Investor AB (publ)

Good morning and welcome to Investors Results Call for the second quarter and first half of 2026. I'm joined in our Stockholm studio by CFO Jenny Arsman-Harkvinius and CEO Kristian Sederholm. Following the presentations, we'll be opening up for questions both via our operator as well as online. With that, over to you, Kristian.

Thank you, Jacob, and hi, everyone. In Q2, net asset value growth was 9%, and total shareholder turn for investors' B-share was 15%. The growth was all driven by listed companies, where both Patricia Industries and investments in EQT contributed negatively. Importantly, when multiples were down, underlying performance in the Patricia companies was solid. At the end of the second quarter, adjusted net asset value stood at 1,215 billion Swedish. Let me briefly go through the three business areas, listed companies, Patricia Industries and investments in EQT. Starting with listed companies then. Listed companies generated a total return of 14% in Q2. Performance was primarily driven by a few of our industrial companies, led by ABB, which benefits from electrification and demand related to the build-out of data centers. During the quarter, we participated with our Prorata share of 1.7 billion Swedish in Rexolux's rights issue, as they strengthened their balance sheet. The joint ventures with Midea is another important strategic step aimed at improving profitability in North America. As you know, Wärtsilä has recently completed a number of divestments of non-strategic assets, basically pruning its portfolio. In Q2, Wärtsilä announced a joint venture for its global energy storage business, teaming up with a seasoned partner who knows the business and has a proven track record of performing also under challenging market conditions. We believe this can unlock further potential from the storage business itself, while also allowing Wärtsilä to focus even more on its remaining core marine and energy businesses, where they continue to expand capacity to meet strong demand. Börje Colm announced his departure from Ericsson. Per Narvinger, his successor, takes over a company in strong shape. Ericsson today is a company with technology and market leadership and with a number of opportunities for accelerated growth. Per has been a key contributor to the journey thus far and knows the customers, the technologies and the company well. Now over to Patricia Industries. Total return here was minus 3% with lower multiples outweighted earnings growth and cash flow in the quarter. For the major subsidiaries, organic sales growth was 7% and adjusted EBITDA grew by 16%, with solid cash flow conversion. For the first time in quite a while, FX was not a big drag on reported earnings. A few highlights then. Nova Biomedical performed strongly, with healthy growth and efficiency improvements from the ongoing integration work. However, a lot of work remains. Mönlycke formed the JV with Sender Medical to broaden access to high-quality wound care solutions in China and to help Mönlycke adapt to China's speed on, for example, product development. And in the quarter, Mönlycke and 3 Scandinavia both distributed cash to Patricia Industries. Now for the major subsidiaries, and our 40% in 3 Scandinavia, revenues amounted to almost SEVENTY ONE BILLION Swedish in the last 12 months. And EBITDA for the corresponding period was just north of EIGHTEEN BILLION. Now remember, this is all in Swedish kronor, so of course sensitive to FX. And finally then, investments in EQT, our third business area. Here, total return was a negative 2%, dragged down by the decline in EQT AB's share price. Dividends from EQT AB and a net positive funds flow more than offset the 349 million Swedish investment we made in EQT AB shares. Activity remained high. For example, EQT was selected to lead the Scale Up Europe Fund, a 5 billion euro initiative designed to support the growth of Europe's most promising technology companies and to strengthen the continent's innovation ecosystem. Also, EQT successfully raised 15.6 billion US dollars for its new Asia flagship fund, making it the largest Asia-Pacific dedicated private equity fund ever raised. These are both great testaments to the strength of EQT. Now, as we all know, the world remains complex and increasingly competitive. Right now, the ongoing conflict in the Middle East causes additional volatility and uncertainty, with clear risks to cost inflation for many input goods, for freight, etc., and potential disturbances in supply chains. In this operating environment, companies need to focus on improving efficiency and strengthening resilience. In general, our companies continue to do a good job to adapt, protecting the businesses and the profits here and now. They're staying close to customers and are able to make quick decisions and adapt as the world around them changes. Our companies do have a strong starting point with excellent customer offerings and leading market positions. And over time, prosperity hinges on innovation. Offering truly differentiated and sustainable solutions to customers is the only way to ensure long term profitable growth. This is why we will always encourage our companies to make well considered investments in innovation. AI and sustainability are, of course, two key dimensions of innovation, with opportunities really across the whole value chain, in R&D, in products and aftermarket, of course, but also in manufacturing, go-to-market, administration, etc. Within AI, our companies are making progress when it comes to finding and implementing and scaling relevant high-value use cases for AI. That said, we've only scratched the surface so far and we need to continue accelerating our efforts here. Sustainability also offers attractive opportunities. Creating added value for customers while also contributing to the green transition remains a very powerful proposition. As I've said many times, we're confident in our platform. Investor has a clear purpose and a focused strategy. a portfolio of high-quality companies, an engaged ownership model that's been proven over time, financial flexibility with low leverage and strong underlying cash flow, and, importantly, great people here at Investor in our companies and in our network. We remain focused on building and supporting great companies and are confident that this will create shareholder value over time. And with that, I leave the floor to you, Jenny.

Thank you Christian and good morning. So let's move over to the financials for the quarter. So in Q2 2026 adjusted net asset value was 1215 billion and this implies an increase of 9% compared to Q1. And for the quarter, the value uptick was driven by listed companies, increasing with 14%, while Patricia Industries and investment in EQT declined. And now double-clicking on each of the business areas, and I will start with listed companies. And within listed companies, share price performance was mixed, particularly strong quarter for the ABB share, which of course benefits from electrification and strong data center-related demand. Saab had a tougher quarter looking at total return. And total return for the listed company's portfolio was 14%, which is 5 percentage points ahead 6RX. And this strong relative outperformance is largely driven by ABB. And as for absolute contribution, ABB again in particular stands out given strong share price performance as well as weight and size in our portfolio. And then moving on to Patricia Industries. Although the adjusted net asset value for Patricia Industries contracted in Q2, we did see solid performance by the portfolio companies. The major subsidiaries grew 7% organically and adjusted EBITDA increased by 16%. And for the first time in quite a while, as Christian mentioned, FX was not a big drag on reported earnings. And now, double-clicking on performance across the companies in Patricia Industries, and I will comment on a few of them. So for Laboree, growth was driven by all business areas, and also this quarter to a large extent by the Optilum urethral strictures product. And if we adjust for 17 million US dollars in expense related to the JADA acquisition, profitability for Laboree was up, and this is despite continued commercial investments. NOVA Biomedical grew 10% organically and profitability increased on the back of efficiency improvements from the integration. And integration is off to a good start. It is still early days, but performance thus far underpins the potential of this platform. Bronability and Sarnova also delivered double-digit organic growth in the quarter. For Bronability, operating leverage was offset by unfavorable product mix, and for Sarnova by continued strengthening of the organization. We saw single-digit organic growth for Permobil and Piab. For Piab, the margin was pressured by 46 million Swedish kronor in restructuring cost and increasing sales cost. For Permobil, the margin was impacted by costs related to the production facility relocation mentioned in Q1, as well as investments in the commercial organization. And then moving on to Mönlycke. Mönlycke had a quarter with 2% organic growth, with growth driven by all of the four business areas. And if we focus on wound care specifically, we saw 2% organic growth, and we recognize that we have yet another quarter with more modest growth. And first of all, we are comparing to a strong quarter last year. And for wound care US, specifically, it was essentially flat this quarter. We do see somewhat softer market conditions, including continued destocking in some channels, and we're also seeing increased competition in some product categories. The more established and mature wound care markets, such as the US, are growing low to mid single-digit, but Mönlyck's ambition to outgrow the market over time remains. And this is on the back of an innovative premium product offering, focused commercial execution, and continued geographic expansion. And in the quarter, great to see strong momentum in APAC, specifically China, which is a very attractive growth market, and here Mönlyck has strengthened its position through the partnership with Sende. And also positive to see that EMEA grew in the quarter. Mönlyke protects share in France, which has been a challenging market. And this is on the back of the company working agile to continuously adapt product assortment to meet changing reimbursement landscape. Despite modest growth in the quarter, it's very positive to see improving profitability as the company is doing a really good work with efficiency improvements and cost control. For this quarter, we had a couple of non-recurring items that were net positive in total, including a tariff refund. And if we adjust for these, the underlying margin is almost 30%. So for Patricia Industries, we saw a 3% contraction in estimated market values compared to Q1. So from 230 billion to 222 billion. And this drop was explained by contracting multiples, which more than offset earnings growth and cash flow generation. And as a reminder, our multiple based valuation method uses a three month value weighted average price and not the quarter end spot price. And then if we look at value development across the companies, it's a mixed bag. Main positive contribution from Nova Biomedical and Bronability, while Mönlycke is the biggest drag in the quarter, and this is explained by the multiple contraction. Also worth highlighting is the distribution, roughly 2 billion Swedish kronor from Mönlycke, and also 300 million Swedish kronor from 3 Scandinavia. and then also an equity contribution to Victura of 300 million Swedish kronor to fund the recent GOKO acquisition. Moving on to investments in EQT. Total value change was a negative 2% in the quarter and that's explained by EQT AB which was down 4%. Fund investments were essentially flat and as a reminder we report EQT fund investments with one quarter lag so the 0% is based on EQT's Q1 report. And here on the right hand side, you see the net cash flow from EQT to Investor, which was 500 million Swedish kronor roughly in Q2. And here we also illustrate net cash flow from investments in EQT to Investor over time. And while it's quite lumpy on a quarterly basis, over the past 10 years, we've received a net cash inflow of 1.6 billion on average per year. And our balance sheet remains strong. Our leverage as of Q2 is 1.9% and it remains in the lower end of our policy range. And we closed the quarter with 29 billion Swedish kronor in cash at hand. And then on to my final slide. If we look at the longer term perspective, the performance of the investor ABB share truly demonstrates the strength and the resilience of our portfolio and our strategy. And with that, I will leave the word back to Jacob.

Thank you very much, Jenny. Thank you, Christian. Now it's time to take your questions and we'll start with questions through our operator. So Sharon, please.

Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. If you wish to ask a question via the webcast, please type it into the box and click submit. We will now go to our first phone question. One moment, please. And the first question comes from the line of Bjorn Olsen from SEB. Please go ahead.

Good morning, guys. Just a question on Patricia. Your listed portfolio has outperformed Patricia for quite a few quarters now, and the MedTech focus, I mean, you're facing pressure both from multiples, but also you're mentioning that Malik is facing softer market conditions, and earlier this week Coloplast flagged down sales outlooks. I was just wondering, At what point would you reconsider the strategic medtech concentration in Patricia?

Okay, thank you. I can start on that one. So if you look at medtech, we remain convinced about the long-term outlook for profitable growth in medtech. You have an interesting combination of an almost endless demand, if you think about it, with the demographics of aging people, the ability to treat more diseases, et cetera, et cetera. And then you have technological development that enables people both better outcomes, but also, importantly, better efficiency and cost efficiency in doing so. And then you couple that with funding systems that are, of course, always sort of strained. That is a very fertile ground for growing and developing business. so we remain all committed to Medtech and of course recognize that the trading in many of the peer companies have been less positive in recent quarters but there also I would just look at what the earnings growth in Patricia is and in the Medtech company specifically for a better indication of long-term performance okay so

If if anything the current multiple environment actually make this this part of your portfolio more interesting rather than less sounds like.

I mean, in a way, you could say that I think when it comes to if you're referring to sort of the opportunity to go in and buy on the cheap, unfortunately, it's quite hard to do that for a couple of reasons. One is timing, of course, but also typically the companies that we are looking to buy, the sellers aren't that keen to sell in a tougher environment. Normally, we're not here to make a bargain, but of course, as you say, there will continue to be good opportunities in this market environment and also if or when multiples recover.

Makes sense. Thanks.

Thank you. As a reminder, if you would like to ask a question via the telephone lines, please press star 1 and 1 on your telephone keypad. That is star 1 and 1 to ask a question. We will now take the next question. And the question comes from the line of Johan Schoeberg from Nordea. Please go ahead.

Thank you and good morning. I would like to start off with Malik talking a little bit upon the outlook, growth outlook in the Womka business. You talked about the positive trends in Asia, but the flattish in North America and also in Europe. I'd like to sort of, if you could start off talking a little bit about the US market here. What is sort of hammering the growth in this business? We are used to sort of mid to high single-digit growth rates in wound care now where I know it's only two quarters, but we are sort of at 2% growth in this business during these quarters. Could you say something about what you are doing in order to drive growth? Yeah, talk a little bit about that, please.

Yes, I can start. Thank you for the question, Johan. Well, as you very rightly point out, we have a second quarter where we do see some more modest growth from Unlycke. And if we zoom in on wound care, so the biggest business area, and also US, so the biggest market, it's actually flat if we compare to the same quarter last year. And there are a few factors at play here. I mean, first, we do see some softness in the market. If we look at the market data, it's quite early signals and it's too early to draw any clear conclusions if it's, you know, clear signals for softness or if it's actually noise. But we do see some destocking similar to Q1. But here, you know, the company is really close to the market and looking at the data and really trying to understand what is what. So some softness, but in addition to that, we also see specifically within prevention, fierce competition. And I think, you know, advanced wound care, by definition, is a competitive space. But in the quarter per se, we see some added intensity in competition, and that's prevention and also specifically on price. And here it's, you know, back to Mönlycke really pushing the health economic case of Mönlycke's products. So continue to invest in the sales force, but also education for customers with both the clinicians and procurement. And then in addition to that, I think it's also worth mentioning that we are coming from a very strong quarter last year as well. So that's some kind of nuance around it. But then I think You know, we have the ambition to grow above and beyond that. If you look at the more mature markets, I think a good reference point to keep in mind is that the underlying market growth is low to mid single digits. But on the back, on a really qualitative premium product offering and strong commercial execution, the ambition is to grow above what we see in the quarter. And then in addition to that, of course, the geographic expansion. And as you also mentioned, we have APAC for the quarter and specifically China. Very positive to see growth there. And also the strengthening of the position with the joint venture with Zende. And I think, you know, another point, but which I think is worth highlighting for the quarter is that even though we see this modest growth in Q2, we have a really good development in terms of profitability. And that's on the back of really good work from the company. As we mentioned last year, you know, focus on finding efficiencies. So Manlycke still contributes with, you know, roughly 60% of the profit increase for the quarter.

Yeah, I understand that. And previous quarters, you have been impacted by the tariffs and the inability to, well, you've been lagging in terms of price increases and also, I mean, could you talk a little bit about how that price, or the price component now, given the tariffs also, or That's one thing. And the second thing I also want to... You talked about the competition also in the U.S. market. I know it's always a tough competition and you have great respect for your competitors. But do you see that the competitive landscape changing somewhat recently? Has it intensified? Because, I mean, given the sort of mind-blowing margins you have in the woonga business, I would assume that would attract a lot of competition, you can say.

Again, I can... Yeah, do you want to start? Okay. In terms of the competition, I would say it's intensifying, but we are seeing the same kind of competitors, as we typically say. And we've seen similar situations before, because in the healthcare sector, and specifically wound care, you know, the hospitals are always under pressure in terms of quite strained budgets, so you could actually compete on price. And that's why it's so important to offer true value to the customer and so over time you will actually more push the health economics rather than the unit price so this is you know this is the name of the game in wound care so to say so I wouldn't say that you know there are any new types of competitors it's more you know in the quarter we say specifically within prevention competitors pushing price a bit more yeah okay and then the question regarding pricing yeah I can take a first shot at that Johan so

As you referred to, I mean, tariffs has been one inflationary factor. But one should remember that we've had a lot of different things in recent years driving the cost. I mean, we had great cost. Now we're looking at oil and oil derivatives, etc. So, really in our discussions with the companies, typically we try to talk about the value that we bring rather than pointing to specific and especially not tying any price increases to specific factors. Of course, there has been intense price discussions in a number of companies, Mönlycke included. And of course, it's always, let's say, tough discussions. But by and large, there is an appreciation for the value that our products bring. And if you look at, for example, gloves, there's certainly been some real price increases.

Okay. If I may change company to go into a laboratory, looking at especially the growth rates here and also actually the margins, I've been looking at the 13% organic growth here in the quarter. Is this an effect of the launch of the recent products that you've been talking about before? I don't dare to pronounce them in English. But do we see the impact from that now? And should we assume that the impact from these launches will continue now during the second half of this year? And then also, if you could talk also about the margins in Labrio. So I mean, if I just for $17 million, the margin looks extraordinary. And is this just a consequence of the 13% growth in organic growth, or is this some other thing? Thank you.

Yes. Well, in the quarter, it's really good to see a strong growth for Laboree, and it's driven by all of the three business areas. But it is similar to previous quarters, to a large extent, still driven by the Optilum urethral strictures product, which is one of the quite recently launched products. And we also typically talk about BPH, but that is much earlier in the launch cycle, and it's not the driver of growth in this quarter. But it is the optimum redistrictious product. And then also, you know, when you have product launches, growth will not be linear, and we are, you know, going to get into tougher comps as well. But it's certainly, you know, new products that are driving the majority of the growth for the quarter. And then in terms of profitability, as you say, you know, if we do the adjustments, you know, it's strong operating leverage as well as a positive mix that is driving a good uptick in profitability.

Okay, so Optilum is clearly margin-enhancing for Laboree. Is that how we should see it going forward?

It's good margins in Optilum. All right, thank you. Okay, thank you very much.

Thank you. There are currently no further phone questions. I will hand the call back to Jakob for webcast questions.

Thank you very much, Sharon. Web questions. We do have a couple of questions from Michael Gilkins. I'll divide them into two parts. Christian, for you, in your letter to shareholders, you emphasize the importance of being present in China, and you highlight your recent trip to the U.S., How do you manage the growing geopolitical tensions and the push for strategic autonomy between the US and China, given investor AB's ambition to have its portfolio companies active in both nations?

Thank you for that question and it's a good question. Basically, we will have to, as we've done previously, find ways to work with basically all markets globally. There has certainly been increased tension in a number of of sectors and fields. And I think at the end of the day, it goes back to another thing that we write about in our report and stress in our report, and that's innovation and differentiated products. I mean, we do see that, be it in China or in the U.S., when and if our companies have truly leading products and offerings, there is opportunities to do business. And then, of course, that's not to underestimate the level and the efforts to navigate the geopolitical landscape. But at the end of the day, with differentiated innovative products, we have a good chance of playing really globally.

Thank you. And the second question from Michael Gilkins. With several of your holdings having significant software exposure, including Nasdaq and Sonova, alongside your co-investment in Fort Knox through EQT, are you experiencing any operational impacts from AI disruption? Additionally, do you see any spending hesitation or reluctance from major clients due to AI transition plans? And how is Fort Knox performing in this environment?

Sorry, was the question related to Fort Knox and what we see there? I didn't quite get...

Yeah, mainly. I'll clarify again. With several of your holdings having significant software exposure, including Nasdaq and Sonova, alongside your co-investment in Fort Knox through EQT, are you experiencing any operational impacts from AI disruption?

Yeah, so really, I would start to look at it in terms of what kind of opportunities and leverage do we see from AI, including in these companies. And if you take the software, the slightly more software-heavy businesses, There we do see clear upside and clear realized potential from AI, not the least with encoding, of course, but it also goes much broader than that. And if you take Fort Knox, for example, it's on the customer care side and call center side and whatnot. So there's lots of opportunities. When it comes to disruption, so far I would say that the companies that we have have been able to leverage the strong position they have in terms of customer relationships and customer trust, rather deep integrations with the customers. good understanding of the verticals that they're in, and finally, a significant flow of data from the existing platforms. But we remain super humble about the risks and just keep on pushing to make sure that we end up on the winning side of this.

I think you covered it briefly, but the second part, do you see any spending hesitation or reluctance from major clients due to AI transition plans? And how is Fortnox performing in this environment?

Well, sort of to tie it a little bit to the first part, I would say that our ambition and what we need to do is to make sure that we bring enough value and I guess enough AI capabilities to make sure that we fit into this bucket of AI spend and AI investments that the companies are doing. Because to your point, that is a real shift we see and I believe that some other players in other parts of the value chain are indeed seeing some pressure from the shifting budgets and the increased AI spend. But so far, so far so good.

Thank you very much. I can't see any further questions. That means that it's time to conclude this session. So many thanks, Jenny. Many thanks, Christian. Our next scheduled call is the Q3 report, and that is on October 16th. Until then, thank you and goodbye. Thank you.