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Trelleborg Profit Tops Estimates as Cost Cuts Offset Sales Slump

Trelleborg AB (TRELB), the world’s biggest maker of vibration-dampening gear, reported first-quarter profit that beat analyst expectations as cost cuts offset declining sales and a joint-venture added to income.

Net income slipped to 489 million kronor ($74.1 million), beating the 403 million-krona average in a Bloomberg survey analysts. That compared with 494 million kronor a year earlier. Sales declined 6 percent to 5.39 billion kronor. Shares of the Trelleborg, Sweden-based company rose as much as 6 percent after the report.

Trelleborg has sought to expand its presence beyond western Europe to counter falling demand caused by European sovereign- debt crisis and added new production facilities in Brazil, India and China last year. Sales in western Europe declined to 56 percent of the group’s total last year from 67 percent in 2006, according to the annual report. The company said it sees second- quarter demand on par with that in the first quarter.

“Trelleborg noted a strong first quarter despite weaker market conditions,” Chief Executive Officer Peter Nilsson said in a statement. “Once again, the group displayed strength and stability in the face of a volatile market.”

TrelleborgVibracoustic, a joint venture with Freudenberg & Co KG, contributed 110 million kronor on to operating profit, Trelleborg said. The business makes antivibration solutions for light and heavy vehicles and was formed in July last year. The operating margin increased to to 11.8 percent in the quarter from 11.6 percent a year earlier. Trelleborg targets an operating margin of 12 percent.

To contact the reporter on this story: Janina Pfalzer in Stockholm at jpfalzer@bloomberg.net

To contact the editor responsible for this story: Kim McLaughlin at kmclaughlin6@bloomberg.net

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