Investor AB (publ)

Warm welcome to Investors Q4 and year-end webcast. As usual, CEO Johan Forssell and CFO Helena Saxon will take us through the quarter in their presentations, which will be followed then by a Q&A session, where you have the opportunity to ask questions either via the operator or via the web. But without further ado, over to you, Johan.

Thank you, Jakob, and warmly welcome to this conference call. Let me see if this is not working. Put it on. Okay. Here we go. 2023 was a strong year for investors. Our net asset value reached an all-new time high, and we passed the 800 billion mark for the first time. We had a strong total share return of 26%, and this was actually the 13th consecutive year where we beat the stock market. Also listed companies have performed the stock market during the year. And we saw a strong sales and profit growth within Patricia Industries. And when it comes to IKT, despite the tough fundraising market, they reached the fund size target for IKT 10 of 20 billion euro. And now when we enter 2024, we are doing that with a very strong financial position at Investor. And that also gives the opportunity for us to continue our dividend policy with a steadily rising dividend with an increase from 440 to 480 kronor per share. Moving down into the figures, in the fourth quarter, our net asset value was up 8%. The TSR was up 12%, which can be compared with the Swedish stock market being up 14% for the full year. Our net asset value was up 24%. Our TSR was up 26% compared to the stock market being up 19%. Moving then over to the different business areas and starting with the listed companies that represent close to 70% of our net asset value. Here you can see that the TSR in the quarter was up 9% compared to the market 14%. And in the Swedish stock market, we saw in the fourth quarter that it was mainly the interest rate sensitive stocks that had a rally like real estate. But for the full year, the listed companies had a very strong year being up 25% compared to the stock market of 19%. A couple of highlights during the quarter. Epiroc announced the acquisition of Stanley Infrastructure. This is a 760 million US dollar deal. This is a very attractive opportunity for Epiroc. It will give them a leading position within attachments. And it also gives Epiroc a very strong dealer network in the important US market. And finally, The company also get a number of very strong brands globally, like the one you see on the picture, which is Labonte, which is a leading player within chairs. Electrolux Professional announced the acquisition of Tosei in Japan, mainly operating within the professional laundry, but also have some operations within food preparation. If you look on the professional laundry market, Japan is actually the second largest market in the world, and this will significantly improve the market position for Electrolux Professional. Also this, for them, a very sizable acquisition, a little bit more than 1.6 billion SEC deal, and the company they acquire has revenues of about a billion with profitability above the level in Electrolux Professional. Ericsson entered a very important contract with AT&T, Open RAN 5G contract. This is a contract of about 14 billion US dollars over a five-year period. A great testament of Ericsson's strong technology offerings to the customers. And finally, Mats Ramström has decided to leave, as you know, Atlas Copco after 35 years, very successfully, 35 years, not at least the last seven years as CEO. The board has now appointed Wagner Rego to become the new CEO of Atlas Koko, and I think that's an excellent choice. He has a very strong track record in compressor technique, which has grown at a very good pace with high profitability. He is a very strong people leader, also with very good technology knowledge. Moving then over to Patricia Industries, which is just above 20% of our net asset value. In the quarter, the TSR was down about 1%. As you can see here, actually, the earnings and cash flow was very strong. We had an earnings growth of just about 20%. And since we use Four quarters rolling, that will give, call it another 5% value increase. In addition to that, a strong cash flow. Those combined gave a positive impact of about 6% to the value in the quarter. That increase has, however, been mitigated by the strengthening of the Swedish krona versus the US dollar and the euro. That took away 4%, and then we also had a multiple contraction of about 2-3%. So that gives the slightly less than minus 1% development in the quarter. As you can see, though, for the full year, the return was very strong at 24%. mainly driven by a very strong earnings increase. Given the stock market development in the fourth quarter, it might seem a little bit strange that we have a multiple contraction of 2-3%, so let me just give you the explanation for it. When we value our unlisted assets within Patricia, we take the three months rolling market values of their peers. And then we put the value of the companies in relation to last 12 months earnings. That's the methodology we use. And as you can see here, we have exemplified it with the Swedish stock market. That was a sharp rally, not the least in the latter part of the fourth quarter. So this upturn in the stock market and also among our peer groups have not yet been reflected in the valuation of Patricia. That all else equal should of course come back in the coming quarter. I should say when we look at all the different peer groups we have, we see a similar pattern as the Swedish stock market, even though the volatility is somewhat lower, but the pattern is the same. If we then move over to the more important part, which is the operational performance, the fourth quarter was very strong with an organic sales growth of 8% for Patricia and a profit growth of 22%. And you can also see here that the full year result was very strong with a sales growth of 16%, of which 9% organic and a profit growth of 26%. In the quarter, we closed a very important deal, Eurotronic, which we believe gives Laboree a very strong growth opportunity for the future. And also due to the strong cash flow generation in Männlycke, they actually had a cash conversion of close to 130% in the quarter. Männlycke could distribute 300 million euro to Patricia or about 3.4 billion SEK. And here you can see the long-term development. Patricia is now running at close to 63 billion in revenues and an EBITDA of 15.2 billion. If I then go into the companies, as you can see here, it was a broad-based growth in the quarter. Eight out of nine subsidiaries actually had organic growth. The one exception is Atlas Antibodies, which is, as you know, our smallest subsidiary that was down 18 percent in the quarter. And the reason is it continues to be negatively affected by small biotech companies that at the moment have some challenges when it comes to financing, especially in the U.S. market. And the dramatic drop in top line for Atlas Antibody, of course, have affected the profitability. But as you can see, even after the significant drops in the top line, they are still running at the profit margin of close to 30%. And of course, one of the reasons for it is that the company has taken quite some cost initiatives to adjust to the lower demand level. Mönlycke, I will come back to later, if I then make two comments on this slide, starting with advanced instruments. It's very good to see that this is actually the second consecutive quarter with double-digit organic growth. In the quarter, as you see, they grew 14% organically, and we had a very good margin expansion in the quarter. The reason for the strong margin development, of course, is operating leverage. Secondly, cost efficiency measures that they have taken during the quarter and also in the previous quarter, actually. And then finally, in the quarter, we saw that the instrument sales were more or less flat, while we saw a very sharp increase in consumables and service, and they have higher margins. We also had a positive mix effect in the quarter. Then my second comment I want to make is Laboree. Laboree is developing really good. Organic growth of 7%, broad-based growth in the quarter. You can see that the profit margin is down quite a lot in the quarter. The main reason is just transaction costs related to the acquisition of Eurotronic. As you know, we fully load our P&Ls with these kind of costs. But even if we adjust for the transaction costs for Eurotronic, you can see that the margin is down some 3-4% compared to last year. And the reason for that is that we are investing heavily now behind the OptiLoom BPH product. And we are investing in the commercial organization, both marketing and sales, and also supporting physicians when it comes to reimbursement questions. So we are investing, and this will continue going into the first quarter. So we will continue now to invest heavily behind this product, and gradually, of course, when revenues take off, we will see the positive impact coming through. I should say that when we look on the Optilum Urethra Strictures product that we bought earlier, That is having a really strong development, and actually the development is above our investment case when we bought it. So we are very optimistic and positive to these acquisitions. Moving then over to Mönlycke. In the quarter, the organic growth was 9%, and the profit margin increased significantly compared to last year. But as you know, Last year's fourth quarter was a weak margin quarter, mainly for two reasons. First of all, there were production disturbances in the US plant for wound care in Maine. And secondly, there was a customer care reorganization in Europe. If we look more on the underlying margin, it was supported by volume growth and also lower logistic cost, but mitigated by a slight negative currency impact in the quarter. As I mentioned before, the cash conversion was super strong, and Manlyke could thereby distribute 300 million euro. If we look on the development within wound care, it was, as I said, broad-based growth of 9%. Many regions had really strong growth. If you look on Europe, you had a strong growth. In France, Germany, Latin America had high growth, China had high growth. All these regions actually grow about 10% in the quarter. If we look on the ORS business, the organic growth was strong at 11% driven by growth, both with volume, price and mix. And once again, it was the trace category that was the main driver. When it comes to gloves, we now turn to slight positive growth in the quarter. And that is a mix of two things. First of all, the distributor inventory situation has now normalized, which of course is a positive. On the other hand, the U.S. market remains soft for these products. And finally, we have a strong growth of antiseptics, more than 30%, as you can see. And the key reason is that we now have a much better supply situation. Moving then over to equity. Equity had a total return of 16% in the quarter and that was driven by equity AB as you can see. The net cash flow was 1.2 billion and if we take the corresponding figure for the full year, you can see it's a similar picture with a total return of 17% mainly driven then by equity AB. And for the full year, the cash flow was close to zero. What are then the priorities going into this year? First of all, of course, navigate the current market environment. There has been a number of improvements during last year. For example, the supply chain clearly eased in 23 compared to 22. We are seeing inflation coming down, which has led to lower market interest rates. But of course, there are also a number of challenges out there. We know all about the unfortunate wars, both in the Middle East and Ukraine. We have the geopolitical situation, not the least between China and the US. And we have two large economies in the world, China and Germany, that currently have quite tough, tough development. And finally, of course, as we have seen, the consumer is still under pressure. So We are prepared. I think the good part is that we are entering 2024 from a position of strength into it, and we are ready to act. Of course, we don't have a crystal ball what will happen with the macroeconomic, but we are ready, I hope, to be able to navigate in this environment. What is important is that we will continue to invest and future-proof our companies to drive long-term growth. And I talked about Laboree before, and I think that's an excellent example where you invest for the future. And our financial strength is we have a super strong balance sheet entering this year. So, last slide then. We will continue our relentless focus on driving value creation. We have a proven business model and a clear strategic direction. I think we have an excellent portfolio of industry leaders with strong profitability and high cash flow generation that are exposed to many good secular growth trends, as you saw within the presentation of Patricia Industries, for example. And finally, strong balance sheet and good cash flow. That is a good starting point entering 2024. And with that, I hand over to Helena.

Thank you, Johan. Then let's move to my part of the presentation and looking at the growth of net asset value over a few years here. We can see that we landed the quarter at an all-time high 818 billion, which is the first time we're over 800 billion. So that's, of course, very satisfying. And if you look at the annual growth over the last five years, it's 19% with dividend added back, comparing to 15% of 6RX. Looking into the total return by business area, we can see that in the quarter, it was a mixed picture where listed companies was up 9%, Patricia rather flat, minus one, and investments in EQT up 16%, which gives a total of 8% for investor in the fourth quarter. If you look at the full year on the right-hand side here, you can see that all business areas developed better. So listed companies was up as much as 25%, Patricia, 24%, investments in EQT, 17%. And for investor as a whole for the full year, this equals 24%. Looking more closely at the listed portfolio here by company, we can see that the total shareholder return was positive for Almost all of the companies in the portfolio, Wärtsilä and Saab, are developing the best over the full year. And looking on the right-hand side, we can see the total contribution in absolute terms. And we can see here that the largest companies, Atlas Copco and ABB, of course, contributed the most. But SEB, Saab, Sobi and Wärtsilä also added to or contributed to the net asset value in the year. Moving over to Patricia Industries market development, market value development in the quarter. Johan also already mentioned the flat development, but it's actually a combination of two different forces. You see EBITDA and cash flow developing really well for the portfolio, while currency and multiple contractions had a negative impact ending the quarter at 183.6 billion. Breaking this sequential market value development down by company, we can see that Manlycke and Piab contributed positively to the development, while the other subsidiaries had headwinds from FX and multiples. And we can see that Manlycke distributed 3.4 billion to Patricia in the quarter. And Laboree received a capital injection of 2.5 billion to support the acquisition of the remaining 91% of Eurotronic in the quarter. Moving over to the financials, Johan mentioned the strong balance sheet. And here we can see that our leverage is at the lower end of our target range, below 2% at 1.7%. And in addition to our strong balance sheets, we also have a very strong cash flow generation. And this slide we have shown before, not the least of the capital markets day, but now updated with 2023. We can see that since 2015, when Patricia was established, our companies and our platforms have generated as much as 165 billion Swedish krona. And a lot of that, of course, a majority comes from the listed portfolio in terms of dividends. But we've also had significant contribution to the cash flow generation from Patricia Industries and our investments in EQT. So then what have we used this capital for? Well, we have distributed half of it to our shareholders. We have invested in six subsidiaries in Patricia Industries. and we've also invested in selected listed names. During this period, our leverage has decreased from 7% to 2%. Talking about dividends, it was today announced that the investor board proposes a dividend of 4.8 krona to the shareholders, and this will be paid in two instalments. 3.6 krona per share in May and 1.2 krona per share in November. And this equals a 4% increase in dividend from 440 last year to 480. 9%. Did I say something else? Sorry. So 9% is the increase from 440 to 480, but it's also the average annual growth on this page. And the final graph here shows our return over the short and the long term. And we can see that we have not only beaten our own internal return requirement, which is the dotted line on this page, but we've also managed to beat the stock market for all of these periods. And let me then end this presentation with our purpose. We create value for people and society. by building strong and sustainable businesses. Over to you, Jacob.