Good morning and a warm welcome to Investor's results call for the third quarter 2025. I'm joined here in the studio by Jenny Ashman Haquinius, CFO, and Christian Cederholm, CEO. Both will soon be giving their presentations. After that, as usual, we will be opening up for questions, both via our operator on the call and online. With that, over to you, Christian.
Thank you, Jacob, and hello everyone. Q3 was a strong quarter with net asset value growth of 7%, with contribution from all three business areas. In a turbulent environment, our portfolio companies maintain a good balance between focusing on efficiency to protect profits here and now, and at the same time, investing appropriately for the future, both organically and by way of acquisitions. The Patricia Industries subsidiaries show solid performance with good organic growth and stable profits despite significant headwinds from a weaker U.S. dollar. We also saw continued high portfolio activity, including investments in all three business areas. At the end of the quarter, adjusted net asset value stood at SEK 1,028 billion. Let me briefly go through the three business areas. Starting with the Listed Companies, that represents about 70% of our portfolio.
Listed Companies generated a total return of 8%, well ahead of the SIXRX return index at 3%. We invested in Ericsson and Atlas Copco at valuation levels that we deem attractive. We also entered into a new contract to divest shares in SAB with the aim to maintain our current ownership level as SAB continues to buy back shares. Companies continue their efforts to future-proof their businesses. For example, in the past 12 months, Atlas Copco has acquired more than 30 companies, including several in this third quarter. AstraZeneca announced a plan to invest $50 billion in the U.S. by 2030, further strengthening its position in this key market. Wärtsilä divested its marine electrical systems business, further focusing its portfolio. After the end of the quarter, ABB announced an agreement to divest ABB Robotics to SoftBank.
We share the view of the ABB Board that this would be financially attractive for ABB while providing a good new home to ABB Robotics. On paper then, the Husqvarna Board appointed internal candidate Glenn Instone as new CEO effective August this year. The nomination committees are currently forming ahead of next year's AGMs. We will continue to push for higher compensation levels to secure competitiveness for the long term. Moving to Patricia Industries then, total return for Patricia Industries was 4%, with the largest positive contribution from multiples this quarter. Our major subsidiaries grew sales organically by 4%, with BraunAbility and Laborie growing significantly faster. Adjusted EBITDA declined by 2%, largely driven by a weakening U.S. dollar year-on-year. Chris Smith was appointed new CEO of Laborie. Chris has served on the Laborie Board and is a seasoned medtech executive.
Advanced Instruments completed the acquisition of Nova Biomedical, which is now the name of the new combined business. Organic growth in the quarter was a - 4% on a pro forma basis, driven by a particularly strong comparison quarter last year for the acquired business and a cyber incident that disrupted operations this quarter. Integration work is off to a good start and entails, for instance, implementation of a common ERP system and alignment and investments in the organization, all with the goal to realize the combined company's full potential. The underlying qualities of the business are all in line with our investment case. For the major subsidiaries, and over 40% in 3 Scandinavia, including also the combined Nova Biomedical business from Q3, reported last 12 months' sales was SEK 68 billion, and EBITDA was just north of SEK 17 billion.
We should note here that this is all in Swedish krona, of course, so rather sensitive to FX. Investments in EQT, our third business area, represents about 10% of our total assets. Here in Q3, total return was 1%. Exit activity in EQT funds was high, with net cash flow to Investor of SEK 2 billion, excluding our investment in Fortnox. We invested an additional SEK 1.8 billion in the co-investment of Fortnox, taking the total investment close to the communicated SEK 4.5 billion. After the quarter, John Salata was nominated new Chair in EQT, taking over after Conny Jonsson from the next AGM. In this turbulent environment, I'm glad that we have a really strong platform. Investor has a clear purpose and a focused strategy. We have a portfolio of high-quality companies, a proven ownership and governance model, great people at Investor and in our companies.
Importantly, we have a financial flexibility with low leverage and strong underlying cash flow from all three businesses. The current somewhat turbulent environment will offer opportunities to further strengthen the position of our companies and Investor itself. Building strong and sustainable businesses and ultimately driving long-term shareholder returns. With that, thank you, and let me hand over to Jenny.
Perfect. Thank you, Christian, and good morning. Let me take you through the financials for the quarter. In Q3 2025, adjusted net asset value was SEK 1,028 billion, and this implies an increase of 7% compared to Q2. For the quarter, all business areas contributed positively. Listed Companies increased with 8%, Patricia Industries 4%, and investments in EQT 1%. This implies a total return of 7% for the quarter and 8% year to date. Double-clicking on each of the business areas, starting with Listed Companies. Within Listed Companies, share price performance was mixed. Wärtsilä was a strong contributor also this quarter, followed by ABB and SAB. We saw positive share price development across several of the companies. However, Electrolux and Electrolux Professional had a tougher quarter looking at total return. Total return for Listed Companies' portfolio was 8% compared to SIXRX benchmark index of 3%.
As for absolute contribution, the strong performance was mainly in companies with size and weight in our portfolio. This implies a strong net asset value contribution from Listed Companies in Q3. Moving on to Patricia Industries. In Patricia Industries, we saw a 10% increase in estimated market values compared to Q2, from SEK 202 billion to SEK 223 billion. Adjusting for the equity contribution from Investor to Patricia Industries for the Nova Biomedical acquisition, the underlying increase is 4%. The increase was mainly explained by an expansion in valuation multiples as well as cash flow generation in the portfolio companies. However, the increase was somewhat negatively impacted by currency, with a stronger Swedish krona negatively impacting earnings in Mölnlycke and Permobil. Worth highlighting is that we have included the combined Nova Biomedical business in the estimated market values using our previously established method.
As a reminder, the method is relative valuation versus listed peers. For each company, we have identified a set of listed peers, roughly 15- 20 peers per company. For each peer group, we find an EV to EBITDA multiple where the EV, meaning the enterprise value, reflects the three-month value-weighted average price as opposed to the spot price at the end of the quarter, and EBITDA of the last 12 months, so backward looking and forward looking. This relative valuation metric is then applied to the EBITDA of our companies. For Nova Biomedical, we apply the relative multiple to the LTM pro forma EBITDA of the combined business.
Looking at value development across companies, we can see that the main contributors in terms of value for Q3 were the North American companies, while the Nordic companies were more flat over the quarter, to some extent weighed down by negative impact from FX. Commenting on performance across the companies in Patricia Industries, first, to highlight a few positives, we saw a strong quarter for BraunAbility , in part explained by a relatively weak comparison quarter, but also due to strong demand. Laborie continued to see solid growth, driven to a large extent by the Optilume urethral strictures product. In the short term, comps are getting continuously tougher as Optilume urethral strictures is included in benchmark quarters. In the longer term, there's a lot of potential in both urethral strictures and the more recently launched BPH product. Nova Biomedical and Permobil had a tougher quarter.
For Nova Biomedical, we are coming from a particularly tough comparison period last year for the acquired business. We also had a cyber incident this quarter impacting sales, but this was partly offset by strong organic growth in the acquiring Advanced Instruments business. Permobil is experiencing muted growth, which is explained by weakness in the U.S., but also a negative impact from a voluntary product recall. Moving on to Mölnlycke, Mölnlycke had a solid quarter with 3% organic growth, primarily driven by wound care and gloves, both growing 5% organically. This was somewhat offset by a contracting ORS. Profitability improved despite negative impact from FX and tariffs, and that is driven by positive product mix, but also lower cost on the back of the accelerating work to find efficiency improvements.
Moving on to investments in EQT, total value change was 1% in the quarter, and that's primarily driven by EQT AB, which was up 2%. Fund investments were down 1%, and as a reminder, we report EQT fund investments with one quarter lag. The -1% is based on EQT's Q2 report. For Q3 earlier this morning, EQT reported 3% in positive development in key fund investment. Again, note that this is in euros and that the correlation to our EQT fund investments is not one-to-one. On the right-hand side, we illustrate the net cash flow from EQT to Investor, which was close to zero in the quarter. This is despite exit proceeds, given our investment in Fortnox and acquisition of shares in EQT AB. Here we illustrate net cash flow from our investments in EQT over time.
While it's quite lumpy on a quarterly basis, over the past 10 years, we have received a net cash inflow of SEK 1.6 billion on average per year. The LTM net cash flow is a SEK -2.7 billion, but that includes SEK 800 million in acquisition of shares in EQT AB and SEK 4.4 billion investment in Fortnox. If we adjust for this, the net cash flow on an LTM basis is a SEK +2.5 billion. Our balance sheet remains strong. Our leverage as of Q3 is 2.6%, so it remains in the lower end of our policy range despite significant investments. Onto my last slide. Over the five, 10, and 20-year period, the Investor AB B share has outperformed both the SIXRX index and our return requirement, which we highlight in orange. This underscores the strength and the resilience of our portfolio and our strategy.
The past 12 months have presented headwinds, looking at the Investor B share. However, adjusted net asset value is up 6% compared to SIXRX, which has been essentially flat. With that, I will leave the word back to Jacob.
Thank you very much, Jenny. Thank you also, Christian, for your words. We are now ready to take your questions, and we will start with questions through our operator. 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 your first question. One moment, please. Your first question today comes from the line of Jakob Hesselvik from SEB. Please go ahead.
Hi, good morning, everyone. Maybe we could first start off with you mentioning the portfolio companies are focusing on cost efficiency, while Patricia Industries showed -4% reported sales growth. Can you elaborate on what you're seeing operationally and how sustainable is the 4% organic growth when we adjust for the currency effects?
I think it's a bit difficult to answer that question in terms of the entire portfolio because it varies across the companies. If we start with the work in terms of operating efficiencies or finding cost efficiencies, the work is a focus for all of our business or subsidiaries. For this quarter, it's a lot about less hiring, also less traveling, reducing consultants. A lot of focus on kind of external cost. At the same time, there's a parallel work to find more structural efficiencies. As we alluded to last quarter, the timing of the impact of such effects will vary. I think in terms of the organic growth, how sustainable it is, I think it depends on each of the different businesses. Maybe I can start commenting on Mölnlycke, for example, which is the biggest subsidiary. We saw Mölnlycke with 3% organic growth for this quarter.
If I focus on the biggest business area, wound care, which is more than 60% of the business and even more so in terms of EBITDA, we saw a good 5% organic growth. If we look at the year-to-date number, it's 7% organic growth, which is in line with the same number during the same period last year. This is in a market where we see a low to mid-single-digit underlying market growth. We are very pleased with Mölnlycke continuing to take share. That is on the back of attractive products, also really good market and go-to-market execution. In parallel, focus on geographic expansion, where China is a good example. We do recognize for all of our companies that we have fierce competition. There will be a lot of hard work also going forward. I don't know if you want to add something, Christian.
Comprehensive.
Thank you. Can you walk us through the integration plan for Nova Biomedical and how you're thinking about the leverage profile at Advanced Instruments post-acquisition? How should we expect organic growth to continue to be negative for the upcoming two quarters given your comment, Christian, or is it only in Q4 that organic growth could be under pressure?
Okay, thank you. If I start with, let's say, the underlying performance of the business, and then maybe we can come back to the leverage question. As we said in Q3, we had a negative -4%. Two things stood out. One was a tough comparison quarter, including some one-off orders that we didn't expect to get back basically this year. The other thing that we bring up is the cyber incident that impacted operations, both sales and cost, during the quarter. Integration is off to a good start. The integration work includes, of course, bringing the organizations together and aligning them, but also other things such as rolling out the common ERP system. What we say is that that may impact both sales and earnings near term. Importantly, the first months since we got the keys here have really confirmed the qualities of this business.
Focus is now on moving fast forward with integration to really realize the full potential of this combined business, creating a really strong platform for accelerated growth as we go forward. With regards to the leverage profile, we did use the combined business and leveraged that to pay part of the proceeds here or the price for Nova Biomedical. Cash flow, as you know, is inherently volatile quarter to quarter, but we do expect to see the leveraging over time.
Thank you. Did you mention how much the one-off cost related to the cyber incident was?
I did not, and that's intentionally so. I mean, it is hard to quantify the impact on both sales and operations. What we said is that we're confident that it was significant enough to bring up.
Okay, it's all completed now and fine.
The attack or the incident is remedied and or rectified, and operations are up and running since several weeks back.
Glad to hear that. Just a final question. Could you help us understand the property divestment from Vectura? Is there a lot of renovation debt in that property portfolio? The price seemed to be quite low given how large Arsenals gatan is and Tekka Udden's unique property position in Stockholm.
Thank you for the question. The combined property value of SEK 1.4 billion is roughly in line with what Vectura has in the books, and that's been revalued every quarter. It is in line with the market values that we've had. In terms of the value in the transaction, we've also used on both sides of the transaction independent appraisal firms and also done a fairness opinion of the entire. We have confirmed that this is the market values.
Maybe it's fair to say that the vast majority of the value lies in Arsenalsgatan 8C.
Yeah. I would just say that Teka Udden is a unique property, which could be difficult to set a price on. That's where we came to as well, given it seems that Tekka U dden is almost worth close to zero when you take multiples on Arsenalsgatan 's what's called space or office space.
Yeah, I think in addition to that, one also has to reflect that it's a land lease and also a significant renovation. It's not renovated in the same sense.
Okay, so there's a lot of renovation debt then, I guess, or upcoming renovation debt.
Yeah, it's like always with the properties, you know, when you haven't renovated for a while, you need to do a renovation. A lot is maybe a bit too much, but it's, of course, more than Arsenalsgata n, which is newly renovated.
It makes more sense. Thank you.
Thank you.
Thank you. We will now go to the next question. The question comes from the line of Oscar Lindström from Danske Bank. Please go ahead.
Yes, good morning. Can you hear me?
Yes.
Good. My first question is on Mölnlycke. Should we expect any further impact from tariffs or any secondary logistics disturbances as a consequence of tariffs that have been introduced? Is that still ahead of us?
I think it's very hard to say because, as you know, tariffs also keep changing as moving material. For this quarter, the impact so far that we see is less than 1% in terms of sales.
Negative impact on organic sales growth?
The actual cost is less than 1% of sales.
Yeah. If we move on, you mentioned in your section on Mölnlycke the weakness in the wound care market in France and Germany. First off, is this something that's sort of getting weaker or is it just sort of in a weak spot? What's the nature of this weakness? Do you have any sense of how long-term that could be?
It's a very good question. It's hard to know how long-term it will be, but we do see pockets of weakness in Germany and France, and that's on the back of pressure on healthcare budgets, essentially. There's no fundamental difference in the actual need for products that Mölnlycke provides. It's more about the healthcare funding, at least for the short term.
Right. Okay. Sorry, when did this weakness appear? I mean, is it something that has come now in Q3? I can't remember if you mentioned it in your Q2 report as well.
No, I think it's a bit different in terms of both Germany and France. In France, we've seen more focus on kind of reimbursement cuts historically, which we've explained. Now we don't see the reimbursement cuts to the same extent. It's more the pressure on the healthcare budgets. For Germany, it's different, but I think for now, what we see in terms of the macroeconomic pressure, that kind of weakness has grown larger during this quarter.
All right, thank you. My final question is on M&A. You or Investor, rather, have previously talked quite a lot about acquiring sort of businesses in industrial automation, preferably sort of a larger addition. Now you've further increased your exposure to in the pharma or biomedical segments. What are you thinking about this sort of future direction here of your privately held assets?
Thank you. Great question. I think that if you look at the recent acquisition of Nova Biomedical as an example, that's a great way for us to leverage the competence and the platform we have in Advanced Instruments, not the least in this case. We're quite happy to continue expanding where we stand. That said, we also remain open for new platform investments. As you point out, we have mentioned industrial technology or technology more broadly as one focus area. We continue to be actively looking for that.
You mentioned, I think, here in your introductory presentation about the current turbulent environment.
Sorry. We don't quite.
I mean, is that something which you connect to this?
Sorry, could you repeat the question? I lost you there in the middle, or we lost you.
Yes, sorry. In your presentation now, you mentioned that the current turbulent environment offered opportunities for investors with regards to acquisitions and growth as well, I presume. Could you expand on that a little bit? I mean, are you seeing a lot of acquisition opportunities at the moment?
We do. As we've said before, the work of finding and courting and hopefully executing on these opportunities is continuous work. Oftentimes, it takes a year before we identify a potential candidate and then until we close on an acquisition. That work is ongoing, and I would say the pipeline looks healthy. In terms of closing rate, it will inherently be volatile over the quarters. Maybe just to add one thing to your last question, which I think is important on where we expand, it's also important when you think about our portfolio. We tend to think about it first and foremost as one portfolio. That means if you look at, for example, life science tools and radiants or medtech, etc., it's still a relatively small share of our portfolio. We really see no concentration risk in that sense.
I'm happy with those answers.
Thank you. As a reminder, if you would like to ask a question, please press star one and one on your telephone. 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 next question. The next question today comes from the line of Johan Sjöberg from Kepler Cheuvreux. Please go ahead.
Thank you and good morning. Just continuing on the last question on the closing rate, which you mentioned, Christian, and talking a little bit about that. I mean, given the character of companies you're looking for, sort of high growth, high, you know, operating in strong growth environments, good profitability, this comes with a cost, you know, high valuation, I assume. Do you think right now that the valuation multiples, especially in the U.S., on these sort of companies and also including the industrial automation or industrial technology, is that a big obstacle right now, would you say?
I think your observation is spot on. I would say that the kind of companies that we're looking for puts us in a place where almost everything we look at comes at a somewhat rich price. It obviously helps if you do add-on acquisitions. You may not have to pay the same kind of, call it, platform premium. You may have synergies that help you finance and help to balance the calculation. This has been the case for many years. I think the teams have proven that they can find and execute on really good opportunities. If you look at the investment pace over the years here, it's been quite solid. I would say not just within Patricia , but across all three business areas.
When you look at the pipeline here of companies which are coming up for sale or are up for sale, first of all, you have these family companies where you have no successor who wants to take over. You also have the private equity market. If I saw them, if they were quoted right, EQT was saying that the activity here or exit market is improving, etc. In Sweden, we've definitely seen that. Do you share that and also looking at that portfolio, is that a good alternative for you now going forward here compared with what you've seen over the last three years, maybe?
I think absolutely in terms of that, this one of private equities is one source of good companies and opportunities. They come with the benefit of being, over time, for sale as well.
We have done a number of those kind of transactions, but also a number of that first category mentioned where it's a more founder-owned business and sometimes a more bilateral process as well.
Just looking also at Mölnlycke, I want to come back to that. I heard your comment here, Jenny, on this. I'm just sort of returning to a question. You know, when you had Slavko on the call, not the last one, but the one before, I think it was two or three years ago, and he mentioned that Mölnlycke should continue to grow with a high single-digit organic growth here. I'm sure that continues to be the ambition also, but of course, there's a market also. I just want to hear your thoughts upon it, not Mölnlycke, but looking at the underlying markets. Do you see that growth in the markets supporting that? I understand that when you have 5%, that's a good growth for wound care. Being a spoiled analyst, we are used to higher operating organic rates in that. Maybe this is clear outperforming.
I just want to get your feeling on what is the underlying market and how you view that growth rate, especially for the wound care. Thank you.
I can start. First of all, taking it back to the year-to-date number, that's 7%. That's in line with the high single digit and similar to the same rate last year. I think the ambition remains, as you say. What we also said earlier is that the market is more low to mid-single digit in underlying growth. I think, as you also saw in Slavko's presentation, we see pockets of higher growth. We have a lot of attractive geographic expansion alternatives. We have China, which is a good example, where we're also establishing local presence. The Middle East is another area. In terms of the U.S., we also have a shift of volumes from the more low-growth acute setting to the higher-growth post-acute setting, where Mölnlycke is also establishing a strong position.
I think, even though the underlying acute channel growth is lower, we do see good pockets of growth that would help build to the high single-digit organic growth over time. It will require a lot of hard work and continued focus on making sure that we have an attractive offering to customers in terms of investing in future innovation.
Okay, cool. Just also coming to the cyber incident also here and - 4% view for in Q3. Tough comps also, of course, here. Just do you, I remember when Mölnlycke had this new IT system, you said that, you know, part of this we could sort of catch up with over the coming quarters in terms of lost sales during the quarter. Is that a possibility also in Nova now?
I would say that you may catch up some of it, but it's never a one-to-one, really.
Timing is also difficult.
Timing is difficult, yes.
Yeah, cool. Just one final question, if I may. Three continue to perform quite well. Now, CapEx to sales is also coming down slightly in the quarter. Is this large investment phase over now? What is sort of a normal CapEx to sales figure in 2026? Just to get a feeling, especially for, you know, this has been a reliable source of funds for you also in terms of dividends when we could expect that to start up again.
Maybe start by disappointing and saying we don't provide guidance on the CapEx number or the dividends. You're right in pointing out that we've been through a couple of years, really, with rather high investments. That has included, for example, the swap out of Huawei equipment to Ericsson equipment that followed the decision from PTS here in Sweden as an example.
All right. Great. Thank you very much.
Thank you. There are currently no further phone questions. I will hand the call to Jacob for web questions.
Thank you very much, Sharon. Let's take questions from the web then. We can start with, in fact, three questions, I think, from Anil Sharma. I think one of them has been answered many times here. The text is, "Good morning. I have three questions on Nova Biomedical. The Q3 organic sales performance was disappointing. How much of this was due to the cyber incident and how much other factors such as the integration? Second one, the pro forma EBITDA margin is also lower than it should be. Can you explain the moving parts here? The third, how do you expect 2026 revenues and EBITDA margins to evolve?
I can start. As you said, Jacob, I think in terms of the quarter, we've discussed that. It's really hard to say exactly what is what in terms of the impacts from the cyber incident. I come back to our statement that it's significant enough for us to bring it up. When it comes to margins, I would say to some extent, they are also related to the very high comparison quarter where we had a couple of really good biopharma orders. More generally, we are in this phase. We got the keys here a couple of months ago. There is lots of integration work ongoing. I've said it before, both in terms of bringing the organizations together in a good way, but also implementing a common infrastructure across the companies, etc. There are lots of moving parts here. Therefore, we never provide guidance for 2026.
We just thought it was worthwhile pointing out some of the factors that we think could impact performance in the near term.
Thank you. We have three separate questions from Michael Gilkens. First one, "Will Investor AB submit capital to the initiative of Wallenberg Investments and your subsidiaries with regards to AI infrastructure?" I suppose he's referring to Spherical AI, the company.
Investor AB is not an investor in the company Spherical AI. That is a joint effort and investment between Wallenberg Investment AB, which is a separate entity, just to be clear, and a number of portfolio companies who signed up to use this AI infrastructure, really, to, for example, train models for R&D and better efficiency in terms of managing networks for Ericsson, etc., etc.
Second question, "Can you provide some insights and examples of the board work on future-proofing initiatives, particularly with regards to digitalization and AI?
I can start. It's a great question. Just to sort of state the obvious here, we do see a lot of opportunities, really, across the whole portfolio in terms of all our companies. Interestingly, the opportunities are distributed across the whole value chain, from R&D to efficient manufacturing, efficient administration, to go-to-market, and ultimately, of course, also using AI to enhance the product offering for our service offering for our customers, making life better for customers. This is really high on our agenda. We drive it, as you alluded to, and not the least, through the boards. It's obvious that the recipe here and the focus areas are different from each or between each company.
What we try to do, in addition to driving this company by company, is to also make sure that we try and share as much as possible in between the companies, you know, what has worked, what has not worked, etc., to create an open sharing culture and also some healthy peer pressure.
Good, thank you. Third one, "Would you, as a shareholder, rather hold on to the robotics division of ABB, or was the valuation offered too attractive to pass up?
We share ABB or the Board of ABB's view that this is financially attractive for ABB and provides a good new home for ABB Robotics. It's good for ABB, it's good for ABB Robotics.
Thank you. The last question I can see here comes from Martin Lindgren. "Is the divestment of 8C, I guess, Arsenalsgatan 8 and Tekka Udden, preparation of a divestment of Vectura in order to keep core Wallenberg property within the Wallenberg sphere?
Yes, thank you for the question. On the contrary, the rationale for the transaction is that FAM provides a very good new home with a long-term perspective and long-term owners, given the importance of these properties to the Wallenberg ecosystem, similar to the Grand Group transaction a couple of years ago. As for Vectura, it is anchored in Vectura's strategy to continue to develop innovation clusters or knowledge-intense clusters. Vectura has a really promising and attractive pipeline of projects going forward.
Great. I can't see any further questions, so time to conclude and wrap up. Thank you, Jenny. Thank you, Christian. Next scheduled call is our year-end report for 2025, which is scheduled for January 22nd next year. Until then, thank you and goodbye.