Chairman’s

message

2021, too, was characterized to a high degree by the vi-

ral disease Covid-19 and its consequences for society.

Vaccinations began at the very start of the year, but the

vaccination rate varies from country to country. In some

parts of the world, still only a minority of people are vac

-

cinated. In addition, owing to new mutations of the virus,

measures taken during the year in the world’s major econ

-

omies, economic growth was strong in 2021. Global GDP

growth amounted to a full 5.9%. For large parts of the busi

-

ness sector, this translated to high demand for products and

services. Certain sectors, however, such as aviation, hotels

and tourism, continued to have weak demand, as did physi

-

cal retail.

-

tor succeeded in handling these problems, and as a result

earnings performance was strong. The adjustments and

eciency improvements that many companies have made

during the last two years also contributed to the favorable

earnings.

Ahead of coming years, uncertainty over inflation has

increased. I believe that improved focus on pricing of com

-

panies’ products and services will be extremely important.

cord-low interest rates and plenty of money, as well as

a lack of investment alternatives, are key explanations for

the stock market’s performance.

with average performance in the stock market. Our net asset

value including reinvested dividend increased by 22%, and

the total return for the Class C shares was 10%. The dier

ence is explained by an increase in the, so called, discount

to net asset value during the year.

shareholders a return that is well in line with the mar

with new technology draw investors’ interest, it can be

hard for Industrivärden to keep pace. However, with our

choice of portfolio companies and our way of working, I am

convinced that over the long term we will continue to de

liver an attractive absolute return, especially in view of our

level of risk. Comparing us in an individual year with an av

-

panies in Sweden. They are also suciently large to have

economies of scale and be able to hold their own against

international competition. With our business model, we are

-

ment are conducted within the framework of the resources

and experience that are characteristic of a large company.

1940s

Industrivärden is founded

in 1944 by Handelsbanken

to manage the sharehold-

ings taken over by the bank

during the economic crisis

in the 1920s and ’30s. The

1945 the Company is listed

on the stock exchange

and its shares are distrib-

uted to Handelsbanken’s

shareholders.

1950s

Demand for industrial

products and input compo-

nents rises sharply in post-

war Europe. Against this

products, gas and steel.

SCA becomes a new port-

folio company.

1960s

Continued strong growth

and extensive housing

construction lead to in-

vestments in engineering

to include more than 60

portfolio companies and a

number of wholly owned

subsidiaries.

1970s

Falling productivity and

growing international com-

petition put demands on

structural measures and

Numerous, large structural

and equity deals are car-

ried out. The Company be-

gins to build up a holding

in Handelsbanken.

1980s

The model for active own-

ership is developed, and in

pace with this the equities

portfolio is sharply con-

Our history

8INDUSTRIVÄRDEN 2021BUSINESS REVIEW

Many talented employees are involved with this undertaking

on a daily basis. A major strength of the companies is their

-

tion with broad delegation of responsibility. Countering bu-

reaucracy and encouraging business acumen and customer

relationships are key for success. In addition, we put strong

emphasis on the importance of leadership and on ensuring

that the companies have a strong financial position. During

2021 we continued to invest in the portfolio companies –

something that we intend to do also in the coming years. We

believe there are good opportunities for value creation in the

companies over time. Furthermore, our ambition is that our

management teams and organizations have done in 2021.

On the whole they advanced their companies’ positions,

which bodes well for the future.

Industrivärden’s financial position remains strong,

with a net debt-equities ratio of 4%. Owing to this and the

positive performance during 2021, the Board of Directors

proposes to the coming AGM an increase in the ordinary

dividend to SEK 6.75 per share.

During 2021 the board work in Industrivärden worked

1990s

Consolidation of the wholly

owned businesses con-

tinues, culminating in the

formation of the industrial

ment of the holdings in

PLM and AGA, new pur-

chases are made in SSAB

and Sandvik, and the hold-

ing in Skanska is doubled.

2000s

A globalized capital market

and mounting competition

drive towards specializa-

tion. Industrivärden focuses

further develops its owner-

ship strategy.

2010s

At the start of the decade

Industrivärden becomes

the largest shareholder in

Volvo. Many industrial com-

panies. In February 2016

Industrivärden unveils a

refined strategy for active

ownership, with greater

focus on existing portfolio

2021

2020s with a concentrated

portfolio of Swedish listed

and overall good profitability and strong cash flows. This

has been made possible thanks to success factors such as

first-rate business models, competent management teams

and employees with a clear capacity for adaptation, in

upon their strategies. Even though the portfolio compa

-

nies’ challenges and converting these into concrete com-

petency needs in their respective boards is one of our main

duties. We therefore put great energy into our participation

changing at an ever-faster pace. This is a challenge, but also

a competitive advantage for an owner like Industrivärden,

with a proven and successful ownership model.

10INDUSTRIVÄRDEN 2021BUSINESS REVIEW

Ultimately, active ownership is about the strategic activities

good profitability, and where the company has the oppor

tunity to command a leading position. Against this back-

ground it is gratifying to see how Sandvik carried out several

acquisitions during the year that strengthen the company’s

business in both the manufacturing and mining industries.

Handelsbanken is another example, where the bank is leav

ing markets with lower growth potential in order to further

develop its business in markets and areas in which it has a

while at the same time advancing its positions. Here I want

to mention Volvo, which has successfully strengthened its

positions in the areas of electromobility and autonomous

and connected vehicles. During 2021 Volvo signed one of the

world’s largest orders for fully electric heavy-duty trucks – a

segment in which it is a world leader. Our portfolio compa

nies Essity and SCA are also at the forefront of driving the

transformation towards greater sustainability, with a high

pace of innovation and continuous product development as

more sustainable over time. Ericsson’s acquisition of the

American software company Vonage, a global provider of

cloud-based communication, is an example of a transforma

tive acquisition that is enabling the building of a global net-

for enterprises, developers and operators.

Sustainable business goes hand-in-hand with long-

term value creation. Industrivärden therefore puts strong

Operations

Mission, objective

and strategy

Business mission

To contribute to long-term value creation through active ownership. The mission

is based on Industrivärden’s strengths, including a long-term investment perspective,

strong positions of influence, a well-developed ownership model, depth of industrial

knowledge and experience, financial strength and an extensive network.

Objective

The business mission is executed with a base in the Company’s shareholdings and active

ownership role.

• Evaluation of the shareholdings is built upon a structured process with continuous

analysis of existing and potential investment alternatives. The estimated return potential

for existing investments is to be compared with the return potential for possible investment

alternatives, taking into account continuity and long-term perspective.

• Industrivärden conducts active ownership in the respective portfolio companies with a view

to contribute to competitive growth in value over time.

The forms of executing this strategy are presented on pages 13–26.

Approach

12INDUSTRIVÄRDEN 2021BUSINESS REVIEW

Business model

Areas of operation

Industrivärden’s business mission aims to create shareholder

value, in part through active ownership that contributes to the

portfolio companies’ operational and strategic development,

and in part through professional evaluation of the Company’s

shareholdings. Evaluation of the shareholdings aims to maxi-

mize Industrivärden’s long-term return through divestments

and investments in new and existing portfolio companies.

It also entails a natural concentration in large ownership

stakes and a limited number of portfolio companies with

clear value potential.

Analysis

Investment decisions as well as decisions to exercise active

ownership are based on extensive industrial and financial

analysis as well as on assessments by the Board of Directors

and management. This analysis forms the foundation both for

investment decisions and owner agendas for the exercise of

active ownership. The owner agendas summarize the strategic

zation that is characterized by high flexibility and short de-

cision-making channels. The organization has a depth of cu-

mulative experience and pertinent expertise. Operations in-

volve some 15 employees at the oce in Stockholm plus eight

board members and an extensive network. Internal work is

project-oriented and based on well-developed processes.

Board of Directors

Apart from its customary duties, the Board of Directors

The Executive Management is responsible for the Company’s

day-to-day administration, which includes strategic, organi-

zational and finance matters as well as control and follow-up,

among other things. Members of the Executive Management

participate actively in evaluation of the Company’s share-

holdings as well as in the active ownership and can provide

Management also serve on the nominating committees and

boards of portfolio companies.

Employees

addresses areas such as the work environment, diversity and

business ethics. The employees’ total compensation shall be

competitive and in line with the going rate in the market.

Investment Committee

Decisions on equity transactions within the continuing ad-

ministration are made by the CEO, where applicable after

consideration by the Company’s Investment Committee. The

Company’s Investment Committee is made up of the members

of the Executive Management, and representatives of the in-

vestment and analysis organization participate when needed.

employees are normally active on two to three teams.

The company teams are responsible for the continuous

monitoring of their respective portfolio companies, updating

Industrivärden’s owner agendas for exercising active owner-

ship and for conducting specific investigative projects related

to strategic issues in the portfolio companies. They also make

recommendations for transactions in the portfolio companies

as well as for alternative investments and entire divestments.

Shareholdings

Process

Industrivärden’s business model entails sizable own ership

positions in a concentrated portfolio of listed companies

with favorable value potential. Over time the respective

investments shall contribute to growth in net asset value

with a view to generate a competitive total return for

Industrivärden’s stock. The long-term ownership per-

vestments’ long-term return potential. This analysis is

grounded in Industrivärden’s investment criteria.

term objectives, each individual portfolio investment shall

over time contribute to a competitive total return. The active

ownership strategy conveys a long investment horizon. The

return potential for investments in the port folio compa-

nies is therefore continuously evaluated over a time horizon

of three to five years. Major emphasis is put on compar-

isons with the estimated return potential for investment

or investments in new portfolio companies.

Breakdown of shareholdings

14INDUSTRIVÄRDEN 2021BUSINESS REVIEW

Active ownership

16INDUSTRIVÄRDEN 2021BUSINESS REVIEW

18INDUSTRIVÄRDEN 2021BUSINESS REVIEW

Value creation

Net asset value

Industrivärden’s long-term goal is to increase net asset

value and thereby generate a return for Industrivärden’s

shareholders that exceeds the market’s required rate of

return.

Net asset value is a measure of the shareholders’

total net worth in the Company, defined as the market

value of the equities portfolio less net debt. Net asset

grew by an average of 14% and 15% per year, respectively,

compared with 18% and 17%, respectively, for the total

return index (SIXRX).

0

20,000

40,000

60,000

80,000

100,000

120,000

Net debt

Debt-equities ratio, %

Growth in net asset value Development of net debt

Composition of equities portfolio and net asset value

 

Ownership, % Market value

Share of

value 

Net purchases ()

net sales (–)

 

Volvo B   

Handelsbanken A         

Essity A 

 



–

 

Essity B   

SCA A 

 



–

 

SCA B   –

Ericsson A 



–

Equities portfolio      

Net debt – –

Net asset value  

Debt-equities ratio 

28INDUSTRIVÄRDEN 2021BUSINESS REVIEW

Equities portfolio

The equities portfolio is made up of large sharehold-

ings in portfolio companies in which Industrivärden

exercises long-term active ownership. On December 31,

2021, the equities portfolio had a market value of SEK

are shown in a table on page 15.

Cash flow

Investment activities

During the year, shares were purchased in Sandvik for SEK

2.5 billion, in Volvo B for SEK 0.8 billion, in Handelsbanken

A for SEK 0.5 billion, and in Essity B for SEK 0.5 billion.

The remaining shareholding in SSAB A was sold for SEK

2.0 billion.

Dividends paid and received

The 2021 Annual General Meeting resolved in accordance

for the Group. Dividends received from the respective

portfolio companies are shown on page 33.

Management cost

Industrivärden’s management cost in 2021 amounted to

SEK 127 M (130). The management cost corresponded

to 0.08% (0.10%) of the equities portfolio’s value on

December 31, 2021.

No part of Industrivärden’s financing is conditional

Total portfolio

30INDUSTRIVÄRDEN 2021BUSINESS REVIEW

Key ratios dividend and return

         

Dividendshare SEK          

Pertains to Class C shares. Source: Bloomberg.

respect to the goals, scope and risk of operations.

Proposed dividend

The Board of Directors has proposed that the 2022 Annual

General Meeting declare an ordinary dividend of SEK 6.75

per share (6.25). The total proposed dividend amounts to

SEK 2,915 M. The dividend yield on December 31, 2021,

was 2.3% for Industrivärden’s Class A shares and 2.4% for

the Class C shares.

ployees’ total compensation and also aim to increase em-

ployees’ ownership of stock in the Company. Information

on the incentive programs and on shareholdings of board

members and members of the Executive Management is

provided on pages 48–49 and in Note 7 on pages 57–58.

Trading per marketplace

Net asset value

Equities portfolio

Industrivärden’s stock

Industrivärden’s market capitalization

Number of shares outstanding

Total return Industrivärden’s stock

Other key ratios

Values for 2012 have not been recalculated according to the principle for investment entities.

Earnings per share for 2020 has been retroactively recalculated due to the change in share base that occurred in 2021. Other periods have not

been recalculated.

Key ratios – ten-year overview

Sandvik SEK  bn ()

Volvo SEK  bn ()

Handelsbanken SEK  bn ()

Essity SEK  bn ()

SCA SEK  bn ()

Ericsson SEK  bn ()

Skanska SEK  bn ()

Sandvik SEK  M

Volvo SEK  M

Handelsbanken SEK  M

Essity SEK  M

SCA SEK  M

Skanska SEK  M

Ericsson SEK – M

Holdings

Portfolio structure

share of the equities portfolio is exposed to the industrial

equipment, commercial vehicles, banking and consumer

products sectors.

At December 31, 2021, the equities portfolio had a market

value of SEK 149,955 M (128,893), or SEK 347 (296) per

Industrivärden share. The value of the equities portfolio,

adjusted for purchases and sales, increased by 15% during

the year. Dividends received from portfolio companies

during the year amounted to a combined total of

SEK8,081M (657).

SEK 8,081 M

12/31/2021

BUSINESS REVIEWINDUSTRIVÄRDEN 202133

Key data  

Net sales SEK M  

Earnings after financial items (adjusted) SEK M  

Earnings per share (adjusted) SEK  

Cash flow from operating activities (adjusted for

 

Shareholding no shares  

Market value SEK M  

Share of votes   

Share of capital   

Total return SEK M  