Trelleborg (TREL) Q2 2024 earnings summary

Executive summary

• Organic sales grew 1% year-over-year, with net sales stable at SEK 8,711 million for Q2 2024.

• EBITA reached a record SEK 1,599 million, with a margin of 18.4%, the highest operational performance to date.

• Operating cash flow was SEK 1,190 million, impacted by higher capex and working capital, with cash conversion at 88% on a rolling twelve-month basis.

• Three acquisitions were completed: MNE Group (Korea), BP-Tech Group (Finland), and Baron Group (medical, finalized post-quarter).

• Share buybacks continued, reducing shares outstanding and supporting EPS growth.

Financial highlights

• EBITA increased 2% year-over-year to SEK 1,599 million, with a margin of 18.4%.

• Net profit from continuing operations grew 10% to SEK 988 million in Q2 2024.

• EPS from continuing operations (excluding items affecting comparability) was SEK 4.49, down 5% due to prior year non-recurring financial income.

• Net debt at quarter-end was SEK 1,981 million; net debt/EBITDA at 0.3.

• Return on capital employed was 12.7%, impacted by acquisitions with initially lower returns.

Outlook and guidance

• Q3 2024 demand expected to be somewhat higher than Q2, adjusted for seasonality.

• Full-year CapEx guidance at SEK 1.6 billion and restructuring costs at SEK 300 million; underlying tax rate guided at 25%.

• Margin target of 20% seen as achievable as markets improve and acquisition synergies are realized.

• Cautious optimism due to ongoing geopolitical uncertainties.