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  5. Trelleborg AB Business Report FY ended Dec. 2015

Trelleborg AB Business Report FY ended Dec. 2015

Financial Overview

(in million SEK)
FY ended Dec. 31, 2015 FY ended Dec. 31, 2014 Rate
of change (%)		 Factors
Overall
Net Sales 24,803 22,533 10.1 1)
Operating Profit 3,471 3,073 13.0 2)
Major automotive related segments
Trelleborg Sealing Solutions - Sales 8,242 7,584 8.7 3)
Trelleborg Sealing Solutions - Operating Profit 1,850 1,714 7.9 -
TrelleborgVibracoustic - Sales* EUR 1,942 million EUR 1,779 million 9.2 4)
TrelleborgVibracoustic - Operating Profit* EUR 162 million EUR 110 million 47.3 -
Other automotive related segments
Trelleborg Industrial Solutions - Sales 5,069 4,905 3.3 -
Trelleborg Coated Systems - Sales 2,432 1,794 35.6 -

*Sales and figures of TrelleborgVibracoustic are not consolidated into the Company's sales and are recognized under the equity method.

Factors
1) Net Sales
-The Company’s net sales increased by 10.1% in the fiscal year ended December 31, 2015 to SEK 24,803 million. While organic sales declined by approximately 2%, this was offset by the effects from structural changes which increased sales by SEK 530 million, or approximately 2%. Positive effects due to exchange rate fluctuations increased sales by SEK 2,100 million, or 10%.

2) Operating Profit
-In the fiscal year ended December 31, 2015, the Company’s operating profit increased by 13.0% to SEK 3,471 million. Despite generally weaker sales trends, operating profits grew due to positive currency effects, effective cost control measures, improved efficiencies, and acquisitions made during the year.

3) Sealing Solutions Sales
-Net sales for the Company’s Sealing Solutions segment increased by 8.7% to SEK 8,242 million in the fiscal year ended December 31, 2015. While net sales increased over the previous year due to positive currency effects, organic sales for the full-year period declined by approximately 1% compared to the previous year. Organic sales declined in Europe and North America, while organic sales increased in Asia.

4) TrelleborgVibracoustic Sales
-TrelleborgVibracoustic’s sales in the fiscal year ended December 31, 2015 increased by 9.1% over the previous year to EUR 1,942 million. The joint venture experienced organic sales growth of approximately 5% due to increases in sales in Europe, North America, and Asia.

Acquisitions

-The Company, through its Trelleborg Wheel Systems business area, signed an agreement and finalized the acquisition of Standard Tyres Group, a Brazilian privately owned industrial tire manufacturer. The company is the main supplier to locally based, global original equipment manufacturers of materials handling vehicles. The acquired business has its head office in Lorena and its manufacturing facility is located in Feira de Santana. Standard Tyres’ annual sales amounted to approximately SEK 100 million (USD 11.9 million) in 2014. (From a press release on December 1, 2015)

-The Company has signed an agreement to acquire CGS Holding a.s., a privately owned company with leading positions in agricultural, industrial and specialty tires as well as engineered polymer solutions. The cash considerations involved in the transaction is approximately SEK 10.9 billion (USD 1.25 billion). CGS is headquartered in the Czech Republic and generated sales of approximately SEK 5.6 billion (USD 641 million). The transaction is expected to be closed in the first half of 2016. (From a press release on November 9, 2015)

R&D Expenditure

(in million SEK)
FY ended Dec. 31, 2015 FY ended Dec. 31, 2014 FY ended Dec. 31, 2013
Overall 383 348 294

Product Development

Bellows technology for air springs
-The Company’s joint venture, TrelleborgVibracoustic, has developed a new bellows technology for air springs. The "ZAX bellows" combines the good torsion decoupling capability of axial bellows with the dimensional stability of cross-ply bellows. The new bellows technology will go into series production in 2015 on the rear axle of a number of new SUVs. (From a press release on February 13, 2015)

Dual-colored components made from liquid silicone rubber
-The Company’s Sealing Solutions business area developed an innovation which allows the production of two-colored components in Liquid Silicone Rubber from a single tool. Based on a request from a leading automotive manufacturer, this capability allows clients to more easily differentiate between geometrically similar products that are used for different platforms.

Capital Expenditure

(in million SEK)
FY ended Dec. 31, 2015 FY ended Dec. 31, 2014 FY ended Dec. 31, 2013
Overall 1,314 1,025 922
-Sealing Solutions 320 334 288

Investments Outside Sweden


-The Company’s joint venture, TrelleborgVibracoustic, inaugurated a new plant in the Hemaraj Eastern Seaboard Industrial Estate in Rayong, Thailand. The site produces engine mounts, chassis mounts, and body mounts for local customers such as Ford, GM, Nissan, and Volvo. Starting with 30 employees, the new plant will increase its workforce to approximately 200 employees in 2018. (From a press release on November 5, 2015)


-The Company has completed and began operations at a new facility in Mexico for the manufacture of thermoplastic elastomer (TPE) bellows for light vehicles.