Annual report 2011 - Trelleborg

PRESIDENT AND CEO PETER NILSSON
Record year and strengthened positions
2011 was a good year for the Trelleborg Group. Our focus on continuous improvement
continued at a brisk pace. We grew organically and acquired and divested operations, to
enhance leading positions in profitable segments and improve our geographic balance.
I am pleased to say that we achieved our financial targets for the Group and I wish to
extend my gratitude to all employees for their hard work throughout 2011.
We entered 2011 on the back of a year
marked by a steep recovery in the global
economy and increasing demand for our
products and solutions following the
severe recession of 2008-2009. Our
expectations for 2011 were reflected in
this, but looking back, I now realize that
these were somewhat cautious. The pace
of change has been rapid and 2011 was
a record year, despite the fact that not
all parts of the business achieved their
full potential.
Targets achieved
Demand for our products and services
was strong and Group sales amounted
to sek 29,106 m, representing an
increase of 7 percent. Consequently,
demand significantly exceeded our
predictions at the beginning of the
year and the Group achieved its
target for organic growth, amounting
to a strong 11 percent. Demand
remained favorable in our market
segments for much of the year, with
the exception of offshore oil & gas,
which displayed a decline in sales
compared with the preceding year. As
we look to 2012, however, the outlook
for the segment is better than it has
been for some time.
The strong development of our operating
profit reflects our focus on the
many steps toward continuous
improvement that is confirmed by
improved earnings as volumes rise.
Operating profit increased by more
than 19 percent to sek 2,431 m and
the operating margin was 9 percent
excluding items affecting comparability.
Through further growth, expansion
and the repositioning that Trelleborg
is currently undergoing, we are tying
up more capital in operations. Our
operating cash flow was satisfactory
and reached sek 1,655 m.
2 Annual Report 2011 Trelleborg AB
In addition to growth, we also surpassed
our target of a 12 percent EBITDA margin,
which was the combined result of the
right offering and hard work in the areas
of cost and rationalization. Together with
efficient capital utilization, this is the
reason why we attained our target
of a return on equity of 12 percent.
The continued improvement in our
balance sheet creates options and flexibility
that were not available to us a few
years ago in our efforts to enhance our
positions.
The Trelleborg of the future
But 2011 is now confined to history. Our
earnings prove that we are on the right
track and this is an important signal for
myself, and all who work at Trelleborg,
as we now move forward to continue
building the Trelleborg of the future.
The Trelleborg of the future is something
we create together each and every
day through small and large-scale endeavors
to continuously improve. This is
the cornerstone of our long-term value
creation for customers, shareholders
and the Group. It involves an emphasis
on organic growth, long-term development
of customer solutions and continuous
adaptation to customer demand.
It requires that we are also always aware
of and alert to cost trends, that we take
a balanced approach to risk-taking and
monitor financial progress. We believe
that there are continued opportunities
for profitable acquisitions.
Paths that influence
Trelleborg’s future
The Group’s history also bears witness
to strength and resolution in terms of
building future competitiveness through
more extensive and continuous structural
changes. Our planned joint venture
with Freudenberg is one such example.
It is the largest transaction measured in
terms of sales and number of employees
in Trelleborg’s modern history.
The exact effects of the joint venture
with Freudenberg will be a subject that
we will return to later in the year, but the
strategic effects are clear for the joint
venture and for Trelleborg. The joint
venture will command a world-leading
position in antivibration solutions for
light and heavy vehicles – a growing
segment in the automotive industry.
GRI: 1.1