declined 5 percent to SEK 8,234 M (8,711). Organic sales declined 3 percent compared with the preceding year, structural changes reduced sales by 2 percent and currency was unchanged compared with the preceding year.
• EBITA, excluding items affecting comparability, decreased 2 percent to SEK 1,490 M (1,528). The EBITA margin was 18.1 percent (17.5).
• Operating cash flow amounted to SEK 718 M (549), up 31 percent. The cash conversion ratio for the most recent 12-month period amounted to 95 percent (75).
• Items affecting comparability for the quarter totaled SEK -55 M (-49) and pertained to restructuring costs.
• EBITA, including items affecting comparability, amounted to SEK 1,435 M (1,479) for the quarter.
• Earnings per share for continuing operations, excluding items affecting comparability, amounted to SEK 4.23 (3.66),
  up 16 percent. The improvement is attributable to lower financial costs and the ongoing share repurchase program.
• For the Group as a whole, earnings per share were SEK 4.06 (5.33). The comparable figure in the year-earlier period included a contribution of SEK 1.81 from discontinuing operations.
• Trelleborg Group has decided to establish a new business area, Trelleborg Medical Solutions, in order to increase focus on healthcare & medical.
• The key figures in this report relate to continuing operations, unless otherwise stated.

Market outlook for the second quarter of 2024
Demand is expected to be on a par with the first quarter of 2024, 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 February 2, 2024, relating to 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.

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 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 three business areas: Trelleborg Industrial Solutions, Trelleborg Sealing Solutions and Trelleborg Medical 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 2024-04-24 13:00 CEST.