Trelleborg plans share-repurchase program, eyeing mergers, acquisitions

Trelleborg Group has revamped its portfolio and is now eyeing growth through mergers and acquisitions as well as investment in "high potential" segments.

Through M&As, increasing global its footprint and "speedboat accelerating" growth in certain segments, the Trelleborg, Sweden-based polymer group aims to increase sales by 5-8 percent, said Chief Financial Officer Fredrik Nilsson.

The Swedish group, meanwhile, aims to raise its earnings before interest and taxes (EBIT) margin to more than 16 percent "in the near term," Nilsson set out at a Dec. 2 capital market day presentation.

"We have a strong list of [acquisition] prospects, which we now like to turn into pipeline, and we are also allocating more resources internally to drive the M&A agenda," he said, noting that Trellebrog had identified 200 acquisition prospects.

In addition, the group's board has called an EGM for Dec. 28 to discuss a share-repurchase program to "adapt the group's capital structure" and deliver "shareholder value."

The goal, Nilsson said, is to repurchase its own shares of approximately $219 million-$328 million per year.

Also presenting at the event, President and CEO Peter Nilsson said the Swedish group continued to focus on "the good positions" offered by its three main segments: sealing solutions, industrial solutions and wheel systems.

In addition, he stated, Trelleborg aims to expand its presence in "speedboat areas" such as health care, medical, aerospace, green aviation, semiconductor business, e-mobility and sensor technology.

"We have had M&A ambitions, but we have not been able to execute. But we feel we have good prospects and are able to execute some M&As," the CEO said.

"The conditions are better than ever, both operationally, and thanks to trends such as increased electrification, digitization and industrial automation," he added.

As for the post-restructuring standing of Trelleborg businesses, Peter Nilsson said the sealing solutions segment was "like clockwork, running very well and is well balanced."

"The target here is to scale up and accelerate," he said adding that Trelleborg had no plans to change the structure of the segment.

Industrial solutions, noted Trelleborg's leader, was the unit most impacted by the portfolio changes and had "now become a better business.

"What we have in the Industrial solutions is only good businesses," he said, adding that new opportunities to enhance the unit had been identified through the restructuring.

"Here, we are what we call climbing the value ladder, which is to say that there is still room to add value," he added.

As for Trelleborg Wheel Systems, Peter Nilsson said the group had been building "a very efficient and good platform" over the past few years, which he said is now "ready for take-off.

"We have, this year, been exposed to heavy increases of raw material," he said. "The way the pricing works here is a bit delayed, but we think we will see solid improvement in this area quite soon."