Industrivärden's Year-End Report 2008
Value development and proposed dividend
- Net asset value on December 31, 2008, was SEK 62 per share, a decrease of 55%
for the year including reinvestment of the dividend in 2008. In 2009 net asset
value has increased by 11%, to SEK 69 per share on February 9, 2009.
- The total return in 2008 was -47% for the Class A shares.
- Purchases of stock in 2008 totaled SEK 4,644 M, of which SEK 1,830 M was in
Volvo Class A shares, after which Industrivärden's ownership in Volvo amounted
to 8.5% of the number of votes. Sales of stock totaled SEK 4,314 M. Stocks were
thus purchased for a net amount of SEK 330 M.
- Earnings per share for 2008 were SEK -75.37 (-5.03).
- The Board of Directors proposes a dividend of SEK 4.50 per share (5.00).
Long-term return
- During the last ten-year period, the annual total return for Industrivärden's
Class A shares has exceeded the return index by an average of 2 percentage
points per year.
Current status
”Industrivärden has an entirely transparent balance sheet with market-valued
assets in liquid stocks. We have no contingent liabilities or financial
obligations entailing high risk, and we have refrained from making private
equity investments, which are difficult to analyze and which usually entail a
high level of gearing and thus high financial risk. With an equity ratio of
approximately 70%, firm credit facilities and income that exceeds our expenses,
we stand on solid ground in our role as an active long-term owner in our
portfolio companies,” comments Anders Nyrén, President and CEO of
Industrivärden.
CEO's message
The price decline on the world's stock exchanges that began at mid-year 2007
continued throughout 2008 and accelerated considerably after Lehman Brothers
declared bankruptcy on September 15. This sharp decline came mainly against the
backdrop of a collapsed global credit system that does not have the ability to
provide loans and finance activities, which forms the foundation of a working
national economy. Unfortunately, as 2009 gets under way there are few clear
signs of a return to a more normal function. As a result of interest rate cuts
that are now being carried out together with powerful stimulus measures in all
key economies, we should begin to see a turn for the better. The question is
only how long this normalization process will take and how much damage the
credit collapse will have caused.
Industrivärden is a long-term owner in some of Sweden's leading listed
companies, with competitive positions in the world market. They are largely
active in industries that have been severely hurt by the lack of normal credits,
with poorer sales and profitability as a result. In 2008 the value of our
portfolio fell by SEK 31 billion, and Industrivärden's stock's total return was
-47%, compared with -39% for the total return index. However, a player such as
Industrivärden, with a long-term investment philosophy, must be assessed from a
long-term perspective. Over long periods of time, Industrivärden's stock has
delivered a competitive total return for its shareholders - which is a clear
validation of our strategy.
During the year, as in previous years, in our capacity as an active owner we
strived to contribute to the favorable development of our portfolio companies.
This is a task that requires a long-term, consistent way of working. I am
therefore pleased to note that several of our portfolio companies have further
strengthened their positions. Handelsbanken's focus on the traditional branch
operations and SSAB's strategic acquisition of capacity in IPSCO are prime
examples of this.
In 2008 we continued to increase our ownership position in Volvo - an investment
that we believe has major potential against the background of the rising global
need for transport, extensive infrastructure development in major growth
countries, and growing environmental concerns.
Our aim in our borrowing is to maintain a debt-equity ratio of less than 20%
over the long term. In an extreme situation of the kind we are now experiencing,
with dramatically diminished stock market values, our debt-equity ratio has
fallen short of our long-term objective. Our credit undertakings are not
contingent on our debt-equity ratio.
Industrivärden has an entirely transparent balance sheet with market-valued
assets in liquid stocks. We have no contingent liabilities or financial
obligations entailing high risk. We have also refrained from making private
equity investments, which are difficult to analyze and which usually entail a
high level of gearing and thus high financial risk. With an equity ratio of
approximately 70%, firm credit facilities and income that exceeds our expenses,
we stand on solid ground in our role as an active long-term owner in our
portfolio companies.
With the proposed dividend of SEK 4.50 per share, we continue to achieve our
goal of paying a higher dividend yield than the average for the Stockholm Stock
Exchange, as this is also the lowest level in order not to pay any income tax.
Contact information
Anders Nyrén, President and CEO, tel. +46-8-666 64 00
Sverker Sivall, IR, tel. +46-8-666 64 19
Carl-Olof By, Executive Vice President, tel. +46-8-666 64 00
Martin Hamner, CFO, tel. +46-8-666 64 00
