Net asset value on September 30 was SEK 132 per share, an increase of 22% for
the year to date including reinvested dividends
The value of the equities portfolio increased by SEK 7.8 billion to SEK 63.5
billion, or 15%, during the first nine months of the year. The Stockholm Stock
Exchange rose 14%
The total return was 15% for the Class A shares and 19% for the Class C
shares during the first nine months of the year, compared with 18% for the
return index
Earnings for the first nine months of the year were SEK 8.4 billion (16.9),
or SEK 21.67 per share (43.68)
Shares worth a total of SEK 2.1 billion, net, were acquired during the first
nine months of the year, with an accumulated growth in value of 23%
Cash offer of SEK 75 per share for Munters; a bid premium of 50%
Portfolio companies positioned for growth
The global economic recovery is continuing, and with it, concerns over another
sharp economic downturn are subsiding. The International Monetary Fund's
projections point to global GDP for 2010 that is higher than at the peak
reached before the financial crisis. However, there are clear differences in
the rate of growth and strength of the recovery in various parts of the world.
In emerging economies, spearheaded by China, the rapid expansion continues,
with a high level of economic activity. In the U.S., Japan and southern Europe
the recovery has been weak, with continued high unemployment, which has forced
the central banks to adopt additional stimulus measures. However, the stimulus
effects are being counteracted by large budget deficits in these regions, which
is forcing governments to implement further austerity measures. For the Swedish
economy, the situation is different. Growth is over 4%, and the state's
finances are in good shape, with a large surplus in the trade balance. The
strengthening of the Swedish krona is a confirmation of this.
The credit and capital markets are now functioning increasingly better, even
though the so-called PIGS countries (Portugal, Ireland, Greece and Spain) are
having to pay high interest on new loans. The corporate bond market has gained
momentum again, with borrowing rates that are once again making this form of
financing attractive for companies. This is important, since the bank system -
above all in southern Europe - is still struggling with high borrowing costs
and impending regulations. I am also happy to note that the fears I described
in the half-year report regarding Basel III did not materialize. Following the
Basel Committee's publication of new rules in early September, we now have a
regulatory code for banks that is built upon more realistic levels for solvency
and liquidity requirements. Moreover, the new rules will not be fully
implemented until January 2019. This will give the banks time to adapt, which
will help improve their ability to provide credits.
The world's stock markets remain nervous and are clearly marked by the
uncertainty that exists regarding developments in various parts of the global
economy. The Swedish stock market is somewhat of an exception, with a gain of
14% thus far for the year to date. This can be compared with, for example, the
U.S. stock market, which has gained about 2%, which is level with the European
index. The fact that gold - a metal with limited use - has been the most
popular investment object when the global economy is projected to grow by 3%-4%
this year, is a clear sign of the market's risk aversion.
Favorable development of net asset value and share price
Net asset value has developed well during the year and reached SEK 50.9
billion. This entails an increase of SEK 8.1 billion during the first nine
months of the year, or 22% including reinvested dividends. The total return
index rose 18% during the same period.
The total return for the nine-month period was 15% for the Class A shares and
19% for the Class C shares, compared with 18% for the return index.
Share purchases for more than SEK 2 billion
During the year we have used some of the proceeds from our convertible issue to
carry out several share purchases for the future. In total we have made net
purchases of stocks for approximately SEK 2.1 billion. These consisted mainly
of shares in Volvo, for SEK 1.0 billion, and in companies like SSAB, Sandvik
and Skanska, for a combined total of SEK 1.1 billion. These investments have
had accumulated growth in value of 23% for the year to date.
Profitable short-term trading with limited risk
Our short-term trading has generated a profit during this year of SEK 98 M,
with limited risk. Through good market knowledge and a well-defined work
method, our short-term trading has generated a total profit of approximately
SEK 900 M since the start in 2003.
Bid for Munters
Industrivärden has decided to divest its holding in Munters by accepting Alfa
Lavals cash offer for our shares under certain conditions. On October 1 Alfa
Laval raised its original offer from SEK 68 to SEK 75 per share after Nordic
Capital offered SEK 73 per share at the end of September. Alfa Laval's offer of
SEK 75 per share corresponds to a bid premium of 50% on the average price
during the three months period preceding the initial offer. Industrivärden has
accepted the raised bid provided that no rival offer is made that exceeds the
current offer by at least 5%. The acceptance period expires on October 15.
Portfolio companies positioned for growth
Our portfolio companies continue to perform well, which is illustrated by their
half-year reports. The significance of emerging economies on profitability
performance is growing increasingly clear, so it is gratifying to note that
many of our portfolio companies, such as Volvo and Sandvik, are well positioned
for future growth.
One company where we have clearly been able to see the results of normalized
demand coupled with the completion of productivity improvements is Volvo. In
pace with the return to profitability, the positive effects of the swift and
powerful structural measures that were taken after the financial crisis in 2008
are now becoming apparent. This is clearly illustrated by the return of
profitability to the level before the financial crisis, but based on
considerably lower volumes. During the same period, Volvo took yet another step
forward in key emerging markets in Asia and South America, which today account
for more than a third of sales. I am pleased to note that we now have a surplus
value in our Volvo holding. Our investment perspective in Volvo is long term,
and we see substantial growth potential in the company.
Anders Nyrén
President and CEO
