Interim Report January 1 - March 31, 2008
Value development
• Net asset value on April 30, 2008, was SEK 127 per share, a decrease of 11%
since the start of the year. On March 31, 2008, net asset value was SEK 125 per
share.
• The total return for the Class A shares was -4% for the first four months of
the year.
• The Group's result for the first quarter of 2008 was SEK -6,464 M (SEK
-16.73/share), compared with SEK 6,653 M in 2007 (SEK 17.22/share).
Significant events for portfolio companies
• SSAB sold IPSCO's tubular operations for USD 4 billion, thereby strengthening
its core business focus and reducing financial risk.
• Greater focus on organic growth of Handelsbanken's core business a
decentralized branch operation - both in and outside of Sweden.
Long-term return
• During the last ten-year period, the average annual total return for
Industrivärden's Class A shares has exceeded the return index by 2 percentage
points.
Financial summary April 30, 2008 March 31, 2008 Dec. 31, 2007
Value of equities 59.3 59.3 65.8
portfolio, SEK
billion
- total return, % -6 -10 -2
Borrowings, net 10.2 10.9 11.0
debt, SEK billion
- debt-equity 17.2 18.3 16.6
ratio, %
- average 4.6 4.6 4.6
interest rate, %
Net asset value, 49.1 48.4 54.8
SEK billion
Net asset value, 127 125 142
SEK per share
- development -7 -12 -3
incl. reinvested
dividend, %
Management cost,% 0.14 0.14 0.13
Dividend yield, 4.9 4.8 4.4
Class A shares, %
Total return, -4 -8 -14
Class A shares, %
CEO's Message
Anxiety and turbulence in the international credit market intensified during the
start of 2008. It remains to be seen if the U.S. Federal Reserve Bank's rescue
of the investment bank Bear Sterns marked a turning point in this turbulence.
America's real economy is now showing considerable signs of slowing. Even though
there are signs of a slowing in other countries, development in the rest of the
world is surprisingly favorable - especially in view of the anticipated negative
effects of the credit concerns, which should lead to credit tightening, and the
effects of weak economic development in the U.S., with falling consumption and a
steadily weakening dollar. A further matter of concern is the rising food,
energy and commodity prices, which are putting inflationary pressures on the
economy.
In other words, the general economic situation is extremely difficult to assess,
which is evidenced in the negative development of the stock markets and
continued large risk aversion. However, I can report that our portfolio
companies have for the most part presented satisfactory three-month results for
2008, with continued favorable growth in many cases - above all in China,
Southeast Asia, India, South America and Eastern Europe. Most of our companies
are well positioned to meet this demand situation.
Through SSAB's acquisition of the North American steel and pipe manufacturer
IPSCO, the company has created an expanded production base to retain its leading
position in its core segments - quenched and high-strength steels. In line with
this niche strategy, it is logical that IPSCO has now agreed to sell its tubular
division, thereby strengthening SSAB's focus on its core business and reducing
its financial risk. SSAB has also substantially lowered its debt burden.
Following the sale of SPP, Handelsbanken can now concentrate on its core
business. With consensus in the board and management on the bank's strategy,
favorable conditions have been created to strengthen growth in profitability and
earnings.
The result of our short-term trading was SEK 22 M during the first quarter,
which covered our management costs. This is satisfactory considering the
turbulent market situation.
During the first four months of the year, Industrivärden's stock generated a
total return that was 2 percentage points higher than the market average,
despite falling stock market values.
Today we have a portfolio consisting primarily of globally active quality
companies, most of which are leaders in their respective industries. I believe
that the prospects are good, through active ownership, to play a part in further
developing these companies and thereby be able to continue delivering a
competitive return.
