Trelleborg Wheel Systems only “marginally affected” by organisational changes
Sweden’s Trelleborg Group is implementing organisational changes with the aim of improving profitability and focusing the company on selected segments. It says the intention is to “continue to develop and strengthen already well-performing and well-positioned business areas that have sizeable global businesses.” This will involve reducing the number of business areas from five to three, Trelleborg Wheel Systems is one of the three businesses under this structure.
The other two business areas in the new organisation are: Trelleborg Industrial Solutions, specialising in polymer-based niche applications and infrastructure projects; and Trelleborg Sealing Solutions, specialising in polymer-based sealing solutions. Trelleborg Coated Systems and Trelleborg Offshore & Construction will be discontinued as business areas. Dario Porta, Business Area president of Trelleborg Coated Systems, will leave Trelleborg’s Group management at year-end and become Business Unit president of the company’s printing blankets operations.
In addition to the three business areas, Trelleborg is creating a new reporting segment – this will be known as ‘Businesses under development’ and will be recognised separately from the business area structure. A number of operations will be transferred to the Businesses under development reporting segment.
Organisational changes in detail
Going forwards, Trelleborg Industrial Solutions will consist of its current operations, the engineered coated fabrics operations of Trelleborg Coated Systems and the operations of marine solutions and infrastructure projects of Trelleborg Offshore & Construction. In conjunction with the changes, certain operations will be transferred from Trelleborg Industrial Solutions to Businesses under development.
Trelleborg Sealing Solutions will be unaffected by the organisational changes.
Trelleborg Wheel Systems is only marginally affected by the transfer of its bicycle tyre operations to Businesses under development.
The new Businesses under development reporting segment will consist of: The printing blankets operations of Trelleborg Coated Systems; the oil & gas operations of Trelleborg Offshore & Construction; the Swedish and Estonian operations for specialty moulded components of Trelleborg Industrial Solutions; the Czech operations for specialty moulded components and technical rubber products of Trelleborg Industrial Solutions; the bicycle tyre operations of Trelleborg Wheel Systems.
Over the past 12 months, the operations now coming into Business under development had annual sales of approximately SEK 3,900 million (£311,500) and weak profitability. The respective operations will be operated independently and report to Trelleborg’s chief financial officer, Ulf Berghult, who will have overall responsibility for Businesses under development.
Impairment of capital employed
An impairment of capital employed amounting to SEK 3,200 million (£255,500) will be recognised in Trelleborg’s report for the fourth quarter. The impairment, with no cash-flow impact, is related to the operations contained in Businesses under development and is the result of the assets’ estimated future earnings trend. Restructuring the organisation will result in restructuring costs of SEK 50 million (£4.0 million), which will be distributed between 2019 and 2020.
“Considering the prevailing business trend for the operations in Businesses under development, we need to recognise impairments of SEK 3,200 million, which will impact earnings. However, this should not prevent the Group from making continued investments and bolt-on acquisitions,” said Ulf Berghult.
Dividend for 2019 unchanged
Trelleborg’s Board of Directors has assessed the proposed changes and believes they will not affect the Group’s dividend capacity. The Board thus intends to propose to the Annual General Meeting an unchanged dividend for the financial year 2019 of SEK 4.75 per share.
The new organisational structure will be reflected in Trelleborg’s report for the fourth quarter of 2019.