Interim / Quarterly Report • Jul 6, 2021
Interim / Quarterly Report
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January 1–June 30, 2021
Average annual change as per June 30, 2021
| Total return | ||||
|---|---|---|---|---|
| Net asset value* | Industrivärden C | Index (SIXRX) | ||
| 6M:2021 | 14% | 21% | 22% | |
| 1 year | 30% | 52% | 47% | |
| 3 years | 14% | 24% | 20% | |
| 5 years | 16% | 21% | 18% | |
| 7 years | 13% | 16% | 14% | |
| 10 years | 12% | 15% | 14% |
*Including reinvested dividend.
The ongoing pandemic continues to affect society to a high degree. Vaccinations for Covid-19 continues, and with a steadily higher level of immunity, parts of the world are now successively opening up their societies. The easing of restrictions, substantial stimulus packages and large savings surpluses are expected to drive aggregated demand during the rest of 2021 and possibly also into early 2022. Overall this is creating conditions for continued favorable development of the real economy. At the same time, it poses a risk for economic overheating. On the supply side, the growing demand has resulted in shortages of semiconductors and a number of other essential input goods. Given the strong development, there are concerns for growing inflation and rising interest rates, which is putting focus on the actions of central banks going forward. Furthermore, the spread of the so-called Delta variant of Covid-19 raises some concerns.
Against the backdrop of the favorable development of the real economy and positive future outlook, the stock market has performed strongly in 2021. As of the end of June the Stockholm Stock Exchange was up a full 19%. Even though volatility is higher than before the pandemic, it has recently decreased as a result of reduced uncertainty about the future.
On the whole, the portfolio companies had positive development and it is gratifying to see how highly adept the companies have been at managing the effects of the global Covid-19 pandemic. Our companies have a structured approach to managing risks, taking advantage of opportunities and executing their strategies in order to achieve their longterm targets over time. On this point I would like to share a few examples of activities in the portfolio companies during the second quarter.
Sandvik continues to execute its strategy to grow in selected areas in which it has a strong position. During the second quarter it signed an agreement to acquire the South African company Kwatani, a supplier of screens and feeders for the mining industry. An agreement was also signed for the acquisition of American Cambrio, which offers integrated solutions in CAM software for the manufacturing industry. At the start of the second quarter Volvo completed its sale of UD Trucks, and at an Extraordinary General Meeting Volvo's board of directors proposed that the proceeds of the sale be distributed to the shareholders, which took place at the end of June. In early July Volvo, Daimler Truck and the Traton Group announced that they plan to pioneer a European high-performance charging network for heavy-duty trucks.
Essity has strengthened its positions in several partly owned businesses in key growth areas. During the second quarter the company increased its ownership in the Colombian hygiene company Productos Familia and acquired the remaining shares in the Swedish medical solutions company ABIGO Medical as well as in the Australian hygiene company Asaleo Care. Ericsson continued to announce new 5G contracts and collaborations, and has unveiled new solutions in 5G. The company also signed a global patent license agreement with Samsung. Skanska has signed a number of new contracts, including on the important U.S. market, and completed the previously announced sale of infrastructure services business in the UK.
In April 2018 we sold slightly more than half of our shareholding in SSAB, after which the remaining holding accounted for only 1% of Industrivärden's total portfolio value. SSAB's stock has performed well in recent time, and in May 2021 we sold our remaining shareholding for slightly more than SEK 2 billion. Industrivärden has been an engaged owner in SSAB since 1994 and participated in a number of key development steps, such as for example, a successful specialization strategy, numerous value-creating acquisitions and the venture into fossil-free steel. Through this sale we have freed up capital for new alternative investments.
On June 30, 2021, Industrivärden's net asset value amounted to SEK 135.4 billion, or SEK 311 per share, which represents an increase of 14% during the first half of the year including reinvested dividend. The total return for Industrivärden's shares during the first half was 24% for the Class A shares and 21% of the Class C shares, compared with 22% for the total return index (SIXRX).
During the period we invested approximately SEK 2.3 billion in existing portfolio companies. Shares were bought in Sandvik for SEK 1.5 billion, in Essity for SEK 0.5 billion, and in Handelsbanken for SEK 0.3 billion. This is a clear expression of our conviction about the continued long-term value potential in our portfolio companies.
Helena Stjernholm Chief Executive Officer
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.
| 06/30/2021 | 6M: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 3,600,000 |
8.4 | 27.6 | 35,353 741 |
83 | 26 | 7,059 | 21 |
| Sandvik | 164,200,000 | 13.1 | 13.1 | 35,894 | 82 | 26 | 3,736 | 12 |
| Handelsbanken A | 215,200,000 | 10.9 | 11.0 | 20,780 | 48 | 15 | 3,823 | 22 |
| Essity A Essity B |
33,257,000 37,600,000 |
10.1 | 29.4 | 9,478 10,671 |
46 | 14 | 1,664 | 9 |
| SCA A SCA B |
33,785,290 38,300,000 |
10.3 | 29.3 | 4,764 5,372 |
23 | 7 | -217 | -2 |
| Ericsson A Ericsson B |
86,052,615 1,000,000 |
2.6 | 15.1 | 9,259 108 |
22 | 7 | 278 | 3 |
| Skanska A Skanska B |
12,667,500 18,500,000 |
7.4 | 24.3 | 2,876 4,200 |
16 | 5 | 843 | 13 |
| Other | 454 | 1 | 0 | 706 | ||||
| Equities portfolio | 139,948 | 322 | 100 | 17,893 | 14 | |||
| Interest-bearing net debt | -4,550 | -10 | ||||||
| Net asset value | 135,398 | 311 | ||||||
| Debt-equities ratio | 3% |
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
Net asset value on June 30, 2021, was SEK 135.4 billion, or SEK 311 per share, an increase of SEK 32 per share during the first half of 2021. Including reinvested dividend, net asset value increased by 14%. The total return index (SIXRX) increased by 22% during the same period.
During the last three-, five- and ten-year periods, net asset value grew annually by 14%, 16% and 12%, respectively, including reinvested dividend. The total return index (SIXRX) increased by 20%, 18% and 14%, respectively, during the same periods.
Net asset value
| 06/30/2021 | 12/31/2020 | |||
|---|---|---|---|---|
| SEK bn | SEK/share | SEK bn | SEK/share | |
| Equities portfolio | 139.9 | 322 | 128.9 | 296 |
| Interest-bearing net | ||||
| debt | -4.6 | -10 | -7.7 | -18 |
| Net asset value | 135.4 | 311 | 121.2 | 279 |
Growth in net asset value, 10 years
During the first half of 2021 the value of the equities portfolio, adjusted for purchases and sales, increased by SEK 10.8 billion. On June 30, 2021, the equities portfolio was worth SEK 139.9 billion, or SEK 322 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 first half of the year were Volvo with SEK 7.1 billion, Handelsbanken with SEK 3.8 billion and Sandvik with SEK 3.7 billion. Handelsbanken and Volvo 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 half of 2021 dividend income from the equities portfolio totaled SEK 7.1 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 | |
| Volvo A | 21 |
| Total return index (SIXRX) | 20 |
| Volvo B | 20 |
| Ericsson A | 18 |
| Ericsson B | 17 |
| Skanska B | 15 |
| SCA B | 14 |
| SCA A | 14 |
| Sandvik | 13 |
| Essity A | 11 |
| Essity B | 11 |
| Handelsbanken A | 2 |
During the first half of 2021 shares were purchased in Sandvik for SEK 1,506 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.
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).
During the first half of 2021, dividends received amounted to SEK 5,455 M (65).
The management cost during the first half of 2021 was SEK 70 M (70), which on a yearly basis corresponds to 0.10% (0.13) of the equities portfolio's value on June 30, 2021.
Contribution analysis of equities portfolio, 6M:2021
Interest-bearing net debt amounted to SEK 4.6 billion (5.1) on June 30, 2021. The debt-equities ratio was 3% (5), and the equity ratio was 95% (94). The debt-equities ratio is calculated as interest-bearing net debt in relation to the market value of the equities portfolio.
During the first quarter of 2021, a new bond was issued of SEK 1.5 billion within the framework of the existing MTN program. The bond pertains mainly to refinancing and has a five-year maturity. The terms of the loan are available on the Company's website.
No part of Industrivärden's borrowings is conditional upon any covenants.
Interest-bearing net debt
| 06/30/2021 | 12/31/2020 | |
|---|---|---|
| MTN program | 6,000 | 5,751 |
| Commercial paper | 1,000 | 1,800 |
| Provisions for pensions | 28 | 42 |
| Other interest-bearing liabilities | 200 | 225 |
| Total interest-bearing liabilities | 7,228 | 7,818 |
| Less: | ||
| Interest-bearing receivables | -1,657 | -164 |
| Cash and cash equivalents | -1,021 | 0 |
| Total | 4,550 | 7,654 |
Development of interest-bearing net debt, 5 years
S&P Global Ratings has assigned Industrivärden a credit rating of A+/Stable/A-1. The rating was confirmed on May 27, 2021.
The market prices for Industrivärden's Class A and C shares on June 30, 2021, were SEK 332.80 and SEK 313.20, respectively. The corresponding prices on December 31, 2020, were SEK 274.20 and SEK 265.50, respectively.
The total return during the first half of 2021 was 24% for the Class A shares and 21% for the Class C shares. The Stockholm Stock Exchange's total return index (SIXRX) was 22% during the same period. The total return 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 half of 2021, 73 shares were converted.
Share structure, June 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 |
The 2021 Annual General Meeting was held on April 21. In light of the Covid-19 pandemic and in order to minimize any risk of spreading of the corona virus, the Annual General Meeting was held only through postal voting in accordance with temporary legislation being in effect in 2021. At the meeting, the following resolutions were made, among others:
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.
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 June 30, 2021, would have affected its market value by approximately +/– SEK 1,400 M. Further information about risks and uncertainties is provided in the 2020 Annual Report.
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.
During the first half of 2021, dividend income was received from associated companies.
No significant events have occurred after June 30, 2021.
This interim report has been reviewed by the company's auditors.
The Board of Directors and CEO certify that the half-year interim report gives a true and fair presentation of the Parent Company's and Group's business, financial position and result of operations, and describes material risks and uncertainties facing the Parent Company and the companies included in the Group.
Stockholm July 6, 2021 AB Industrivärden (publ)
| Fredrik Lundberg | Pär Boman | Christian Caspar |
|---|---|---|
| Chairman | Vice Chairman | Director |
| Marika Fredriksson | Bengt Kjell | Annika Lundius |
| Director | Director | Director |
| Lars Pettersson Director |
Helena Stjernholm CEO and director |
We have reviewed the interim report for AB Industrivärden (publ) for the period January 1 - June 30, 2021. The Board of Directors and the President are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and is substantially less in scope than an audit conducted in accordance with ISA and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not, in all material respects, prepared for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act.
Stockholm July 6, 2021 Deloitte AB
Hans Warén Authorized Public Accountant
| 2021 | 2020 | 2021 | 2020 | 2020 | |
|---|---|---|---|---|---|
| SEK M | Apr.-Jun. | Apr.-Jun. | Jan.-Jun. | Jan.-Jun. | Jan.-Dec. |
| INCOME STATEMENT | |||||
| Dividend income | 5,352 | 65 | 7,072 | 65 | 657 |
| Change in value of shares, etc. | -5,878 | 12,633 | 10,758 | -5,922 | 8,008 |
| Management cost | -37 | -31 | -70 | -70 | -130 |
| Operating income | -563 | 12,667 | 17,760 | -5,927 | 8,535 |
| Financial items | -12 | -13 | -26 | -22 | -48 |
| Income after financial items | -575 | 12,654 | 17,734 | -5,949 | 8,487 |
| Tax | -14 | -41 | -74 | 28 | -47 |
| Net income for the period | -589 | 12,613 | 17,660 | -5,921 | 8,440 |
| Earnings per share (there is no dilution effect), SEK | -1.35 | 28.98 | 40.58 | -13.60 | 19.39 |
| STATEMENT OF COMPREHENSIVE INCOME | |||||
| Net income for the period | -589 | 12,613 | 17,660 | -5,921 | 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 | -589 | 12,613 | 17,660 | -5,921 | 8,440 |
| BALANCE SHEET as per end of period | |||||
| Equities | 139,948 | 111,838 | 128,893 | ||
| Other non-current assets | 19 | 11 | 21 | ||
| Total non-current assets | 139,967 | 111,849 | 128,914 | ||
| Cash and cash equivalents | 1,021 | 798 | 0 | ||
| Other current assets | 1,696 | 207 | 196 | ||
| Total current assets | 2,717 | 1,005 | 196 | ||
| Total assets | 142,684 | 112,854 | 129,110 | ||
| Shareholders' equity | 135,047 | 106,607 | 120,976 | ||
| Non-current interest-bearing liabilities | 4,533 | 4,554 | 4,549 | ||
| Non-current non interest-bearing liabilities | 247 | 115 | 213 | ||
| Total non-current liabilities | 4,780 | 4,669 | 4,762 | ||
| Current interest-bearing liabilities | 2,695 | 1,487 | 3,269 | ||
| Other liabilities | 162 | 91 | 103 | ||
| Total current liabilities | 2,857 | 1,578 | 3,372 | ||
| Total shareholders' equity and liabilities | 142,684 | 112,854 | 129,110 | ||
| CASH FLOW | |||||
| Dividend income | 5,455 | 65 | 657 | ||
| Other | -101 | -97 | -166 | ||
| Cash flow from operating activities | 5,354 | -32 | 491 | ||
| Purchases/sales of shares | -279 | -1,004 | -4,106 | ||
| Cash flow from investing activities | -279 | -1,004 | -4,106 | ||
| Change interest-bearing liabilities | -589 | 1,778 | 3,559 | ||
| Dividend paid | -3,590 | - | - | ||
| Other Cash flow from financing activities |
125 -4,054 |
- 1,778 |
- 3,559 |
||
| Cash flow for the period | 1,021 | 742 | -56 | ||
| Cash and cash equivalents at end of period | 1,021 | 798 | 0 |
| 2021 | 2020 | 2020 | |
|---|---|---|---|
| SEK M | Jan.-Jun. | Jan.-Jun. | Jan.-Dec. |
| CHANGES IN SHAREHOLDERS' EQUITY | |||
| Opening shareholders' equity as per balance sheet | 120,976 | 112,528 | 112,528 |
| Net income for the period | 17,660 | -5,921 | 8,440 |
| Other comprehensive income | - | - | 0 |
| Dividend to shareholders | -3,590 | - | - |
| Share-savings programme | 1 | - | 8 |
| Closing shareholders' equity as per balance sheet | 135,047 | 106,607 | 120,976 |
| INTEREST-BEARING NET DEBT at end of period | |||
| Cash and cash equivalents | 1,021 | 798 | 0 |
| Interest-bearing assets | 1,657 | 166 | 164 |
| Non-current interest-bearing liabilities | 4,533 | 4,554 | 4,549 |
| Current interest-bearing liabilities | 2,695 | 1,487 | 3,269 |
| Interest-bearing net debt | 4,550 | 5,077 | 7,654 |
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.
| 06/30/2021 | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Assets | ||||
| Equities | 139,494 | - | 454 | 139,948 |
| Derivatives, etc. | - | 1 | - | 1 |
| Total assets | 139,494 | 1 | 454 | 139,949 |
| Level 1 | Level 2 | Level 3 | Total | |
| Liabilities | ||||
| Derivatives, etc. | - | 91 | - | 91 |
| Total liabilities | - | 91 | - | 91 |
| 2021 | 2020 | 2020 | |
|---|---|---|---|
| SEK M | Jan.-Jun. | Jan.-Jun. | Jan.-Dec. |
| INCOME STATEMENT | |||
| Operating income | 12,136 | -3,894 | 10,457 |
| Income after financial items | 12,110 | -3,917 | 10,409 |
| Income for the period | 12,110 | -3,917 | 10,409 |
| Comprehensive income for the period | 12,110 | -3,917 | 10,409 |
| BALANCE SHEET as per end of period | |||
| Non-current assets | 88,653 | 65,873 | 82,138 |
| Current assets | 1,597 | 365 | 156 |
| Total assets | 90,250 | 66,238 | 82,294 |
| Shareholders' equity | 82,565 | 59,710 | 74,044 |
| Non-current liabilities | 4,624 | 4,604 | 4,622 |
| Current liabilities | 3,061 | 1,924 | 3,628 |
| Total shareholders' equity and liabilities | 90,250 | 66,238 | 82,294 |
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.
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.
Interest-bearing net debt in relation to the market value of the equities portfolio.
Net income for the year divided by the total number of shares outstanding.
Shareholders' equity as a share of total assets.
Interest-bearing liabilities including pension liabilities less cash and cash equivalents and interest-bearing receivables.
The value of the equities portfolio based on market prices on the balance sheet date.
The market value of the equities portfolio less interestbearing net debt.
To calculate the development of net asset value before dividends paid out, the dividends paid out by the Company are recalculated to take into account 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.
Change in the share price taking into account 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.
Change in value of a shareholding included reinvested dividend. Reported only for the current reporting period.
Interim report January-September: October 11, 2021
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]
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
INDUC:SS in Bloomberg INDUc.ST in Reuters INDU C in NASDAQ OMX
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 10:00 a.m. CET on July 6, 2021.
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