Trelleborg (TREL) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales were SEK 8,442 million, flat year-over-year, with organic growth of 1%, M&A contributing 2%, and a 3% negative currency effect.

• EBITA declined 2% to SEK 1,464 million, with a margin of 17.3%, mainly due to currency headwinds and higher central costs from M&A activity.

• Operating cash flow was SEK 1,422 million, lower than last year due to higher CapEx and working capital investments.

• The Baron Group acquisition significantly strengthened the Medical Solutions segment, expanding product range and geographic reach.

• All business areas showed slight organic growth despite a weaker macroeconomic environment.

Financial highlights

• Earnings per share (excluding comparability items) fell 10% to SEK 3.78, mainly due to higher financial net.

• Net profit from continuing operations was SEK 836 million, down 8% year-over-year.

• Cash conversion remained strong at 85% on a rolling 12-month basis.

• Net debt at quarter-end was SEK 5.38 billion, with a net debt/EBITDA ratio of 0.8 and a debt/equity ratio of 13%.

• Return on capital employed (R12M) was 12.3%, slightly down due to acquisitions and investments.

Outlook and guidance

• Guidance for full-year 2024 was revised slightly lower, reflecting expected softness in machinery and fluid power segments, and earlier holiday shutdowns in Europe.

• Q4 2024 demand is expected to be slightly lower than Q3, with continued geopolitical uncertainty.

• CapEx for 2024 is guided at SEK 1.7 billion, up from SEK 1.6 billion, due to ongoing greenfield investments.

• Restructuring costs expected at SEK 300 million; amortization of intangibles at SEK 500 million; tax rate at 25%.

• Additional cost measures are planned for Q4 to address the weaker economic climate.