AB INDUSTRIVÄRDEN
-- The total return for the year was 13% for the Class A shares and 16% for the Class C shares, compared with 16% for the SIXRX to-tal return index. -- Net asset value on December 31, 2014, was SEK 158/share, which adjusted for conversions and reinvested dividend amounted to a rise of 9%. Earnings per share for the year were SEK 12.62 (31.16). Net asset value on January 30, 2015 was SEK 178/share, or SEK 176/share after full conversion. -- The entire convertible loan 2010-2015 was converted, to 46.1 million new Class C-shares, adding SEK 5.8 billion to share-holder's equity. -- A SEK 4.4 billion exchangeable bond was issued as part of the continuous refinancing of the debt portfolio. The bond was issued at a premium to the existing share price for ICA Gruppen of approximately 38% and carries no interest. -- The Board of Directors proposes a dividend of SEK 6.25 per share (5.50), an increase of 14% equivalent to a dividend yield of 4.6% for the Class C shares.
CEO's message
In early 2014 an air of optimism spread over indications that the European as well as global economies were on track towards a broad upswing. Such was the case in the U.S., but in the rest of the world the economy performed generally worse than expected. Although these expectations were not met, economic performance was not worse than in 2013, and global growth reached 3.3% according to the IMF's estimations - a comparatively favorable level from an historic perspective. In the wake of a stronger economy, the world's stock exchanges rose slowly but surely during the year, led by the U.S., where the S&P 500 noted an all-time high in December.
With this performance in mind, it is exciting to reflect over the fundamental conditions for the current year. We are now facing a situation characterized by monetary stimulus packages on a scale seldom witnessed before. The European Central Bank recently unveiled a stimulus program of EUR 60 billion per month for up to EUR 1.1 trillion at the same time that Abenomics is resulting in continued expansive policies in Japan. The Chinese authorities continue to actively stimulate the Chinese economy with the goal of achieving GDP growth of just over 7%. In the U.S., growth is now favorable, which has led to a slow scale-back of the Fed's QE program. The drop in oil prices represents one of the largest stimulus injections that the Western world has ever seen. Overshadowing these positive forces are numerous geopolitical worries, including the Ukraine crisis, advances by IS, and Russia's economic woes.
All in all I believe that the low interest rates and supply injection created by the lower energy and commodity prices during the year will lead to an improved economic situation for Europe at the same time that the U.S. continues to perform relatively well. This will benefit our portfolio companies - most of which work in a global market. It also creates favorable prospects for Industrivärden's value performance in 2015.
Handelsbanken is showing continued stable performance and continues its organic growth, particularly in the UK. The Volvo Group is in the midst of strategic focus work and has launched several new products that have strengthened its positions in several markets. The restructuring of SCA's product portfolio has borne fruit, and the company can now use cash flow from its European operations for proactive investments in emerging markets. Sandvik's work on lowering costs and increasing flexibility for stronger profitability is unfolding well and has resulted in a stronger and more stable company. Ericsson has in a professional manner developed its leading position with stable sales growth and a strong operating margin. ICA Gruppen is showing continued impressive stability in its core business and left its unprofitable business in Norway during the year. Skanska is continuing its successful expansion in key areas in the U.S. and is winding up its unprofitable business in Latin America. Through its merger with the Finnish steelmaker Rautaruukki, SSAB is creating synergies, increasing its flexibility and strengthening its customer offering. Industrivärden stands stronger than ever before. With a well-developed ownership model and clear action plans in our portfolio companies, we are well equipped for continued long-term value creation.
Net asset value at year-end was SEK 158 per share, an increase of 9% for the year adjusted for conversions and reinvested dividends. The total return was 13% for Industrivärden's Class A shares and 16% for the Class C shares, which was even with the return index. A few of our portfolio companies are undergoing necessary and extensive restructuring programs. These companies have strengthened their conditions considerably, and as their profitability improves they will make a positive contribution to a long-term favorable return for Industrivärden's stock.
In total Industrivärden bought stocks for SEK 1.6 billion, net, during the year. The largest net purchase was in Volvo, for SEK 1.2 billion, followed by Sandvik, for SEK 0.5 billion. The largest net sale was in Skanska, for SEK 0.1 billion M.
Despite low volatility in the stock market, our trading generated a record profit of SEK 178 M, which exceeded the management cost, which amounted to SEK 146 M, or 0.18% of managed assets.
During 2014 the entire convertible loan due in 2015 was converted to 46.1 million new Class C shares, whereby SEK 5.8 billion was added to shareholders' equity. We have thereby carried out a new issue in an investment company that is traded at a discount to net asset value. The proceeds have been invested primarily in Volvo and Sandvik - companies that we believe have favorable long-term value potential.
As part of the ongoing refinancing of the debt portfolio, Industrivärden issued exchangeable bonds worth SEK 4.4 billion in 2014. The loan was issued at a 38% premium over ICA Gruppen's share price and carries zero interest. This is a good component in our debt portfolio which lowers the average interest rate of the portfolio.
The Board of Directors proposes a dividend of SEK 6.25 per share (5.50), which corresponds to a dividend yield of 4.6% for the Class C shares, compared with an average dividend yield of 3.5% for the Stockholm Stock Exchange. We have thereby once again achieved our goal of paying a higher dividend yield than the average for the Stockholm Stock Exchange.
Anders Nyrén
CEO's message
In early 2014 an air of optimism spread over indications that the European as well as global economies were on track towards a broad upswing. Such was the case in the U.S., but in the rest of the world the economy performed generally worse than expected. Although these expectations were not met, economic performance was not worse than in 2013, and global growth reached 3.3% according to the IMF's estimations - a comparatively favorable level from an historic perspective. In the wake of a stronger economy, the world's stock exchanges rose slowly but surely during the year, led by the U.S., where the S&P 500 noted an all-time high in December.
With this performance in mind, it is exciting to reflect over the fundamental conditions for the current year. We are now facing a situation characterized by monetary stimulus packages on a scale seldom witnessed before. The European Central Bank recently unveiled a stimulus program of EUR 60 billion per month for up to EUR 1.1 trillion at the same time that Abenomics is resulting in continued expansive policies in Japan. The Chinese authorities continue to actively stimulate the Chinese economy with the goal of achieving GDP growth of just over 7%. In the U.S., growth is now favorable, which has led to a slow scale-back of the Fed's QE program. The drop in oil prices represents one of the largest stimulus injections that the Western world has ever seen. Overshadowing these positive forces are numerous geopolitical worries, including the Ukraine crisis, advances by IS, and Russia's economic woes.
All in all I believe that the low interest rates and supply injection created by the lower energy and commodity prices during the year will lead to an improved economic situation for Europe at the same time that the U.S. continues to perform relatively well. This will benefit our portfolio companies - most of which work in a global market. It also creates favorable prospects for Industrivärden's value performance in 2015.
Handelsbanken is showing continued stable performance and continues its organic growth, particularly in the UK. The Volvo Group is in the midst of strategic focus work and has launched several new products that have strengthened its positions in several markets. The restructuring of SCA's product portfolio has borne fruit, and the company can now use cash flow from its European operations for proactive investments in emerging markets. Sandvik's work on lowering costs and increasing flexibility for stronger profitability is unfolding well and has resulted in a stronger and more stable company. Ericsson has in a professional manner developed its leading position with stable sales growth and a strong operating margin. ICA Gruppen is showing continued impressive stability in its core business and left its unprofitable business in Norway during the year. Skanska is continuing its successful expansion in key areas in the U.S. and is winding up its unprofitable business in Latin America. Through its merger with the Finnish steelmaker Rautaruukki, SSAB is creating synergies, increasing its flexibility and strengthening its customer offering. Industrivärden stands stronger than ever before. With a well-developed ownership model and clear action plans in our portfolio companies, we are well equipped for continued long-term value creation.
Net asset value at year-end was SEK 158 per share, an increase of 9% for the year adjusted for conversions and reinvested dividends. The total return was 13% for Industrivärden's Class A shares and 16% for the Class C shares, which was even with the return index. A few of our portfolio companies are undergoing necessary and extensive restructuring programs. These companies have strengthened their conditions considerably, and as their profitability improves they will make a positive contribution to a long-term favorable return for Industrivärden's stock.
In total Industrivärden bought stocks for SEK 1.6 billion, net, during the year. The largest net purchase was in Volvo, for SEK 1.2 billion, followed by Sandvik, for SEK 0.5 billion. The largest net sale was in Skanska, for SEK 0.1 billion M.
Despite low volatility in the stock market, our trading generated a record profit of SEK 178 M, which exceeded the management cost, which amounted to SEK 146 M, or 0.18% of managed assets.
During 2014 the entire convertible loan due in 2015 was converted to 46.1 million new Class C shares, whereby SEK 5.8 billion was added to shareholders' equity. We have thereby carried out a new issue in an investment company that is traded at a discount to net asset value. The proceeds have been invested primarily in Volvo and Sandvik - companies that we believe have favorable long-term value potential.
As part of the ongoing refinancing of the debt portfolio, Industrivärden issued exchangeable bonds worth SEK 4.4 billion in 2014. The loan was issued at a 38% premium over ICA Gruppen's share price and carries zero interest. This is a good component in our debt portfolio which lowers the average interest rate of the portfolio.
The Board of Directors proposes a dividend of SEK 6.25 per share (5.50), which corresponds to a dividend yield of 4.6% for the Class C shares, compared with an average dividend yield of 3.5% for the Stockholm Stock Exchange. We have thereby once again achieved our goal of paying a higher dividend yield than the average for the Stockholm Stock Exchange.
Anders Nyrén
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