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Industrivärden
Interim / Quarterly Report • Oct 11, 2021
2928_10-q_2021-10-11_e484f35d-cc7a-42df-96eb-b95599f7aefb.pdf
Interim / Quarterly Report
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Interim Report 9M:2021
January 1–September 30, 2021
- Net asset value on September 30, 2021, amounted to SEK 128.6 billion, or SEK 295 per share, an increase during the first nine months of the year of SEK 16 per share. Including reinvested dividend, net asset value increased by 8%.
- The total return for the first nine months 2021 was 5% for the Class A and Class C shares, compared with 24% for the Stockholm Stock Exchange's total return index (SIXRX).
- Earnings per share for the period were SEK 24.98.
- During the first nine months 2021, shares were purchased in Sandvik for SEK 1.9 billion, in Volvo for SEK 0.8 billion, in Essity for SEK 0.5 billion and in Handelsbanken for SEK 0.3 billion.
- The shareholding in SSAB was divested in May for SEK 2.0 billion.
- The debt-equities ratio as per September 30, 2021, was 4%.
Value performance
Average annual change as per September 30, 2021
| Total return | |||||
|---|---|---|---|---|---|
| Net asset value* | Industrivärden C | Index (SIXRX) | |||
| 9M:2021 | 8% | 5% | 24% | ||
| 1 year | 17% | 17% | 32% | ||
| 3 years | 9% | 13% | 18% | ||
| 5 years | 13% | 14% | 16% | ||
| 7 years | 12% | 15% | 15% | ||
| 10 years | 15% | 18% | 16% |
*Including reinvested dividend.
CEO's message
During the third quarter, the extensive vaccination against Covid-19 being conducted in large parts of the world, is enabling societies to now open up again. From a real economic perspective it can be ascertained that the easing of restrictions combined with large stimulus packages has created conditions for strong demand. On the supply side, however, we are seeing major disruptions in global supply chains, including a shortage of semiconductors, rising prices for input goods, labor shortages in certain areas, and higher transport costs. In recent time this strong development has led to rising inflation, a slight rise in interest rates and higher volatility in the stock market. On the whole, however, despite a number of challenges at the moment, there are long-term prospects for continued good economic growth.
Industrivärden's net asset value amounted to SEK 128.6 billion on September 30, 2021, or SEK 295 per share, representing an increase of 8% during the first nine months of the year. The total return for Industrivärden's Class A as well as C shares during the same period was 5%, compared with 24% for the total return index (SIXRX).
During the year we have invested approximately SEK 3.5 billion in several of our existing portfolio companies. We have done this against the backdrop of our conviction that these companies have good value potential over time. Shares were bought in Sandvik for SEK 1.9 billion, in Volvo for SEK 0.8 billion, in Essity for SEK 0.5 billion, and in Handelsbanken for SEK 0.3 billion.
Industrivärden's business model, where shareholder value is created mainly through active ownership in a concentrated portfolio of listed Swedish companies, entails that we engage ourselves in and put strong emphasis on the portfolio companies' ability to adapt and develop. I therefore want to mention a few examples of noteworthy steps taken by the portfolio companies during the third quarter.
Sandvik continues to successively carry out well-considered add-on acquisitions that are strengthening its core businesses. During the quarter, two acquisitions were announced in the CAM software field, and against this background the company raised its 2025 revenue target for Sandvik Manufacturing Solutions.
Volvo is showing continued high activity in all parts of its operations, with strong focus on the ongoing industry transformation. During the third quarter – in North America – Volvo received its largest commercial order to date for its heavy-duty electric truck model. The company is currently working intensively to reduce the effects of disruptions in its supply chains.
As part of a refocusing and review of its payment business, Handelsbanken has agreed to sell its card acquiring business to Worldline for approximately SEK 2 billion.
Within the framework of its renewable fuels investment program, SCA – together with an energy company – has started a joint venture company to produce and sell liquid biofuels.
At the end of September Handelsbanken's board of directors announced that they have proposed an extra dividend of approximately SEK 4 per share for approval by an Extraordinary General Meeting. The dividend, which will be conducted in the form of Industrivärden shares, will reduce the bank's exposure to shares in pension management, which will increase the long-term stability of its capitalization. We are evaluating various alternatives for how to manage a potentially received dividend of own shares and will communicate the Board's decision when it has been made.
Given the portfolio companies' strong positions and proven ability to continuously develop and strengthen their businesses over time, I see favorable opportunities for Industrivärden to continue generating long-term shareholder value with balanced risk.
Helena Stjernholm Chief Executive Officer
Overview
Equities portfolio
The equities portfolio is made up of large shareholdings in seven portfolio companies with strong market positions and a good value potential, in which Industrivärden exercises long-term active ownership.
A significant share of the equities portfolio is exposed to the industrial equipment, commercial vehicles, banking and consumer products sectors.
Composition of the equities portfolio and net asset value
| 09/30/2021 | 9M:2021 | |||||||
|---|---|---|---|---|---|---|---|---|
| Share of ownership, % |
Market value | Total return, holdings | ||||||
| Portfolio companies | No. of shares | Capital | Votes | SEK M | SEK/share | Share of value, % |
SEK M | % |
| Volvo A Volvo B |
166,600,000 7,600,000 |
8.6 | 27.7 | 33,120 1,498 |
80 | 26 | 4,511 | 14 |
| Sandvik | 166,200,000 | 13.2 | 13.2 | 33,439 | 77 | 25 | 766 | 2 |
| Handelsbanken A | 215,200,000 | 10.9 | 11.0 | 21,158 | 49 | 16 | 4,217 | 24 |
| Essity A Essity B |
33,257,000 37,600,000 |
10.1 | 29.4 | 9,013 10,227 |
44 | 14 | 732 | 4 |
| SCA A SCA B |
33,785,290 38,300,000 |
10.3 | 29.3 | 4,608 5,224 |
23 | 7 | -524 | -5 |
| Ericsson A Ericsson B |
86,052,615 1,000,000 |
2.6 | 15.1 | 8,588 99 |
20 | 6 | -319 | -3 |
| Skanska A Skanska B |
12,667,500 18,500,000 |
7.4 | 24.3 | 2,796 4,083 |
16 | 5 | 639 | 10 |
| Other | 453 | 1 | 0 | 705 | ||||
| Equities portfolio Interest-bearing net debt |
134,307 -5,730 |
309 -13 |
100 | 10,728 | 8 | |||
| Net asset value | 128,577 | 295 | ||||||
| Debt-equities ratio | 4% |
Industrivärden is a long-term asset manager that invests in listed Nordic companies with good value potential. Shareholder value is created through a professional investment operation and active ownership aimed at contributing to the portfolio companies' strategic development and long-term value creation.
For further information, visit www.industrivarden.net
Performance
Net asset value
Net asset value on September 30, 2021, was SEK 128.6 billion, or SEK 295 per share, an increase of SEK 16 per share during the first nine months 2021. Including reinvested dividend, net asset value increased by 8%. The total return index (SIXRX) increased by 24% during the same period.
During the last three-, five- and ten-year periods, net asset value grew annually by 9%, 13% and 15%, respectively, including reinvested dividend. The total return index (SIXRX) increased by 18%, 16% and 16%, respectively, during the same periods.
Net asset value
| 09/30/2021 | 12/31/2020 | ||||
|---|---|---|---|---|---|
| SEK bn | SEK/share | SEK bn | SEK/share | ||
| Equities portfolio | 134.3 | 309 | 128.9 | 296 | |
| Interest-bearing net | |||||
| debt | -5.7 | -13 | -7.7 | -18 | |
| Net asset value | 128.6 | 295 | 121.2 | 279 |
Growth in net asset value, 10 years
Equities portfolio
During the first nine months 2021 the value of the equities portfolio, adjusted for purchases and sales, increased by SEK 3.9 billion. On September 30, 2021, the equities portfolio was worth SEK 134.3 billion, or SEK 309 per share.
On May 10, 2021, the entire shareholding in SSAB of 44,334,933 Class A shares was divested for SEK 45.53 per share, corresponding to total proceeds of SEK 2.0 billion.
The largest contributors in value in Industrivärden's equites portfolio during the period were Volvo with SEK 4.5 billion, Handelsbanken with SEK 4.2 billion and Sandvik with SEK 0.8 billion. Handelsbanken showed a total return in line with the total return index (SIXRX). The other portfolio companies showed a lower total return than the total return index (SIXRX), as shown in the table on page 3.
During the first nine months 2021 dividend income from the equities portfolio totaled SEK 7.2 billion.
The total return for the shareholdings for the last threeyear period is shown in the table to the right.
Performance of shareholdings, 3 years
| Annual average total return, % | |||
|---|---|---|---|
| Class of shares | |||
| Total return index (SIXRX) | 18 | ||
| Volvo A | 15 | ||
| Volvo B | 15 | ||
| SCA B | 12 | ||
| SCA A | 12 | ||
| Skanska B | 12 | ||
| Sandvik | 10 | ||
| Ericsson B | 10 | ||
| Essity B | 9 | ||
| Ericsson A | 9 | ||
| Essity A | 9 | ||
| Handelsbanken A | -1 |
Cash flow
Investment activities
During the first nine months 2021 shares were purchased in Sandvik for SEK 1,939 M, in Volvo B for SEK 808 M in Essity B for SEK 482 M and in Handelsbanken A for SEK 295 M. Furthermore, the entire shareholding in SSAB A was divested for SEK 2,004 M.
Dividend paid out
The Annual General Meeting on April 21, 2021 decided in accordance with the Board's proposal on an ordinary dividend of SEK 6.25 (0.00) per share and an extra dividend of SEK 2.00 per share. In total, the dividend amounted to SEK 3,590 M (0).
Dividends received
During the first nine months 2021, dividends received amounted to SEK 7,072 M (65).
Management cost
The management cost during the first nine months 2021 was SEK 98 M (97), which on a yearly basis corresponds to 0.10% (0.11) of the equities portfolio's value on September 30, 2021.
Financing
Interest-bearing net debt
Interest-bearing net debt amounted to SEK 5.7 billion (6.2) on September 30, 2021. The debt-equities ratio was 4% (5), and the equity ratio was 94% (94). The debt-equities ratio is calculated as interest-bearing net debt in relation to the market value of the equities portfolio.
Within the framework of the existing MTN program, during the first quarter a new bond of SEK 1.5 billion was issued with a five-year maturity. In addition, during the third quarter a bond of SEK 1.0 billion was issued with a maturity of 30 months. The loans pertain mainly to refinancing of matured MTNs and commercial papers. The terms of the loans are available on the Company's website.
No part of Industrivärden's borrowings is conditional upon any covenants.
Interest-bearing net debt
| SEK M | 09/30/2021 | 12/31/2020 |
|---|---|---|
| MTN program | 7,000 | 5,751 |
| Commercial paper | - | 1,800 |
| Provisions for pensions | 22 | 42 |
| Other interest-bearing liabilities | 187 | 225 |
| Total interest-bearing liabilities | 7,209 | 7,818 |
| Less: | ||
| Interest-bearing receivables | -129 | -164 |
| Cash and cash equivalents | -1,350 | 0 |
| Total | 5,730 | 7,654 |
Development of interest-bearing net debt, 5 years
Credit rating
S&P Global Ratings has assigned Industrivärden a credit rating of A+/Stable/A-1. The rating was confirmed on May 27, 2021.
Industrivärden share data
Share performance
The market prices for Industrivärden's Class A and C shares on September 30, 2021, were SEK 281.20 and SEK 272.00, respectively. The corresponding prices on December 31, 2020, were SEK 274.20 and SEK 265.50, respectively.
The total return during the first nine months 2021 was 5% for the Class A and the Class C shares. The Stockholm Stock Exchange's total return index (SIXRX) was 24% during the same period. The total returns for longer periods of time are shown in the table on page 1 and for specific years in the chart below.
Value performance for respective years
At the 2011 Annual General Meeting, a share conversion clause was added to the Articles of Association. Shareholders have the right at any time to request conversion of Class A shares to Class C shares. During the first nine months 2021, 73 shares were converted.
Share structure, September 30, 2021
| Capital, | Votes, | |||
|---|---|---|---|---|
| Share class | No. of shares | No. of votes | % | % |
| A (1 vote) | 267,111,711 | 267,111,711 | 61.4 | 94.1 |
| C (1/10 vote) | 168,098,166 | 16,809,816 | 38.6 | 5.9 |
| Total | 435,209,877 | 283,921,527 | 100.0 | 100.0 |
Accounting policies
This interim report has been prepared in accordance with IAS 34 Interim Financial Reporting. Disclosures in accordance with IAS 34.16A appear not only in the financial statements and their accompanying notes but also in other parts of the interim report. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the EU, and the Swedish Annual Accounts Act. The Parent company's financial statements have been prepared in accordance with RFR 2 – Accounting for Legal Entities, and the Swedish Annual Accounts Act. New or amended IFRSs and IFRIC interpretations have not had any material effect on the Group's or Parent Company's earnings or financial position.
Risks and uncertainties
The dominant risk in Industrivärden's business is share price risk, i.e., the risk of a change in value caused by changes in share prices. A 1% change in the share price of the holdings in the equities portfolio as per September 30, 2021, would have affected its market value by approximately +/– SEK 1,300 M. Further information about risks and uncertainties is provided in the 2020 Annual Report.
Impact of Covid-19 pandemic
During the ongoing Covid-19 pandemic, Industrivärden's operations have been managed without major disruptions. The company has continued low debt level and a good financial position.
The portfolio companies' have been impacted in various ways and successively taken measures to deal with the situation.
Related party transactions
During the first nine months 2021, dividend income was received from associated companies.
Events after the balance sheet date
No significant events have occurred after September 30, 2021.
This interim report has not been reviewed by the Company's auditor.
Financial statements
Group, condensed
| 2021 | 2020 | 2021 | 2020 | 2020 | |
|---|---|---|---|---|---|
| SEK M | July-Sep. | July-Sep. | Jan.-Sep. | Jan.-Sep. | Jan.-Dec. |
| INCOME STATEMENT | |||||
| Dividend income | 87 | 0 | 7,159 | 65 | 657 |
| Change in value of shares, etc. | -6,856 | 5,575 | 3,902 | -347 | 8,008 |
| Management cost | -28 | -27 | -98 | -97 | -130 |
| Operating income | -6,797 | 5,548 | 10,963 | -379 | 8,535 |
| Financial items | -14 | -12 | -40 | -34 | -48 |
| Income after financial items | -6,811 | 5,536 | 10,923 | -413 | 8,487 |
| Tax | 21 | -43 | -53 | -15 | -47 |
| Net income for the period | -6,790 | 5,493 | 10,870 | -428 | 8,440 |
| Earnings per share (there is no dilution effect), SEK | -15.60 | 12.62 | 24.98 | -0.98 | 19.39 |
| STATEMENT OF COMPREHENSIVE INCOME | |||||
| Net income for the period | -6,790 | 5,493 | 10,870 | -428 | 8,440 |
| Items that are not to be reversed in the inc. statement | |||||
| Actuarial gains and losses on pensions | - | - | - | - | 0 |
| Comprehensive income for the period | -6,790 | 5,493 | 10,870 | -428 | 8,440 |
| BALANCE SHEET as per end of period | |||||
| Equities | 134,307 | 118,477 | 128,893 | ||
| Other non-current assets | 18 | 10 | 21 | ||
| Total non-current assets | 134,325 | 118,487 | 128,914 | ||
| Cash and cash equivalents | 1,350 | - | 0 | ||
| Other current assets | 163 | 200 | 196 | ||
| Total current assets | 1,513 | 200 | 196 | ||
| Total assets | 135,838 | 118,687 | 129,110 | ||
| Shareholders' equity | 128,258 | 112,100 | 120,976 | ||
| Non-current interest-bearing liabilities | 5,526 | 4,547 | 4,549 | ||
| Non-current non interest-bearing liabilities | 202 | 163 | 213 | ||
| Total non-current liabilities | 5,728 | 4,710 | 4,762 | ||
| Current interest-bearing liabilities | 1,683 | 1,779 | 3,269 | ||
| Other liabilities | 169 | 98 | 103 | ||
| Total current liabilities | 1,852 | 1,877 | 3,372 | ||
| Total shareholders' equity and liabilities | 135,838 | 118,687 | 129,110 | ||
| CASH FLOW | |||||
| Dividend income | 7,072 | 65 | 657 | ||
| Other | -133 | -129 | -166 | ||
| Cash flow from operating activities | 6,939 | -64 | 491 | ||
| Purchases/sales of shares | -1,520 | -2,063 | -4,106 | ||
| Cash flow from investing activities | -1,520 | -2,063 | -4,106 | ||
| Change interest-bearing liabilities | -604 | 2,071 | 3,559 | ||
| Dividend paid | -3,590 | - | - | ||
| Other | 125 | - | - | ||
| Cash flow from financing activities | -4,069 | 2,071 | 3,559 | ||
| Cash flow for the period | 1,350 | -56 | -56 | ||
| Cash and cash equivalents at end of period | 1,350 | 0 | 0 | ||
Group, condensed (cont.)
| 2021 | 2020 | 2020 | |
|---|---|---|---|
| SEK M | Jan.-Sept. | Jan.-Sept. | Jan.-Dec. |
| CHANGES IN SHAREHOLDERS' EQUITY | |||
| Opening shareholders' equity as per balance sheet | 120,976 | 112,528 | 112,528 |
| Net income for the period | 10,870 | -428 | 8,440 |
| Other comprehensive income | - | - | 0 |
| Dividend to shareholders | -3,590 | - | - |
| Share-savings programme | 2 | - | 8 |
| Closing shareholders' equity as per balance sheet | 128,258 | 112,100 | 120,976 |
| INTEREST-BEARING NET DEBT at end of period | |||
| Cash and cash equivalents | 1,350 | - | 0 |
| Interest-bearing assets | 129 | 165 | 164 |
| Non-current interest-bearing liabilities | 5,526 | 4,547 | 4,549 |
| Current interest-bearing liabilities | 1,683 | 1,779 | 3,269 |
| Interest-bearing net debt | 5,730 | 6,161 | 7,654 |
Fair value measurement of financial instruments
In accordance with IFRS 13, financial instruments are measured at fair value according to a three-level hierarchy. Classification is based on input data that is used in measuring the instruments. Instruments in Level 1 are valued according to quoted prices for identical instruments in an active market. Instruments in Level 2 are measured in a valuation model which uses input data that are directly or indirectly observable in the market. Instruments in Level 3 are measured using a valuation technique based on input data that are not observable in a market. No changes have been made between levels compared with the preceding year.
Evaluation of fair value, September 30, 2021
| Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|
| 133,854 | - | 453 | 134,307 |
| 133,854 | - | 453 | 134,307 |
| Level 1 | Level 2 | Level 3 | Total |
| - | 69 | - | 69 |
| - | 69 | - | 69 |
Parent Company, condensed
| 2021 | 2020 | 2020 | |
|---|---|---|---|
| SEK M | Jan.-Sept. | Jan.-Sept. | Jan.-Dec. |
| INCOME STATEMENT | |||
| Operating income | 6,273 | 2,438 | 10,457 |
| Income after financial items | 6,235 | 2,403 | 10,409 |
| Income for the period | 6,235 | 2,403 | 10,409 |
| Comprehensive income for the period | 6,235 | 2,403 | 10,409 |
| BALANCE SHEET as per end of period | |||
| Non-current assets | 83,946 | 72,749 | 82,138 |
| Current assets | 120 | 159 | 156 |
| Total assets | 84,066 | 72,908 | 82,294 |
| Shareholders' equity | 76,691 | 66,030 | 74,044 |
| Non-current liabilities | 5,592 | 4,602 | 4,622 |
| Current liabilities | 1,783 | 2,276 | 3,628 |
| Total shareholders' equity and liabilities | 84,066 | 72,908 | 82,294 |
Alternative Performance Measures and definitions
This report includes financial key ratios that are based on IFRS (earnings per share). In addition, other key ratios (Alternative Performance Measures – APMs) are used by the Company and other interests to describe the Group's operations and which cannot be discerned or derived from the financial statements. These APMs are to be regarded as a complement to the financial reporting presented in accordance with IFRS. It should be noted that the APMs defined below may differ somewhat from other companies' definitions of the same terms.
Change in value of shares
For shares held at both the start and end of the year, the change in market value consists of the difference in value between these two points in time. For shares sold during the year, the change in market value consists of the difference between the sales price of the shares and their value at the start of the year. For shares acquired during the year, the change in market value consists of the difference between the cost of the shares and their value at the end of the year.
Debt-equities ratio
Interest-bearing net debt in relation to the market value of the equities portfolio.
Earnings per share
Net income for the year divided by the total number of shares outstanding.
Equity ratio
Shareholders' equity as a share of total assets.
Interest-bearing net debt
Interest-bearing liabilities including pension liabilities less cash and cash equivalents and interest-bearing receivables.
Market value of equities portfolio (Portfolio value)
The value of the equities portfolio based on market prices on the balance sheet date.
Net asset value
The market value of the equities portfolio less interestbearing net debt.
Net asset value including reinvested dividend
To calculate the development of net asset value before dividends paid out, the dividend paid out by the Company is recalculated to consider the performance of the listed portfolio. This gives a measure of how net asset value would have developed if Industrivärden had not paid any dividend.
Total return, shares
Change in the share price considering reinvested dividends. The total return is compared against the total return index (SIXRX), which indicates the price development including reinvested dividends for stocks listed on the Stockholm Stock Exchange.
Total return, shareholding
Change in value of a shareholding included reinvested dividend. Reported only for the current reporting period.
Information
Financial calendar
Year-end report 2021: February 10, 2022 Annual report 2021: February 24, 2022 Interim report January-March: April 7, 2022 Annual General Meeting: April 21, 2022 in Stockholm Interim report January-June: July 7, 2022 Interim report January-September: October 6, 2022
Contact persons
Sverker Sivall, Head of Corporate Communications and Sustainability Phone: +46-8-666 64 19 Email: [email protected] Jan Öhman, CFO Phone: +46-8-666 64 45 Email: [email protected]
Contact information
AB Industrivärden (publ) Box 5403, SE-114 84 Stockholm, Sweden Registered office: Stockholm Reg. no.: 556043-4200 Switchboard: +46-8-666 64 00 [email protected] www.industrivarden.net
Ticker codes, Class C shares
INDUC:SS in Bloomberg INDUc.ST in Reuters INDU C in NASDAQ OMX
Publication
This information is such that AB Industrivärden is required to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the Head of Corporate Communication and Sustainability stated above, at 7:30 a.m. CET on October 11, 2021.
