Year-End Report 2000

  • Listed portfolio
   
  Value at December 31: SEK 54,961 M (54,298)
  Change in value: -4%, General Index -12%
  Total return 1) : -2%, Total Return Index -11%
     
Net asset value    
  At December 31: SEK 283 (298) per share and CPN
  Change from start of the year: -5% (+86%)
     
  • The stock
   
  Price trend: +11%, General Index -12%
  Total return: +14%, Total Return Index -11%

A total net value of SEK 3,149 M was invested during the year in the pharmaceuticals and financial services sectors.

The Board proposes that the dividend and bonus for 2000 be raised by SEK 2.20 to SEK 8.40 per share. Interest per CPN would thus be SEK 9.66.

NET SALES AND EARNINGS 2)
Consolidated net sales amounted to SEK 4,540 M (4,071), an increase of 12 percent compared with the preceding year for comparable units.

Earnings before financial items totaled SEK 1,605 M (4,735). This includes capital gains on sales of stocks, totaling SEK 366 M (3,635). The year-earlier figure includes the sale of the shareholding in AGA, which generated a capital gain of SEK 3,327 M.

Dividends from the portfolio of listed stocks rose 6 percent, to SEK 821 M (775).

Net financial items amounted to SEK -241 M (-132). Earnings after financial items totaled SEK 1,364 M (4,603).

FINANCING AND EQUITY RATIO
During the year Industrivärden was assigned international corporate credit ratings of A+/Stable/A-1 from Standard & Poor's. A five-year EUR 600 M syndicated loan was subscribed, and the Group's Medium-Term Notes program was increased from SEK 2 billion to SEK 5 billion.

Interest-bearing net debt increased by SEK 3,993 M to SEK 5,663 M.

The visible equity ratio was 65 percent (73), while the adjusted equity ratio, which includes surplus values of listed stocks, was 87 percent (91).

PORTFOLIO OF LISTED STOCKS

During the fourth quarter, purchases of listed stocks totaled SEK 503 M and sales totaled SEK 175 M. Major net purchases consisted of 2,025,100 shares of Skandia.

The value of the portfolio of listed stocks at year-end was SEK 54,961 M (54,298). The surplus value was SEK 36,935 M (39,962). Purchases of listed stocks during the year totaled SEK 4,400 M (3,731) and sales totaled SEK 1,053 M (SEK 5,168 M). Stocks were thus purchased for a net total of SEK 3,347 M (1999: net sales of SEK 1,437 M). Sales from the portfolio of listed stocks resulted in a capital gain of SEK 456 M (SEK 3,535 M).

Adjusted for purchases and sales, the value of the portfolio decreased by 4 percent during the year (1999: increase of 87 percent). The Affärsvärlden General Index fell by 12 percent during the same period (1999: +66 percent). The total return for the portfolio of listed stocks was -2 percent, compared with -11 percent for the Findata Total Return Index.

Dividend income from the listed portfolio amounted to SEK 821 M (775).

During the year a net total of SEK 1,373 M was invested in the pharmaceuticals sector and SEK 1,776 M in financial services.

Major net purchases consisted of 7,596,800 shares of Skandia, 1,871,000 Lundbeck A/S, 4,350,000 Handelsbanken, 1,151,250 Pharmacia Corp., 550,000 Pfizer Inc., and 455,000 Karo Bio. Major net sales consisted of 1,227,000 SCA and 200,000 Volvo.

The number of shares in Ericsson increased as a result of a 4:1 split, and the number of shares in Skandia increased as a result of a 1:1 stock dividend. Pharmacia Corp. was formed through the merger of Pharmacia & Upjohn and Monsanto, whereby 1.19 shares in Pharmacia Corp. were received for each share held in Pharmacia & Upjohn.

During the year Industrivärden signed an agreement with Ericsson and others to form Ericsson Venture Partners, targeting investments in mobile Internet development. The aggregate committed fund capital amounts to USD 300 M, of which Industrivärden's share is 25 percent.

Price Trend for the Largest Shareholdings
The trend in 2000 for the largest shareholdings, which accounted for 89 percent of the portfolio's value at December 31, was as follows:

  Share of portfolio Price change
  value at Dec. 31, % 2000, %
Ericsson 37 -22
Handelsbanken 15 51
Skandia 13 19
     
Sandvik 10 -15
SCA 7 -19
Pharmaceuticals 7 107
     

Ericsson’s earnings for the network operators segment remained strong, while a substantial loss was reported for consumer products. Ericsson's stock performed worse than the General Index.

Handelsbanken performed better than the General Index, the bank & financial services index, and other Nordic commercial banks.

Skandia performed better than the General Index as well as comparable international insurance companies.

Stocks of cyclical companies like Sandvik and SSAB were weak in 2000 after having outperformed the General Index in 1999.

SCA showed favorable earnings development. Its stock performed on a par with the forestry index.

Industrivärden's pharmaceutical stocks (Lundbeck A/S, Pfizer Inc. and Pharmacia Corp.) performed better than the General Index, the chemical and pharmaceuticals index, and comparable international pharmaceutical companies.

Development for the Listed Portfolio Through February 16, 2001
The market value of the listed portfolio on February 16, 2001, was SEK 50,473 M, and the surplus value was SEK 32,461 M. Adjusted for purchases and sales, the portfolio's value decreased by 8 percent from the start of the year. The General Index decreased by 5 percent during the same period.

PARENT COMPANY
The Parent Company's dividend income amounted to SEK 839 M (787), including SEK 821 M (775) from listed companies. Including capital gains of SEK 366 M (3,654) from sales of stocks, earnings amounted to SEK 1,205 M (4,441). After administrative costs and a negative balance of net financial income/expense, earnings after financial items totaled SEK 881 M (4,230), including SEK 14 M in repaid surplus funds from SPP.

SUBSIDIARIES
Besam's net sales rose 14 percent, to SEK 1,977 M (1,735). Earnings after financial items amounted to SEK 217 M (182), including SEK 5 M in repaid surplus funds from SPP.

Isaberg Rapid's net sales were SEK 642 M (583), an increase of 10 percent. Earnings after financial items totaled SEK 65 M (64), including SEK 6 M in repaid surplus funds from SPP.

Indutrade's net sales amounted to SEK 1,919 M (1,751), an increase of 10 percent. Earnings after financial items totaled SEK 176 M (138), including SEK 26 M in repaid surplus funds from SPP.

After the close of the year Indutrade acquired the trading companies AKA and Fagerberg from Hexagon. Including these acquired units, Indutrade's pro forma net sales would have amounted to approximately SEK 3 billion for 2000.

The return on capital employed for the subsidiary businesses (excl. repayment of SPP surplus funds) was 32 percent (28).

CALCULATED NET ASSET VALUE

Industrivärden's net asset value 3) as per December 31, 2000, has been calculated at SEK 54.1 billion, or SEK 283 per share and CPN. Net asset value as per February 16, 2001, has been calculated at SEK 259 per share and CPN. Net asset value as per December 31, 1999, was calculated at SEK 298 per share and CPN.

PROPOSED DIVIDEND
The Board proposes a dividend of SEK 5.00 (5.00) per share, plus a bonus dividend of SEK 3.40 (1.20), for a total dividend of SEK 8.40 (6.20) per share. Interest per CPN would thus amount to SEK 9.66. The proposal entails that no tax would be paid by the Parent Company. The total dividend payout would thus amount to SEK 1,443 M, and CPN interest would amount to SEK 188 M.

SHARE REPURCHASES
The Board has decided to request a renewal of its authorization from the Annual General Meeting concerning the repurchase of a maximum of 5 million shares of the Company's own stock.

ANNUAL GENERAL MEETING
The Annual General Meeting will be held on Thursday, May 3, 2001, at 2 p.m., at the Grand Hotel, Vinterträdgården, in Stockholm.

Industrivärden's nominating committee for election of board members consists of Bo Damberg (Handelsbanken foundations), Erling Gustafsson (National Pension Insurance Fund, Sixth Fund Board), Tor Marthin (AMF Pension), Tomas Nicolin (National Pension Insurance Fund, Third Fund Board), and Bo Rydin (Chairman of Industrivärden).

Stockholm, Sweden, February 20, 2001

AB Industrivärden (publ)

The Board of Directors

FINANCIAL CALENDAR
The 2000 Annual Report will be published at the end of March 2001.
An interim report for the period January–March 2001 will be released on May 3, 2001.
An interim report for the period January–June 2000 will be released on August 15, 2001.
An interim report for the period January–September 2000 will be released on Oct. 31, 2001.

Fotnot 4)


Fotnot 5)

XX 6)


The listed portfolio above included the following stocks which were out on loan:

  Number
Skandia 20,000
SCA 176,900
Skanska 500,000

The portfolio of listed stocks has been valued at current market value. The wholly owned industrial and trading operations have been assigned a calculated value using a P/E multiple of 13 (15 at year-end 1999), based on the companies' earnings for 2000.

For data on the composition of net asset value on all reporting occasions during the past seven years, see Interactive Analysis of Holdings on Industrivärden's website: www.industrivarden.se.

AB Industrivärden (publ) Org nr 556043-4200

Box 5403, SE-114 84 Stockholm, Sweden

Phone +46-8-666 64 00, Fax +46-8-661 46 28

Internet: www.industrivarden.se

E-mail: info@industrivarden.sePrice trend plus reinvested dividends.

Industrivärden has ownership stakes in Ericsson, SCA and Skanska which corresponds to at least 20 percent of the number of votes after full dilution. The consolidated income statement and balance sheet presented in this year-end report do not include any part of these companies' reported earnings.

The composition of net asset value is shown in the table on page 11.

Of which, surplus funds in SPP: SEK 64 M.

Of which, surplus funds in SPP: SEK 64 M.

Including surplus values of listed stocks.



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