Trelleborg Wheel Systems’ 2014 sales down as OEM production slows
The agricultural and industrial tyre and wheel unit, Trelleborg Wheel Systems (TWS) recorded five per cent lower organic sales in 2014, after original equipment manufacturers reduced equipment production. The decline in organic sales was not reflective of material handling vehicle industrial/specialist tyre and wheel sales, which Trelleborg said were slightly positive for the full year. Despite the reduced agricultural sales, operating profit for the unit rose to 504 million SEK (£38.84m), with margins also up from 11.7 to 12.1 per cent.
TWS explained that “effective cost control, good price discipline and a successful positioning on the market” had helped it to achieve these increases, despite lower sales. The manufacturer has established a position as one of the world’s premium brands within its niches, particularly within the agricultural segment.
Exchange rate effects had a positive impact of 20 million SEK on operating profit compared with 2013, while the manufacturer will commence production of agricultural tyres locally in the US in 2015, with the first deliveries estimated in “the latter part of 2015”.
TWS says that 2014 was distinguished by gradually deterioration in market conditions for agricultural tyres, resulting in sharp falls in the volumes of manufacturers of agricultural machinery. The manufacturer said that it expected the more challenging market climate, affecting around a quarter of the business area’s sales, to persist during much of 2015.
Fourth quarter reflects year’s figures
TWS’s fourth quarter similarly saw organic sales droop by five per cent year-on-year, though currency effects helped to mitigate this downturn somewhat. OE manufacturers’ lower production levels dropped, as did aftermarket sales, though TWS said that it had “outperformed the underlying market”, with market share increased “in selected sub-segments of agricultural tyre”.
In Europe, TWS saw material handling vehicle tyres perform “positively” during the quarter. In North America however, there were slightly lower organic sales. TWS was able to raise the operating profit to 103 million SEK (£7.94m) from 92 million SEK, with operating margin at 10.5 per cent compared with 9.6 per cent in Q4 2013. TWS said that this was down to “effective cost management, sustained price discipline and successfully integration of formerly made acquisitions.” Exchange rate effects from the translation of foreign subsidiaries also had a positive impact of 11 million SEK on operating profit.
Finally TWS noted the strengthening of its European industrial tyre distribution network after the close of the period, having acquired DG Manutention Services SAS (DGMS) in Marseilles.