Trelleborg Business report FY2006

Business Highlights

Financial overview
SEK in million FY2006 FY2005 Rate 
of change
Sales 27,284 24,170 +12.9% Sales increased for all business areas. In 2006, the Group's net sales increased by 13 percent to SEK 27,284 m (24,170). And the organic growth for Q4 was 9% and for the full year 6%. The Group further strengthened its presence in new growth markets with sales growth of 24 percent in North and South America, 11 percent in Europe and 32 percent in Asia and the rest of the world. And 11 operations were acquired with combined sales of approximately SEK 3,200 m.
Operating profit 1,507 1,177 (34.9%) The operating profit improved for three of the four business areas, despite the substantial increase in costs of raw materials that impacted results during the year. It was generally possible to offset the increase in raw-material costs in all business areas, except for Trelleborg Automotive.
Sales 9,493 8,995 4.0% Trelleborg Automotive experienced an increase in volume. Growth was generally favorable within the AVS area, with strong growth in such operational areas as brake shims and vehicle boots. The business area expanded the operation in growth markets by moving production to a larger facility in India and expanding production in Korea, for example.
Operating profit 214 471 (54.6%) Operating profit declined, adversely impacted mainly by increased raw materials costs, a lower level of efficiency in Fluid & Acoustic Solutions and increased amortization of capitalized research and development expenses.

Action program within Trelleborg Automotive
An action program was initiated in November 2006. The program is expected to affect about 700 persons initially and measures include closure of a plant in Trowbridge, as well as personnel reductions in Europe. The transfer of resources from Western to Eastern Europe is part of the program, with investment in existing units in the Czech Republic, Poland and Romania. Also as part of this program, the closure of a plant in West Thurrock, in the UK, was announced in February 2007.

In January 2006, the Company acquired the remaining 70% of Elastomer Compounding s.r.o. (ECS) of the Czech from Rado of Germany. The Company has owned 30% of ECS since 1998. Synergies will be generated in the form of shared purchasing and cost-efficient supplies to existing units, primarily in the Trelleborg Building Systems and Trelleborg Automotive business areas, and the acquisition also supports Trelleborg Automotive s projected manufacturing plant in Romania.


R&D Expenditure
  2006 2005 2004 2003 2002
(SEK in million) 522 568 589 459 470
R&D Structure
- Trelleborg Automotive has five major testing facilities based in China, France, Germany, Sweden and USA. It also has a number of satellite test center to optimize product design close to the customer supply point.

Product Developments
Trilobe Boot : Combined a driving-gear boot and its outer casing as a single component. This reduces the number of parts, warehousing, leakage risk and warranty costs.

Applied Damping Material (ADM): is a damping material comprising two layers of steel with an intermediate layer of polymer material that results in a strong, durable laminate.

Creatub: is a fiber-reinforced hose for water cooling. It is produced with its final dimensions before vulcanization, reducing the number of steps in the manufacturing process.

Investment Activities

Capital expenditure

in million SEK FY2006 FY2005
Automotive 495 474
Group Total 1112 873

Overseas Investments

-At the beginning of 2006, a decision was made to expand operations in Korea during the first half of the year, further increasing production capacity.

-In 2006, the Company strengthened presence in Asia after a larger plant in India was placed in operation, increased production in Korea and R&D investments in Wuxi, China.