Trelleborg AB (publ)

welcome to the trelleborg q4 2024 report presentation for the first part of the presentation participants will be in listen only mode during the questions and answers session participants are able to ask questions by dialing hash 5 on their telephone keypad now i will hand the conference over to ceo peter nielsen and cfo frederick nielsen please go ahead thank you and peter speaking

I want to start by welcoming all of you to this run through or presentation of our end of the year results with the specific focus on Q4 and I will start Peter Nilsson who is let's say the CEO of Trelleborg and also supplemented in this call by Fredrik Nilsson our group CFO And also supporter for us, also Christopher Sjögren, Head of Investor Relations is also here if there is any questions which needs his attention. As usual, we have a slide deck on our homepage and we're going to use that as a guidance to the call. So that is what I'm going to refer to. So using that as a reference, turning to page two in this slide deck agenda, normal agenda for us. starting with the highlights in the quarter some highlights for each of our three business areas Fredrik will then guide us through the financials and then we are summing up with the summary of the quarter and also some comments on the outlook for the running quarter and then finishing off as already told by the introducer ending with the Q&A session so turning them to page three in the deck heading for this quarter, growth with enhanced profitability, a very slim growth, but nevertheless growth. Sales is increasing in the quarter by 4%, organic ending up slightly better than we kind of anticipated going into the quarter, driven then primarily by increased project sales, as we call, which is more one-time projects, Some of them bigger we ended up with higher invoicing than we kind of expected before the quarter in the quarter Particularly and relate to our business areas industrial solutions M&A also with satisfaction when we see that the M&A is bringing in 3% and get back to that later as well and we have been concluding a few Bolton acquisitions in the quarter and we see that this is a very good good add-on to our existing business, which is already kind of strengthening our already strong positions currency no impact in the quarter on the sales level EBIT A ending up then at almost 1.6 billion Swedish and which then gives us a margin of 18.1 percent which is more than one percentage was up compared to a year ago on basically flat sales which means that we are happy to see that we're actually running the operations in a better kind of operational way than we did last year. Items affecting comparability in line with guidance ending up then at 76 in the quarter. Very strong cash flow, actually the strongest cash flow quarter ever for us in this structure and that is also with satisfaction well managed. by my colleagues in the group, good management of working capital. And we have to notice also that this cash flow is being delivered, although we continue to invest on a record high level for Trelleborg. So very happy with the cash flow, very happy with the management of the balance sheet. A dividend up, increasing the dividend with the same amount as last year. up to Swedish 750 also already noted we also announced a few add-on acquisition Maggi I get back and comment on that and Mampai and also we finalized this acquisition of CRC in Alabama in US in ceiling solutions so a great quarter in many ways it's not a lot of extras in the quarter if I would say but I mean a good push in sales good management of the costs, good management also on the margin side in terms of sales and contribution, good management for purchasing, so overall a very good operational quarter for us, which is creating a great foundation to move on from this level. Turning to page four, organic sales, as you note it is kind of mixed, Europe down, in the quarter get back in comment on that but by that's a business area business area but a little bit challenging in parts of the business in Europe but we also have to say this is also coming from kind of portfolio actions in order to improve margin improve long-term positioning. North and South America flat is minus one also there is a mixed mixed let's say underlying market overall ending up at minus one and then a very strong development in asia for us which is basically coming from all the major economies but japan's we have strong growth in china strong growth in india strong growth in korea where korea then is coming you know we have some Semiconductor exposure there which is delivering well but primarily also coming from continued build out on the marine sector related both to kind of ship building but also LNG development which is a lot of that happening in Korea. India basically all across development good development in most segments in India. And all in all this is of course with great satisfaction We we note that we continue to grow in Asia and the share of sales from Asia is increasing in relation to total Trelleborg all in all with this mixed picture of minus 5 minus 1 and plus 19 ending up with plus 1 for the group Turning then again page 5 agenda business areas and then quickly moving to page 6 and where we comment on industrial solutions, good growth and higher margins, good organic sales, 4% up, M&A also adding another percentage points. Already noted good project deliveries in marine segments spurred by larger projects and in this as a marine definition there is also a few sub-segments of the marine which is related to LNG and oil and gas which is also pushing this segment in a good direction. Continue to struggle in the construction segments I mean it might be that is flattening out in Europe and we see some kind of see the down of that cycle that is what we see but we see continued push down in North America and that is primarily related to an area which we have we call facade seals which is kind of basically used when you build the bigger constructions and that is kind of where we see a substantial downturn in North America which is of course hitting us as well automotive in a way we say somewhat weaker but I mean overall is still continuing to be slightly better than we kind of expected and also here well managed and we in our niche positions that we have we continue to grow market share which is somewhat kind of compensating for the somewhat more challenging overall market related automotive. Overall this mixed picture managed well by our colleagues in industrial solutions and these higher sales and then in combination with continuous never-ending structural improvements is then getting us into let's say a better profit and better margin last year and we should also in this even though we don't have any slide that for those of you following Trelleborg knows also that we have some extraordinary good sales a year ago related to this project specific project which we talked about related to the Panama Canal and this is not in the figures this year and then that is also why we are kind of extra It's extra satisfactory to see that we can compensate for this, although we do not have the same kind of business this year as a year ago. Also in the quarter acquisition, a smaller acquisition, Mampai, a Dutch company with a very global exposure, which is a nice add-on to us in our what we call birthing and mooring operation. related to the marine segments so that is a nice very nice add-on which is strengthening a very strong position and creating some new inroads to some specific end markets where mampai is kind of very supplementary to what we already have so it's a good delivery on industrial solutions continued good delivery and continue this small uptick in margin which we have seen for several years now turning to page seven Medical solution our kind of newest business area big jump in profitability coming down from integration of Baron primarily but also from Good underlying development. I mean we have to note that this is still very much a business area in construction so so behind the scenes Of this what you see in this slide. We still have a lot of kind of construction work ongoing recreating new new positions and we're building kind of a new structure in order to create kind of a long-term success for these business areas but looking at the development in the quarter organic sales is still flattish as you see somewhat better in Europe somewhat weaker in North America but honestly not that much difference we still note that there are some kind of inventory reduction at some customers and it's kind of a mixed portfolio looking at the different segments and different different customers but overall once again we're ending up at the zero organic growth we note that life science which is for us in this biopharma segment is somewhat growing it's a small part of medical solutions as of today but it's in part of medical solutions so we see great possibilities and we of course with that background satisfactory to see that we see that this segment growing up again after being pushed down quite a lot let's say post COVID but now we see some signs of bounce up again EBITDA and margin increased um yeah mainly due to the baron group is how many substantial add-on and we once again satisfactory integration good synergies and a good structure being put in place to to continue to benefit for from this also going forward There was a note, which I already started with here, where we have quite a lot of new units coming on screen. We're investing on capacity in Malta, we're investing in capacity in Switzerland, putting up a new factory in Costa Rica, investing also quite a lot related to Biofarma in our, let's say, Boston facility. So a lot of activity ongoing here behind the scenes in order to develop a structure which once again we will benefit from long term and we still do not see in the figures here the kind of benefit we will have of being a very global supplier in this area. So a good start of the business area in line with our expectations but more to come especially related to sales growth but with that comment we must also note that for Q1 running Q1 there will be a somewhat let's say push down in sales and that is mainly related, Baron exposure is mainly related to China and Australia and for those of you aware then of course we have Chinese New Year coming here which is going to impact the operations in Baron in China and then we have Australia Day in Australia which is going to take away another week or something in Australia so it will be a somewhat lower run rate for medical solutions in Q1 compared to Q4. But I mean get back on that and I can show that Fredrik can guide you through a little bit more on that one. Turning to page 8. Here we call stable despite challenging markets. We are actually rather satisfied with the development of ceiling solutions. There is some of the kind of core segments of ceiling which is still being challenged. Here we have what we call diversified industry, which is related to off-highway construction equipment, which is still somewhat depressed in demand. And we also here have an impact from the auto decline. So there is some core segments of this one which has been pushed down, especially in Europe and North America. Here we're doing good in Asia, which continued bounce back and we continue to grow substantially in Asia actually here in the quarter, which is then balancing the somewhat more negative development in Europe and North America. Aerospace continues to do very well. I mean we know that we had these issues at Boeing for instance but we have not really been impacted by that on the sales level and we continue to have a good order intake and we continue to see good prospects for aerospace here also going into 2025. All in all, as I said, mixed picture in demand but well managed also here. I mean credit to our colleagues in Sealing Solutions. They are managing this somewhat mixed picture in a good way and we managed to deliver a margin in line with last year with a slight increase in EBITDA. Also in this area we have to note that we have several greenfield projects ongoing. We have a high activity level in new factories and expansions which is also of course creating some attention on that one but nevertheless also in that aspect well managed and we don't really see it in the operational delivery in the business area. Acquisition of Magee, a good acquisition for us, a bolt-on acquisition in aerospace which is kind of widening our exposure into new sub-segments of the aerospace industry which we also see it's not big but it is a good add-on and it's going to be beneficial for us in several aspects both in the aftermarket fair space but also in the OE sector of the aerospace. We also have this earlier announced acquisition of CLC finalized in the quarter which means that we now can push fully to integrate this acquisition which is going to strengthen us primarily in the southern part of the U.S. in the Alabamas, Louisiana, and of course then you know it's going to be some oil and gas related activities, but also down there, some kind of sub-segments related to that. So that's an area of U.S. where we have had a little bit sub or let's say under representation, and we hope that the CSE, and we firmly believe that CSE will, let's say, create, let's say, better opportunities for them. Turning to page nine a few comments on sustainability. We continue to improve and as you see it's a substantial improvement in CO2 emissions year on year. Slight up on quarter on quarter but that is kind of seasonality related then we continue to see good progress on this and we're actually getting down to fairly low numbers overall for CO2 and we need to Of course, we will continue to improve, but I mean, of course, we will not be able to see the same steps as we have had before in these aspects. But high attention, good activities ongoing and a very structured approach to improve it in all parts of Trello board. Page 10, major... part here as well. Our share of renewable and fossil-free electricity is improving. We are now up to 88%. Of course, there is some way to go, but we cannot really go 100%. There is some limitations in a few countries where we actually cannot buy renewable or fossil-free electricity. But we feel certain that we're going to get almost to the maximum here in 2025 and where we can get with the current, let's say, available electricity. So well managed also in this aspect. be pushing forward and without any kind of cost increase also if you'd have that that is well managed in all aspects also related to this part of Trelleborn turning to page 11 agenda slide financials and then page 12 and Fredrik's turn to give us some guidance thank you Peter let's then move to page 12 and look at the sales development

organic sales increased by one percent with organic growth in industrial solution four percent as peter mentioned flat developed in medical solutions and a small decrease of one percent for a ceiling solution if you're looking at the report net sales up four percent from eight billion four hundred twenty one million to eight billion seven hundred eighty three million As just mentioned, organic sales up one and structural changes added 3%. And then there was no net impact from currency in the quarter. If we then look for the full year, we saw a flat sales development year over year. Moving on, page 13, showing the historical sales growth. You can see that the fourth quarter was below on our sales growth target, but it was another quarter with organic growth. Moving on, page 14, showing the quarterly sales in the early 12 months for continuing operations. The sales in the quarter reached 8,783,000,000, which was the highest ever for a quarter. And if we then look at the full year, we reached 34.2 billion SEK, which was in line with last year. Moving on, page 15, looking at the EBITDA and the margin. If you start with EBITDA, exclude items affecting comparability, it's up 11% from 1,424,000 to 1,587,000. We see profit growth in all three business area. If we then start with the medical solution where we saw the highest growth, well supported with a barren integration. And then we have industrial solution up 9% and ceiling solution improved by 1%. And there was no net FX impact in the quarter from translations. Modding wise, up from 16.9 to 18.1. So an increase by 1.2 percentage points. EBIT A and margin were the highest so far for a quarter. Moving on to page 16. On rolling 12 months, EBIT A amounted to 6 billion 140 million with a margin of 18%. And we have seen an EBIT A growth of 2% during the last 12 months. Going into some further details on the income statement on page 17. Items affecting comparability, minus 76 million in the quarter compared to 260 million and this was entirely related to restructuring costs for adjusting our cost base. Financial net, you can see it's going from minus 38 to minus 86 in the quarter. And that was due to that we were sitting with a net cash position in the corresponding quarter last year. So that year we had a quite significant interest income that was not repeated in the fourth quarter this year. Tax rate for the quarter amounted to 26%, which was slightly above our underlying tax rate of 25%. But that was more of a timing issue. The tax rate for the full year was 25%. Moving on to page 18, earnings per share. We saw an increase of 4% if we exclude items affecting comparability, an increase from 4.08 up to 4.24. And for the group including items affecting comparability, it was up from 3.40 to 3.99. Moving on to page 19, As Peter mentioned, a strong cash flow generation in the quarter, starting in Q4 last year at 1,321,000,000, ended at 1,681,000,000. And that was due to, we saw a good improvement in EVDA, well-managed working capital from our business units, capex slightly higher due to all ongoing greenfield projects, And then leasing was a little bit higher last year, come back to a more normal level. And the unusual high last year was related to one of our greenfield investments. So overall, a very good operating cash flow for the quarter. Moving on, page 20, looking at the cash flow conversion. 89% in cash flow conversion for the last 12 months. Still a very high cash conversion despite the current high capex levels. Looking at the balance sheet on 21 and the gearing and the leverage development. Net debt at the end of the quarter amounted to 6 billion 735 million. We have done share buybacks of 1 billion 349 million during the fourth quarter. slightly higher than the guidance of one billion per quarter. But please remember that we on the other hand was a little bit lower during the third quarter this year. And net debt in relation to DA 0.9. In other words our balance sheet remains strong. Moving on to page 22. Return on capital employed ended at 12% and capital employed increased in the quarter due to the acquisitions and the continued high pace from our greenfield investments. Some guidelines for the financial year of 2025. CapEx 1 billion 650. Restruction costs we expect to be around 300 million. amortization of intangibles, 650 million for the full year, and underlying tax rate of 25% for the year. By that, I would like to hand back the microphone to you, Peter.