TRELLEBORG, Sweden — Trelleborg A.B. reported double-digit gains in operating income and sales for the quarter ended March 31, aided largely by the first-time inclusion of results of Czech tire and rubber products maker CGS A.S.
Pre-tax operating income jumped 37 percent to $128.3 million, while sales rose 36 percent to $940.4 million, yielding a record 13.9 percent operating ratio. Organic sales accounted for 8 percentage points of the sales gain.
Trelleborg said it expects recent rises in raw materials prices to impact results more fully in the second half of 2017, CEO Peter Nilsson said in the financial statement.
First quarter tire sales to the agricultural sector and industrial and construction vehicles performed well, according to Mr. Nilsson. The Trelleborg Wheel Systems business unit's sales doubled to $260 million, primarily due to the inclusion of sales of CGS's Mitas tires businesses, which the Swedish firm acquired in mid-2016. The business unit reported an 81-percent jump in operating income for the period, to $31.6 million, but the operating margin was negatively impacted by a sharp increase in the price of raw materials. Adjustments made to sales prices were unable to fully offset this due to the time delay.
"We are working intensively to compensate for the higher raw material prices, which is deemed to have a full impact particularly in the second half of the year," Mr. Nilsson added.
During the quarter, Trelleborg sold a compounding operation in Lesina, Czech Republic, generating a capital gain of $53 million.
Trelleborg said it expected demand for the second quarter of 2017 to be in line with— or slightly higher than — the first quarter of 2017.