It's working now? Okay. We start all over again. Thanks to all of you for welcoming us here. Welcome to all of you for joining us here on the Q3 presentation, where we're going to guide you through the financials for Trelleborg following Q3. As usual, I'm starting giving you the overall highlights and also commenting on the business areas. Later on, joined by Ulf Berghult, our CFO, who will guide us through the financials, and we're finishing off with some summary conclusions and followed with a Q&A moderated by Erik Golrang. After that, we will, let's say, sum it up again, of course. As usual, agenda, starting off with some highlights and guiding through the BAs, business areas for us, financials summary and Q&A, finishing off with that. Starting with the overall highlights for Trelleborg.
Sales in the quarter came in with an increase of 6%, then supported by currency and structural moves and acquisitions, primarily within Sealing Solutions. Organic sales, though, decreased with 1%. If we then exclude the project business of Trelleborg, it actually came in with a decrease of 3%. If you go through here, we say we have a, let's say, bit tougher times in general industry and automotive and then supported with some somewhat better development, continued good development within aerospace. As anticipated and guided before, we see a fairly strong increase then in oil and gas and infrastructure construction. Get back and comment more on that later. EBIT came in at roughly SEK 1 billion corresponding to a margin a little bit shy of 12%.
This is a decrease compared to last year and decrease basically coming from, get back and comment on that more later on, but from some market headwinds in related to especially wheel systems and then some actions connected to that, but also to highlight in comparison to last year. We had very low central costs last year due to some extraordinary income in that line. That is also a difference compared to last year of almost a little bit north of SEK 50 million. We also, as for sure most of you remember, we announced some increased, what they call efficiency measures here after Q2. These measures are kicking in, even though the majority of this is not really in this quarter and that will not be in the running quarter either. The majority of that will be kicking in in 2020.
We are working on this, of course, it will be probably increasing the number of redundancy following these actions, it will not increase the costs allocated to these measures. That means that the items affecting comparability came up of SEK 127 million, which increased compared to last year. Ulf will get back also and confirm the guidance that we've given for the full year 2019. Cash flow, very strong in the quarter, coming from, as I already guided, some inventory focus and, of course, also with this negative organic sales, we also see, let's say, good outflow in from accounts receivables as well. Good development of working capital while CapEx is on the same level as last year. That means that the cash conversion is now increasing.
Of course, as we go into more uncertain territories in some businesses, we will continue to focus on the cash flow and continue to make sure that we deliver cash going forward as well. Looking at the organic sales geography, you see it's kind of negative all over the world with an exception for us in South and Other Americas, but that is a small part of Trelleborg and not really material in the total picture. If you look in Western Europe, down by 2%, North America down roughly the same, 3% down. Then we have Asia and Other Markets down by 9%. I know there are some concerns here. China is down. Here we're down by some 5%-10% organically. They are down slightly more than the overall Asia, but that is being compensated for us by good development in India.
That is kind of why we're ending up roughly at the -40 as well. Basically the same development all over the world if you kind of try to generalize a little bit. No big differences between geographies for us. Going to the business areas. Coated Systems, we've had a headline there, stable profitability. We have, let's say, basically same margin as last year and EBIT growing slightly more than the net sales growth and actually underlying a little bit better since we are hit in the quarter with a customer insolvency in South America which is hitting us. We put away a reserve. We don't know exactly how it will end up, we are fully, let's say, reserved for whatever happens in this insolvency. That cost us roughly SEK 10 million in the quarter.
Coated Fabrics, developing well, growing in aerospace especially, but also growing into some other segments like medical and some other also general industry actually also developing quite okay in this area. Printing Blankets, negative year-over-year besides Asia actually. Asia continue to develop well here and we're growing our market share in Asia while we kind of keeping our market share in the rest of the world and developing in line with the market. That is the comments on Coated Systems. Moving on to Industrial Solutions, where we have organic sales -1%. With structural growth +6%, coming from an acquisition in the quarter. I'll get back and comment on that. Lower sales in general industry. Automotive, actually stable in this area. We're developing substantially better than the market here due to some innovations and some growth of market share in specific segments.
We are not hit in this area. I'll get back to you. Sealing Solutions has been hit by automotive, not really in this area. This is more general industry going down. From a geographical perspective, we are losing a little bit in Western Europe and North America, positive, especially in Asia, for this business area. EBIT is slightly down on weaker sales mix, especially. Basically in line with last year. We are very happy also to finalize within the quarter, the Signum acquisition, which is strengthening our position, especially in LNG, offloading LNG transport. Just to clarify that, it's not really linked to the, let's say, the drilling or extraction of LNG. It's more linked to the infrastructure development you have when you're offloading LNG into ports and new power stations and all of that.
Don't mix up with different segments. That is a segment which we feel is a quickly growing segment, and it's also a great supplement for us to develop better solutions for that specific segments. That is the comments on Industrial Solutions. Moving on to Offshore Construction. Very strong growth, as you see here. Organic 27%, which we guided for. We are happy now that this growing order book is getting through. We also say that this basically good organic sales growth in oil and gas and infrastructure segment, and this, in terms of order intake, is the best quarter for years, if you put it like that. We continue to build orders here. It's really the challenge here is more coming not from orders going forward.
It's more to make sure that we get profitable orders in, and that we can get good margins on what we will deliver in the future. A little bit changing the focus here now. EBIT is increasing. As I said, we still have an order book which is not of the highest quality here. We believe that the order book will improve in quality. Of course, it's not going to happen quarter on quarter, but we see now with confidence here going into next year that we will go into next year with a better order book and better possibilities to deliver even better profitability. We say also recovery will continue in Q4. The sales growth as we see it today in Q4 will actually organically be even better than we've seen in this quarter.
Of course, it's going to be always a struggle here. When you have these kind of growth figures, it's always a little bit uncertainty whether you actually are able to deliver what you have on orders. That's going to be the challenge here going forward. We're going into this quarter with a better order book than we went into Q3. Hopefully also we continue to build the order book also in Q4 for 2020. We also here, which we have not really commented on before this, we made a small but interesting technology acquisition which is focusing on low-density products called Deep Spring. Basically, a development company in U.S., which is then more, let's say, improving the performance of products than actually creating own sales.
This is something more of an internal acquisition, very interesting for us, difficult to fully explain without going into depth. I'm happy to tell you more about that going on. From sales perspective, it will not have an impact. Sealing Solutions. Execution in tougher markets they're heading. We continue here to adjust, continue to deliver. Organic sales is down by 2%, supplemented by structural growth of 5%. On top of that, also some currency translation on this one. Basically, it's a little bit softer all over the world. No drama anywhere, actually, we are slightly down. We also have then general industry, here also automotive is down.
That is maybe where we're suffering a little bit also with [SAM origin] is down a little bit, organic sales and unfavorable sales mix is in some automotive segment is quite a lot down, which has also been impacting the manufacturing units. That is something we expect to be more balanced in the next few quarters. What we read today, of course, is changing. If you see it today, we don't expect the drop in automotive for this year. It will continue to drop, but not at the same pace as we have seen in the last few quarters. It's going to be a little bit more stable going forward, and then hopefully will be easier for us then to manage capacity and make sure that we adjust. We also note here aerospace continue to be very strong. Of course, we have the Boeing situation here.
We don't really know what will happen. At the moment, we continue to see good aerospace demand, and we don't really see that turning any way in the next few quarters, but to continue on a very strong sales growth path. Final on the business areas, of course, the troubled market headwinds, inventory adjustment, Trelleborg Wheel Systems dramatically down -6%. Of course, that is going into the quarter. Those of you who are following us closely remember that we said the end of the Q2 was quite dramatic and that continued herein. We say basically declining organic growth in more or less all areas. We say OE down, we see aftermarket down, and that relates both to agriculture and material handling. For us, when we saw that coming, we have substantially underproduced in the quarter.
On top of this, a kind of organic sales decrease. We have also done inventory adjustments, and we are underproducing. We are also on top of that, doing some volume transfers between plants, simply to adjust a little bit for more new ways of supplying some markets, but also to facilitate for future more efficient setup, basically moving production to our Serbian plant. In the quarter, that has been costing us some money. Overall, market headwind of course is the majority of the profit drop, but there is also tens of millions of SEK coming from each of the inventory adjustment and volume transfers. The good on the inventory adjustment is of course that this turns into good cash flow, which you can see as well. We have some cash outflow, which is better than the EBIT in this business area.
We also say that we don't see really any change in the short term here. We see that this kind of negative, especially from lesser production volumes and also these transfers will impact also Q4, and of course on top of that also. We don't see really any change in the running quarter, even though we still believe in the underlying market trends here of growing agriculture production and also growing, let's say, for the material handling, we see this growing as well in terms of global trade, and on top of that also this e-trading and all of that, which is also benefiting the material handling. Overall, tough quarter, and it continue to adjust, and we continue to build the platform for the future when this market eventually will turn up. With that, Ulf, leave it to you to guide us through the financials.
Thank you. My first slide, we have the total sales. As you can see, we have a total sales development of 6% in the quarter, of which an organic is minus 1. As Peter told you earlier, if I take away the project-based business, we are in the quarter minus 3%, and year-to-date, also from the organic growth flat-ish, low 0% in year-to-date. We are minus 1% on excluding project-based business. The structural growth is coming in from two acquisitions in 2019, one in quarter 1, Sil-Pro within Sealing Solutions. In beginning of quarter 3, within the Industrial Solutions, the acquisition Signum. Organic, as Peter said earlier, the major swing set that we have Offshore Construction plus 27%, also Wheels on the other side of minus 6%.
The next slide is the quarterly development. On the bottom line, you can see we have a negative organic growth, on the overall sales growth, including the structural and currency, we have 14 quarters of positive sales. Of course lately, it's been fueled by the acquisitions. Unfortunately on organic growth, we have a negative growth in this quarter. Next slide is the rolling 12 months. This is the highest third quarter so far within Trelleborg, again impacted by acquisitions. Next slide is the EBIT. You can see that we have in the quarter a minus 9% on EBIT from down to SEK 1 billion 36. Also, the margin is down from 13.6% down to 11.7%. Of course that is the two impacts, or three impacts we have.
On a positive side, we have Offshore & Construction delivering the first positive quarterly results since quarter one 2017. On the negative side, we have then the Wheel Systems that Peter then mentioned, that the sales drop, the movement that we need to do in order to create a better footprint going forward, but also then we have some under-absorption that we have taken in order to adjust our inventory. The third one is then on others that we are kind of in a normal mode. We had a natural low cost last year in quarter three 2018. The translation impact in the quarter, that is minor. It's only SEK 38 million. Year to date, that is SEK 123 million.
Then as Peter mentioned earlier also then if you look in the margin, it's slightly also kind of a mix between the BA as we have Sealing and Wheels going down slightly and also Offshore coming up. On the next slide, we have the rolling 12 months numbers. This is the first EBIT drop we have had now after 25 consecutive quarters of improvements. On a rolling 12 months basis, the margin is on 12.9%. If I look at the P&L, the next slide, the financial net is low in the quarter, basically due to some positive exchange differences, FX impact. The tax is also quite low in the quarter due to favorable mix between countries. It's at 22%.
Year to date, it's 25, and we still guide to that we will be around 26% for the full year. Also as in the quarter, you can see the impact from the launched restructuring program that we did in quarter two. We are slightly higher on SEK 127 million versus the SEK 28 last year on our restructure cost. The guidance for full year, that is the SEK 500 million. Next one is earnings per share. You can see that we have in the group total, we're down 15%. If I take away the restructuring, we are down by 5%. The good thing now in the quarter, as also Peter mentioned earlier, that we have a very good cash flow, and as you can see, the large improvements coming in from working capital.
We have put more focus on, as we have done on the cost base, on working capital. It is still slightly high if I look in absolute terms, but also that will have an impact due to that we're doing some restructuring and that we are carrying some extra inventory. Also then where now offshore is coming back into business, that will also consume working capital. Again, it is on healthy levels. The next one is cash conversion. We took a jump then on from 69 up to 82, and we would like to be then above 80. Also then we will have going forward more focus on CapEx spending. We are kind of ending it, and when we're moving into 2020, we are stepping down in CapEx spending.
On the slide on page 21, in order to explain the net debt as we have done the impact from IFRS 16 on lease debt, which we also then took the opportunity then to reclassify the pension debt. You can watch then the SEK 10 billion, we added the pension debt, and then we have restated, and then we have the leasing debt. Right now we have then a net debt of SEK 15.9 including lease and pension. Next slide is then the leverage, which is then up from 1.9 to 2.6. We have on excluding lease and pension liability, that is then from 1.8 up to 2.2. The next slide is gearing and leverage, over a period of years. It's moving in.
The SEK 2.2, then the only mark I mentioned on the leverage, of course, these are not pro forma numbers based on that we get the debt as we've done acquisitions, but we don't get the fully with that until we have run them for 12 months. Next slide is then the return on equity, which you can see then, of course, with the falling decline in earnings, we are down then for the total group from 10.3% down to 9.4%. Then I will finish off with the guidance for 2019. The CapEx is SEK 1.82 billion. We most likely will end up below, down to SEK 1.8, not to SEK 2. Restructuring costs will be around SEK 500 million. As I said previously, the underlying tax rate will be about 26%. Peter?
Continuing then with the summary. As a summary I said sales is up for us by 6%, driven by currency and structural growth coming from acquisitions then primarily within Sealing Solutions, but also in this quarter also within Industrial Solutions. Organic sales total down by 1%, which is a mix, which is say general industry, little bit short of where we want it to be. Automotive down while supported positively by aerospace, oil and gas and infrastructure construction. EBIT down roughly SEK 100 million compared to a year ago, coming down primarily from lower central costs or different, there's a more natural central cost in this quarter than primarily from a drop that we had in Wheel Systems, coming down from market headwinds, inventory adjustments, and some own initiatives to shift production.
Efficiency measures, which we announced, is running according to plan, slightly upgraded, slightly more activity in this, but it will not cost us more, but that will have an impact primarily going into 2020, which means that items affecting comparability sum up compared to a year ago. As Ulf already commented on keeping the guidance for this year. Cash flow is strong, coming from a working capital release and a flattish CapEx spending. That means also cash conversion is up, and we are now above 80% again, where we expect it to remain now as we're focusing slightly more on the cash flow going forward as we see some tougher markets in some areas. Priorities, of course, manage the market conditions, stay close and try to read what is happening and be ready to act whenever necessary. We continue to work on portfolio management.
Of course, we are addressing some parts of the portfolio, where we would like that to improve. Continue also, of course, general operational excellence and those efficiency measures, and also continue to work on our footprint optimization. As you know, especially within Wheel Systems, there's still some changes ongoing following the CGS acquisition a few years ago. There's still some actions from that kicking in, especially now in Serbia, and we're also addressing with some investment in Czech Republic, where we're going to grow our capacity in especially one of the plants in Czech Republic in order to create a better long-term footprint.
Continue to focus on innovation and especially then what we call ease of doing business with us, where we are working closely in the customer interface in order to make it easier for the customers to do business with us in a more efficient way, but also to support them in a better way. Of course, now we continue to make acquisitions, and we continue to focus on integrating these acquisitions. As you mentioned, also maybe on the medical and healthcare area, which is this acquisition of Sil-Pro and Sealing Solutions, which we now also created a platform for global growth in that area.
That is kind of a new strong focus area within Sealing Solutions going forward, while also this acquisition that we did in Industrial Solutions is a very good fit for them, and we're growing our strength and our leading position, especially in these LNG transfers. Outlook for the running quarter, we keep the guidance going into this, and we say it's going to be on par. The organic development is going to be similar in Q4 as we saw in Q3. It might be slightly weaker in the general industry. We continue to see automotive probably getting slightly better, since we don't see inventory adjustment kicking in as much in this quarter as it did in the last few quarters. Then we continue to see a strengthening in oil and gas and infrastructure construction. That is overall a mixed bag.
Overall, we expect the organic growth to be on par what we have seen from Q3. That's really where we would like to end. Then inviting Erik to guide us through the Q&A session.
Okay. I'll start with one or two questions on my own. You highlighted one of the priorities being continued portfolio management. That has mostly meant acquisitions now for a number of years.
My question is really that as you try to position the group now for the next upturn, is the portfolio the way you'd like it, or is there room to perhaps be a bit more active on the divestment side as well?
There is always divestments on the horizon as well, but it's also linked to valuation and the way we believe in the market. That is always on the agenda. We are working in both ways with this, to be honest, always honest, of course. To tell you that the way we look at it, so portfolio is definitely a two-way activity for us. For us, also portfolio optimization, what you might not see, is also putting priorities within the businesses and stepping out of certain segments and stepping into other segments. There is, of course, exits ongoing within the portfolio, but it might not be seen as divestitures.
Very good. The second question from me, if you could give some more guidance on the Offshore & Construction division. You talked about sustainable or even higher rate of growth in the fourth quarter. Obviously, this is one of the key earnings drivers now for the group, meaning the pace of that growth into 2020 is quite important.
Any indication of where the last couple of quarters orders have been running in relation to sales to set the stage for what to expect next year?
It's higher. We have the highest order book that we had for many years. It's difficult, Erik, to give you a guidance, but we can say it's higher, and we expect the profitability to improve in the next few quarters step by step. Really to give you a guidance on what levels, we don't want to do that. We simply see it's moving in the right way, and it is improving, and we expect improvements here step by step in the next few quarters. I don't know if I want to tell anything more, but I think that's what we can tell at the moment.
Okay. Let's turn to the room and see if there are any questions. Yes, there are. Hampus?
Hampus Engellau, Handelsbanken. Two questions. On Wheel Systems, could you maybe talk a little bit where you are in the inventory reductions? We should speak more to come into Q4 or a bit less? Second question is on Spartanburg. If you can talk about capacity utilization, how things are going there. Lastly, I would like to hear a little bit about cost saving. If you could quantify cost savings during the quarter and at least say if it's less or more, or we should expect more next year. Thanks.
Finally, we are stepping up. The actual cost saving this quarter, we talked total, I say a few tens of millions of SEK probably from these new measures, if that's what you meant. That's going to increase in Q4, and increase even more. The lion part of it will be in 2020 and not in this year. We talk a few tens of millions of SEK. The big chunk of it will be in 2020.
When you add more people to the headcount reduction within the same cost.
That is improving the run rate, but this is not going to be too short-term. That is going into 2020 because this headcount reduction is also linked to a few moves of production and all of that. That is also why it will take a little bit longer, but we have identified some more efficiency measures, if you put like that, going forward. Then get back on the other one.
On Wheel Systems, where you are in the inventory reductions.
Inventory reduction will be less in Q4 than in Q3, but there will be inventory reductions as well in Q4.
Spartanburg?
Spartanburg is still growing. We are probably making profit. We are making profit in North America at the moment, but we are not really supported by the underlying market, let's say. We don't really see that there is not really a substantial improvement quarter on quarter. We are kind of growing our market share in North America, but that is on an overall shrinking market, so that is a little bit tough at the moment as well. It's difficult. We're working on it, but at the moment, it's quite tough markets in North America, especially in agriculture, but also in material handling. Both material handling and agriculture is quite tough in North America.
Thank you.
Yeah.
Hi, Erik Pettersson, Pareto Securities. Can you talk a bit about the CapEx profile the coming years? You said it's going down now.
What we said is that we divide into what we are underlying, which is in line with the differentiation.
About SEK 1 billion or SEK 1.1 billion. We have what we call strategic CapEx. We have been through a phase now in 2018, 2019, and partly slightly in the beginning of 2020, where we have large strategic CapEx, that will then go down. What we have, we've been more strict on strategic CapEx going forward. It will not be down slightly be more than underlying depreciations, not in full in 2020, when we're moving into 2021. It will be sliding down.
Right. Thank you. Can you tell us anything about the restructuring charges for 2020?
Again, that depends on what we, as Peter said before, that with the current market conditions, we are on the business areas that we want them to be forceful on the cost base. What we said is that and then that might be that we need them to take further restructuring costs. Right now we are in guidance from SEK 500, and then next year we see then most likely we will go back to the guidance of SEK 250.
Right. Thank you.
Okay. Seems to be no further questions in the room. Operator, do we have any questions from the telephone lines?
Ladies and gentlemen, if you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. We already have a question from Matthew Fu from Commerzbank. Sir, please go ahead.
Hi. Hi Peter. Yeah, first of all, maybe also you spoke already on portfolio adjustment. Do you have specific targets for healthcare and aerospace in mind, which you would like the group to have in, let's say, two, three years down the road?
Sorry, Matt, I didn't get it really. Christofer, maybe.
Okay, I will try to rephrase the question again or speak a bit louder. You talked a lot about portfolio readjustments. Do you have a specific target for healthcare and aerospace you want to reach over the next two to three years?
No, we don't really have a specific target besides that we want to continue to grow it. We are expanding, especially within aerospace, we are expanding our offering and we're moving into new sealing families. We are penetrating more of the sealing applications within engines. We're also targeting more of what you call airframe seals or what you talk structural seals on an airplane. We are basically having very high market shares in the segments where we are present within Sealing Solutions. The growth here will be dependent on that we are able to grow our, let's say, offering into those segments, which we think we have good possibilities to do as we are kind of already established as one of the main suppliers, and we know there is a lot of supplier cutting and all of that within the aerospace industry.
I think we are well equipped to grow. Our market share in existing segments, there is a few maybe, let's say what we call airframe seals. Not going down to details, but in some of these product families, we still have potential to grow, while in others we are probably on a market share that we cannot grow. The growth here will be mainly coming from extensions in the offering, and we see good possibilities to do this. The same basically applies also in the other area, Coated Systems, where we also have aerospace exposure on these escape slides and all of that. That also we'll be working heavily together with the customers in order to develop lighter materials in order to save some weight on the airplanes. There also we have good momentum to get even closer to our customers.
This is coming primarily from basically organic development, and we expect it to grow. The same applies for medical and healthcare, where we have made a few acquisitions the last few years, and we have now created a platform for growth. That's going to come through pure organic growth, where we leverage the solutions where we have two individual customers and moving in that to wider space. All of these acquisitions we've been doing has been fairly local or regional companies, and now we're pulling it into a global sales organization and then being able to offer it to more customers. Both of these areas is going to grow, and they're going to be a stepwise, let's say, not a stepwise like that. It's going to be a continuous growth and continuous focus in extending both the product offering as well as the customer portfolio.
Okay. Maybe a second question, rather on Wheel Systems. Some years ago you gave some synergy targets also with the CGS acquisition. Maybe you can update us there where you are, what you have achieved and where you have been maybe short, where you have exceeded the targets and particularly also maybe on the second comment also say something about the technology transfer between Trelleborg and Mitas and if you have been able to grow also in your anticipated larger sizes, construction tires there, or where you see the business developing going forward there?
It's not easy to say now when we look at the performance, let's say the actual underlying EBIT performance, but the integration has been successful. We have been able to position the Mitas brand against Trelleborg in a very good way. We have been integrating and closing some close to 15 sales offices, integrating the sales offices. We have been getting purchasing synergies. The integration as such has been good. What remains on the synergy side is to grow the sales, especially in construction, and that is kind of more a long-term range extension and then putting that into
To the market afterwards, that is where we still have some way to go. That is also not clearly, let's say, that we are late. It is simply that it is a long time because it requires investments like we do in Serbia, like we do in Czech Republic, and it takes time to get into that. The integration has been good, and then, of course, it is not easy to stand here and blame the market. I must say it, from when we did the CGS acquisition a few years ago, I think us and everybody else expected, let's say, the agricultural market to bounce back, but it has not happened. Since then, we believe we were in a trough, and I think also everybody else. Not blaming analysts, they are also wrong sometimes.
I think also that the analysts were also, let's say, in line with us here, and that is really the big disappointment for us and the big disappointment for others, that we really have not seen the agricultural market bouncing back as we expected when we did the acquisition. I cannot. Of course, we always try to do better, but if we look at the pure integration efforts made following the CGS acquisition, that's actually internally been very well made. We have built a new organization. We changed the organization. As I said before, we have closed sales offices. We have gotten these moves in between the factories. Unfortunately, the market has continued to develop negatively organically, even though I think when we made the acquisition, that everybody expected it actually to improve from that level. That has not happened yet.
While we still see that underlying market, more food is produced, more advanced tractors is coming on the market. We know now we have Agritechnica, which is the biggest trade show for this, coming up in the next few weeks. We know there's still a lot of launches of new, better products, more digital solutions. I think the industry is getting more sophisticated, and the production of food is increasing. Unfortunately, or strangely, if I may say, it's not really coming into sales yet, and it's not only for us, because that is the overall market. That is the way we look at that at the moment. We're working hard, of course, to adjust for this and to improve from this base, but at the end of the day, we cannot blame ourselves for the integration.
It's simply the underlying market which has not developed as we expected for the last few years.
Yeah. Thanks already for that. On the R&D synergies, where are you?
Yes, that's ongoing. We have been changing. Now we're down to the details again. We have changed the curing systems for our tires. We now do nitrogen curing instead of steam curing, which is then saving energy, and thereby saving cost as well, improving our CO2 footprint, but also improving the efficiency of that. There is several. We also know, if you relate back to this Agritechnica show, which is coming up, now we're launching what we call a new PneuTrac system, which is a combination of a pneumatic tire and a rubber track with the benefits of, let's say, maintaining the benefits of both, and that is a development that is ongoing between CGS, if you say, CGS and the Trelleborg organization, which is now one. Now, it takes some time to do it, but we're launching this now together with one of the major tractor manufacturers.
Also from a production innovation, it is happening, and also from a product innovation, it is happening. This is really also, you can always push a little bit more, but things are happening and things are improving.
Okay, thank you.
I believe we have one more question on the line.
Yes, we have another question from Robert Davies from Morgan Stanley. Sir, please go ahead.
Yes, thanks for taking my questions. I guess just two questions really. One was around the Wheel Systems business and the ongoing inventory destock that you mentioned sort of still persisting into the fourth quarter.
Could you give us some sort of idea on a sort of relative balance, I guess? I'm asking in the terms of, what are your sort of expectations in terms of margin profile for that? Can you actually get margins up in an environment where you're getting an inventory destock in that business? The second one, which is sort of more broadly on some of the end markets. You mentioned autos, I think, progressively getting better. Is that from a demand standpoint, or that just a comp effect as you're moving into the back half of the year and into early 2020? Thank you.
We're talking automotive. Our reading of the situation is not really that the underlying market is improving. It's more that the destocking is flatting out, or we're more going to continue to supply in line with the demand. It's not really, we don't see an improvement in the underlying demand. It's simply that our, let's say, loss of sales in that area has been definitely above the market development. That is more an inventory adjustments are true, and we get more into. That is the way we look at that. On the margin in Wheel Systems, of course, as we guided here, we don't expect the margin to get a lot better here in Q4 compared to maybe that we can do a little bit uptick, but it's not going to be, let's say, a bounce back here in Q4.
We expect also from a seasonality point of view, it's a tough quarter, Q4. On top of that, we're going to continue to do inventory adjustment, but maybe not to the full extent that we did in Q3. Nevertheless, there are going to be a negative push on the margin coming from inventory reductions as well as coming from seasonality. That is the way. An important quarter for us here is, of course, not maybe Q4. It's more we're going into Q1 and Q2 next year, where we hopefully will see a market improvement coming. That is also from a profitability point of view, especially for the agri part of Wheel Systems, then Q1 and Q2 is the most important quarter. It's not really Q4.
That's great. Thank you.
Very good. I have one more question, which relates to your comment about the negative mix impact on Sealing Solutions in the third quarter. You expected that to improve a bit in Q4. Should we expect the pace of year-on-year decline then for the margin for Sealing to more or less go away in Q4?
I don't want to give those details, really, because when you talk about mix in Q4, it's a little bit linked to automotive. Is automotive shrinking? On top of that, we also have some kind of downgrading about the factories, and we expect that to improve. At the same time, we maybe also expect the general industry to be a little bit tougher in Q4 compared to Q3. Overall, I don't think, as we see it today, it's not going to be a big change on the trend compared to what we've seen in Q3. I don't really want to send any signals there is a difference at the moment.
Very good. There appears to be no more questions. Thank you so much.
Thank you.
Peter, any finishing words?
Thank you. No, I mean, We are developing a quarter which is not as good as last year, and once again, the explanation is especially in Wheel Systems and then some central costs compared to last year. Overall, besides that, we continue to work hard to adjust our cost base and to adjust operations to the underlying markets. Of course, we need to continue to watch carefully what is happening going forward. The major priority for us is, of course, to get Wheel Systems in the right shape and in the right position in order to really get the gains when the markets eventually turn up. The underlying consumption, the underlying production of food, and the underlying movement of goods is there. It's simply they're not buying tires at the moment.
That is something that we need to adjust for and something we need to be ready for when it eventually turns up.
Thank you.