- Net asset value on June 30, 2012, was SEK 113 per share, an increase of 13% since the start of the year including reinvested dividend.
- The value of the equities portfolio increased by SEK 3.3 billion to SEK 59.8 billion, or 6%, during the first half of the year. The Stockholm Stock Exchange gained 3%.
- The total return during the first half of the year was 12% for the Class A shares and 13% for the Class C shares, compared with 7% for the return index.
- Income for the first half of the year totaled SEK 5.1 billion (-4.3), corresponding to SEK 13.08 per share (-11.18).
CEO’s message
The euro crisis continues to affect the global sentiment in general and the financial markets in particular. The anxiety about developments in Europe is mainly rooted in a weak banking system and underfunded government budgets in many continental European countries. Sweden, as well as the other Nordic countries, has strong public finances and a solid banking system, which is a strength in these troubling times. Activity in the real economy and in our portfolio companies is still at a generally stable and relatively high level. This is because our portfolio companies operate in a global market, and economic trend is still relatively favorable in large parts of the world.
The situation in Europe is in many ways a tug of war between the political system and the financial market. The global financial market demands fast solutions and clear results at the same time that the natural sluggishness of a political system like the EU, with broad agreements and negotiated compromises, creates a confidence gap. As a result, the market is not obtaining the stability and predictability it expects. In the current situation, the market’s thirst for solutions can only be satisfied in the area of liquidity, through further initiatives by the European Central Bank, ECB. In the end, only structural reforms and growth can reverse the crisis in the euro area over the long term. Among other things this would involve well adapted structural frameworks for the single currency’s way of working, structural reforms in the member states in areas such as financial markets and labor law, and investments in infrastructure. This structural work takes time – something that the market will have to accept.
Personally, I do not believe the world will go under this time, either. It can also be noted that there are strong driving forces in the form of urbanization, population growth and societal development, which are enabling sustainable growth in large parts of the world. From such an historical perspective, stocks today are cheap. We are therefore not worried about our portfolio of actively owned, quality companies with robust, global market positions. However, the extensive work on change that I described above may take time. It is therefore prudent to exercise patience with respect to valuations of listed companies.
Activity in our portfolio companies is high. With their strong balance sheets they are also well equipped to take on future challenges and to take advantage of favorable acquisition and investment opportunities that arise in times of trouble.
Industrivärden’s stock has performed relatively well during the year, with a total return for the Class C share of approximately 13%, compared with 7% for the Stockholm Stock Exchanges’ total return index.
During the first half of the year we have only made marginal changes in the portfolio. We have bought stocks for SEK 440 M and sold for SEK 872 M, for a net sale of SEK 432 M.
The profit from our short-term trading has amounted to SEK 51 M which is in line with our management costs.
Global competition and free trade are two central drivers of growth and prosperity today. It is therefore important that the playing field is level between companies as well as between trade areas. Against that background, it is worrying that the EU – in its eagerness to regulate in an attempt to avoid new financial crises – is drawing up rules and regulations that put the banking sector in the EU area at a disadvantage. A current example is CRD 4, which regulates banks’ capital adequacy along with a host of other issues. Companies’ operations and ownership rights are being affected by long-reaching detailed regulations, such as those laid out in the EU’s so-called Green Paper on Corporate Governance. What’s even more unfortunate is that the Swedish government is striving for regulations that go even further than the EU’s ambitions, including in such areas as capital adequacy rules for banks, tax rules and specific rules in the environmental area. Such regulation hurts competitiveness, growth and jobs in Sweden.
Anders Nyrén
The information provided in this half-year interim report is such that AB Industrivärden (publ) is obligated to publish pursuant to the Securities Market Act and/or the Financial Instruments Trading Act. Submitted for publication at 10 a.m. on July 5, 2012.
Anders Nyrén, President and CEO
Anders Gustavsson, IRO
Sverker Sivall, Head of Corporate Communication
Martin Hamner, CFO
Tel. +46-8-666 64 00
