Trelleborg : Annual Report 2021

WE SEAL, DAMP AND PROTECT CRITICAL APPLICATIONS

2021 ANNUAL REPORT WITH SUSTAINABILITY REPORT

CONTENTS

Trelleborg in brief...........................................................................................	1
Interview with the President and CEO..........................................................	4
The year in brief.............................................................................................	8
The Trelleborg share 2021.........................................................................	12
How Trelleborg generates value.................................................................	16
Global trends...............................................................................................	18
Strategy.......................................................................................................	19
Trelleborg's business areas.......................................................................	28
Operations: Use of resources.....................................................................	38
Operations: Employee safety, diversity and development........................	41
Compliance with laws and codes..............................................................	43
Social engagement.....................................................................................	46
Risks and risk management......................................................................	50
Foreword by the Chairman.........................................................................	54
Corporate governance................................................................................	55
Board of Directors.......................................................................................	62
Group Management....................................................................................	64
Remuneration report..................................................................................	66
Consolidated income statements...............................................................	71
Consolidated balance sheets....................................................................	75
Consolidated cash-flow statements...........................................................	78
Notes - Group.............................................................................................	79
Parent Company income statements, balance sheets and
cash-flow statements................................................................................	111
Parent Company notes.............................................................................	113
Proposed treatment of unappropriated earnings...................................	116
Auditor's Report........................................................................................	117
Management of sustainability work........................................................	122
Stakeholder engagement.........................................................................	123
UN Sustainable Development Goals.......................................................	124
Task Force on Climate-related Financial Disclosures (TCFD).................	127
EU taxonomy.............................................................................................	130
Outcome of the Group's sustainability work...........................................	131
GRI Index overview...................................................................................	135
Assurance Report - Sustainability..........................................................	136
Sustainability metrics for continuing operations....................................	137

OPERATIONS 2021,

STRATEGY AND SUSTAINABILITY

RISK, RISK MANAGEMENT AND CORPORATE GOVERNANCE

FINANCIAL AND SUSTAINABILITY-RELATED INFORMATION

Ten-year overview: Sustainability.............................................................	138	OTHER INFORMATION
Ten-year overview: Financial....................................................................	139
Financial calendar 2022..........................................................................	140

= Included in the audited annual accounts and consolidated accounts.

BOARD OF DIRECTORS' REPORT

This is a translation of Trelleborg's definitive Annual Report for 2021 in Swedish. The Swedish-language version is the original. The audited annual accounts and consolidated accounts for the 2021 fiscal year are included on pages 8-13,16-17,28-35,38-47,50-53,62-65 and 70-116. The Board of Directors' Report comprises pages 8-13,16-17,28-35,38-47 and 50-53.

OTHER EXTERNAL ASSURANCE

The auditor has performed a limited assurance of the sustainability report, pages 9, 19-25,38-47 and 122-135. Refer to the Assurance Report on page 136, which includes the auditor's opinion regarding the statutory sustainability report in accordance with FAR's auditing standard RevR 12. The auditor has examined the corporate governance statement, pages 55-65, in accordance with FAR's auditing standard RevU 16 The auditor's examination of the corporate governance statement.

SUSTAINABILITY REPORT ACCORDING TO GRI STANDARDS

Trelleborg reports on sustainability in 2021 in accordance with the GRI Standards: Core option. The scope of the sustainability report is outlined in the GRI Content Index on page 135. For more information and a detailed GRI Content Index, refer to the separate 2021 Sustainability Report, which can be downloaded from www.trelleborg.com.

TRELLEBORG AND THE UN GLOBAL COMPACT

Since 2007, Trelleborg has been affiliated with the UN Global Compact network, an initiative to promote responsible business practices in the areas of the environment, labor, human rights and anti-corruption.

ANNUAL REPORT 2021 TRELLEBORG AB

TRELLEBORG IN BRIEF

PROTECTING THE

ESSENTIAL

The Trelleborg Group is a world leader in engineered polymer solutions. The Group has annual sales of approximately sek 34 billion and operations in about 50 countries.

With Trelleborg's material expertise and industry insight into cutting-edge areas with rigorous requirements, such as the aerospace and automotive industries, as well as healthcare & medical, the Group is creating the sustainable industrial solutions of today, shaped by such trends as electrification, digitalization, industrial automation and new sustainable materials. The Group's polymer-based solutions are often critical to the functionality of the customers' advanced end products.

The engineered solutions are based on unique sealing and damping properties of polymers such as rubber and plastic. The solutions save energy and reduce CO2 emissions, eliminate noise and vibrations, and dramatically extend the lifecycles of machines and medical devices as well as skyscraper facades.

The Trelleborg Group has set ambitious science-based climate targets for its own operations, aiming for net zero emissions by 2035. Resource efficiency and circularity are becoming part of Trelleborg's DNA.

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TRELLEBORG IN BRIEF

TRELLEBORG AND 2021 IN BRIEF

Trelleborg is working continuously to create value for all its stakeholders. For those who are considering an investment in Trelleborg, there are a number of factors that form the basis for the Group's value creation.

THIS IS A UNIQUE TIME

FOR TRELLEBORG

This is a time of rapidly advancing technological development, increasingly stringent quality standards and focus on product safety. But also it is a time for the transition of the global community toward more sustainable energy consumption, adaptation to climate change and a more circular use of resources.

Industrial companies worldwide must quickly adjust their operations to the new reality.

These needs are positive for Trelleborg.

THE GROUP HAS A CLEAR

AND DECISIVE ROLE

With Trelleborg's material expertise and industry insight into cutting-edge areas with rigorous requirements, such as the aerospace and automotive industries, as well as healthcare & medical, the Group is creating the sustainable industrial solutions of today, shaped by such trends as electrification, digitaliza- tion, industrial automation and new sustainable materials.

A factor favoring Trelleborg's polymer-based solutions is that they are often critical to the functionality of the customers' advanced end products. One good example is the sealing solutions in an aircraft's landing gear. While they are critical to the function of the aircraft, the solutions make up a relatively small share of the total cost for a customer's end product

• the finished aircraft. Or, for instance, in an offshore wind farm sealing solutions are small components, but they are crucial if these massive structures are to withstand the harsh marine environment.

TRELLEBORG STANDS STABLE

AND STRONG

For more than 100 years, Trelleborg has successfully restructured its operations when the external environment has changed. The way of achieving results - a strongly decentralized organization built on local responsibility and personal dedication - forms the basis of the Group's model for profitability and business success. Local presence around the world is supported by Trelleborg's global expertise and financial strength.

THE GROUP CREATES LONG-TERM

VALUE FOR SHAREHOLDERS

Three things provide Trelleborg with a clear advantage when it comes to creating long-term value for shareholders: the choice of niches in industries of the future, a high level of expertise and the entry barriers the niches have to competitors. Demand for the Group's balanced portfolio of solutions is also relatively evenly distributed throughout the business cycle.

TRELLEBORG IS ON

THE RIGHT TRACK

Longstanding customer relationships are built on close collaboration on innovations with renowned industry players who are on the same journey toward better sustainability as Trelleborg. The Group's engineered solutions are based on the completely unique sealing and damping properties of polymers, such as rubber and plastic. The solutions save energy and reduce CO2 emissions, eliminate noise and vibrations, and dramatically extend the lifecycles of machines and medical devices, as well as skyscraper facades.

Trelleborg's overall mission is to help protect the essential in society: people, the environment and infrastructure.

However, Trelleborg recognizes the fact that the Group's solutions are largely fossil-based. Trelleborg is therefore working systematically to increase the share of bio-based and recycled raw materials in everything it develops, to strengthen its role as sustainability leader in its industry.

The Group has set ambitious science-based climate targets for its own operations, aiming for net zero emissions by 2035. Resource efficiency and circularity are becoming part of the company's DNA.

This new demanding reality favors the Group's continued journey as the preferred partner to leading customers in the most attractive segments. Trelleborg knows the company is on the right track and has further strengthened its growth and profitability targets.

TRELLEBORG IS READY FOR THE NEW REALITY

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TRELLEBORG IN BRIEF

NET SALES

33,864

Net sales for 2021 increased 12 percent to sek 33,864 m. Organic sales increased 16 percent compared with 2020.

sek m				R&D CENTERS
NUMBER OF COUNTRIES	29
	WITH OPERATIONS
		48	NUMBER OF
		EMPLOYEES	Most employees in 2021 worked
			21,230 Republic and China. Sales were
				in the US, followed by the Czech
				conducted in just over 150 countries
EBIT				across the globe and manufacturing
			at more than 100 production
5,151	margin of 15.2 percent.		facilities in 2021.
	EBIT, excluding items affecting comparability,
	increased 26 percent year on year to
	sek 5,151 m, corresponding to an EBIT
sek m	EBIT MARGIN		CASH
15.2%	CONVERSION	The cash conversion ratio for the
	RATIO	most recent five years amounts
		95%	to 95 percent. In 2021, the cash
		conversion ratio was 84 percent
		(128). Operating cash flow

amounted to sek 4,347 m, down 17 percent compared with 2020.

CLIMATE 2021

-10%

Carbon dioxide emissions are to decrease by approximately 10 percent per year over the current five-year period, which they also did in 2021. The climate target "50 by 25" is established for 2025, meaning a 50-percent cut in emissions from operations relative to sales during the period, with 2020 as the base year. In addition, emissions along the value chain are to be significantly reduced. Read more on pages 24-25.

EARNINGS

PER SHARE

13.95

sek

Earnings per share, excluding items affecting comparability, amounted to sek 13.95. For the Group in its entirety, earnings per share amounted to sek 13.71.

NET SALES PER MARKET SEGMENT		NET SALES PER REGION
General	Capital-intensive	Asia and Rest of
industry, 33%	industry, 55%	the World, 18%	Europe, 55%
of which	Transportation
South and Central
Healthcare &	equipment, 20%
America, 4%
medical, 5%	Infrastructure, 7%

Agriculture, 20%
Aerospace, 5%	North America, 23%
Oil & gas, 3%

Light vehicles, 12%

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