- The total return for the first quarter was 19% for both the Class A and the Class C shares, compared with 16% for the SIXRX total return index.
- Net asset value on March 31, 2015, was SEK 186/share, which amounts to a rise of 18% since the start of the year. Earnings per share for the first quarter were SEK 27.06 (14.36).
- Bengt Kjell acting CEO of Industrivärden as from the AGM on May 6th, 2015. A new CEO is expected to be presented during the third quarter of 2015.
CEO’s message
Strong stimulus measures for growth
Numerous macroeconomic activities and events are currently taking place which together are creating an unprecedented stimulus of the Western world’s economies. This is needed, to be sure, because growth in the major economies in Europe and in Japan is still far too weak. In the U.S. growth is picking up, with falling jobless figures as a result. So far this has not led to pay raises and higher inflation. However, the point is nearing when America’s central bank, the Fed, can be expected to carry out its first interest rate hike in nine years.
In Europe, extensive Quantitative Easing stimulus programs are currently in progress, which together with zero interest rates have dramatically weakened the euro. This, combined with considerably lower oil prices, has translated to a stimulus of historically unique proportions. This should lead to a needed acceleration of growth in the euro area, where growth and unemployment as well as inflation have been unsatisfactory. In Japan, Abenomics is slowly but surely lifting the economy out of decades of stagflation. With negative or virtually zero interest on treasuries, the world’s bond rally is over. In such a situation, the only investment alternative remaining is equities. Against this background it is hardly surprising that the European bourses, in particular, have shown strong growth as investors seek returns for the large volumes of liquidity.
The stimulus measures that are now being carried out will gradually lead to a strengthening of the economies in emerging markets and to an increase in global trade. So far, however, we have not seen any tangible effects of these measures in our portfolio companies’ order books. But, there are positive signs, such as Volvo’s truck deliveries in Western Europe increased by 17% during the two opening months of the year, which indicates a slightly improved market. Focus for the portfolio companies is however still on structural and efficiency improvement measures. These programs are developing well and are creating, together with strong balance sheets and good cash flows, the scope for investments and acquisitions that is needed for future growth. One example is Ericsson’s investment during the year in the telecom business of the Chinese company Sunrise Technology to expand its IT service offering in China. Strong finances are also enabling favorable dividend levels. This is especially important in times of low interest rates as support for companies’ value performance.
Management changes at the portfolio companies
On March 1 Magnus Groth took office as the new CEO of SCA. Magnus was previously responsible for SCA’s European consumer products business, and prior to this he served as CEO of Studsvik. Pär Boman has been proposed by SCA’s nomination committee to serve as the new Chairman of the Board of SCA.
A new CEO was also appointed at Handelsbanken during the period. Frank Vang-Jensen, with a career at Handelsbanken going back many years, served most recently as head of the bank’s Swedish operations. He took over as Group Chief Executive in connection with Handelsbanken’s Annual General Meeting, when the former Group Chief Executive, Pär Boman, was elected as the new Chairman of the Board.
Developments in 2015
Industrivärden has performed well thus far during the year. At the close of the first quarter, net asset value amounted to SEK 81 billion, or SEK 186 per share – an increase of 18% during the period, compared with 16% for the return index. During the same period, the total return was 19% for both the Class A and the Class C shares, compared with 16% for the return index.
Trading showed a strong first quarter and generated a profit of SEK 65 million.
Management changes at Industrivärden
In connection with the Annual General Meeting in May, after fourteen eventful years I will be leaving my role as President and CEO of Industrivärden. This interim report, the 56th during my tenure, will therefore be my last. It has been an exciting journey taking Industrivärden from more of an equities manager to its current role as a proactive and engaged owner. Provided that the AGM accepts the Nominating Committee’s proposal, I will be elected as Chairman of the Board of Industrivärden on May 6. I am very happy to have been given this confidence, and I look forward to participating in Industrivärden’s continued development.
The ongoing recruitment of a new CEO of Industrivärden is progressing well, but will be extended somewhat in time. The Board believes that it will be able to present a new CEO during the third quarter of 2015. In the interim period, after the AGM Bengt Kjell will serve as acting CEO. He is a former Executive Vice President and Chief Investment Officer of Industrivärden and knows the company well. In addition, he has considerable experience in board work. Given his background, Bengt is well-suited for this assignment.
Annual General Meeting on May 6
On May 6 Industrivärden will hold its Annual General Meeting in the Vinterträdgården hall at Stockholm’s Grand Hotel. I hope as many shareholders as possible will attend and take this opportunity to ask questions and share their views. You are warmly welcome!
Anders Nyrén
