Trelleborg announces measures to consolidate and adapt operations in oil & gas.
M2 EQUITYBITES-November 29, 2017-Trelleborg announces measures to consolidate and adapt operations in oil & gas
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Trelleborg AB (STO:TRELB), a provider of engineered polymer solutions, announced on Tuesday the decision to gradually discontinue the manufacturing of subsea buoys for drilling equipment in deep-water environments in Houston, Texas, US.
According to the company, production equipment will be transferred and consolidated to the existing operations in Skelmersdale, England, which focuses its manufacturing on other types of deep-water buoys and engineered polymer solutions. The US sales and engineering organisation will be retained.
Also, restructuring costs related to the Trelleborg Offshore & Construction business area will be recognised as an expense in the fourth quarter of 2017 amounting to about SEK580m and will be recognized as an item affecting comparability.
This restructuring cost consists of SEK350m, attributable to impairment of intangible assets, SEK70m attributable to impairment of operating assets and SEK160m in other restructuring costs. The total impairment losses of SEK420m will not impact cash flow.
These changes are expected to improve earnings for the operations concerned by approximately SEK100m per year under the prevailing market conditions, at the same time as the adapted structure is expected to contribute toward further earnings improvements when the market recovers.
Trelleborg had earlier communicated that restructuring costs for 2017 are expected to total about SEK450m. In connection with this decision to implement changes at Trelleborg Offshore & Construction, restructuring costs for 2017 are expected to increase by SEK580m to approximately SEK1,030m.
During Q1 2017, a unit was divested in the Czech Republic resulting in a capital gain of SEK472m, which had a positive impact on items affecting comparability.
In addition, the performance of the divested Trelleborg Vibracoustic operation provides favourable conditions for the payment of an additional purchase price that may exceed the recognised receivable of about SEK 224 M. The final amount will be determined in early 2018, as the additional purchase price is related to sales developments at Trelleborg Vibracoustic in 2017. This amount will have a positive impact on items affecting comparability for 2017.
The total of items affecting comparability for the full-year 2017 will be influenced by these items.
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|Publication:||M2 EquityBites (EQB)|
|Date:||Nov 29, 2017|
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