Welcome to Investor’s Q3 presentation. As usual, we will have our CEO, Johan Forssell, starting out, and then followed by our CFO, Helena Saxon. After their presentations, we will have a Q&A session. First, we will take the questions over the phone with the help of our facilitator, and then we will also take questions over the web. And once again, welcome to all of you who are joining us today, both over the phone and over our webcast. Now, Johan.
Okay. Thank you, Viveka, and also from me, warmly welcome to this presentation. Let me then start with the overall picture. In a quarter where we saw falling stock market, our performance held up a little bit better than the stock market, so we showed some resilience. And actually, all our three business areas performed better than the Swedish stock market during the quarter. We continued to see a good development within Patricia Industries, with the subsidiaries growing profits by 18% in the quarter, compared to tough comparison period, and we actually reached a new record profit in the quarter. And then we also had quite high activity across the portfolio. We invested more than SEK 2 ,000,000,000 in Sobi, related to their acquisition of CTI, which is a very important acquisition for Sobi.
We also announced a big acquisition by Laborie, one of our subsidiaries within urology area, and I will come back to that. Finally, we also divested our entire remaining stake in Acceleron during the quarter, so high activity during the quarter. Let me then move over to the financials. As you can see, the adjusted net asset value was down 2%, and our TSR was -3%, which can be compared to the stock market that was down 6% in the quarter. That leaves quite a significant outperformance year to date. If I then move over to the listed companies, the total return was -3%, compared to the market being down 6%, and the relative outperformance was mainly driven by a good strong return in Sobi and SEB.
As I mentioned, we invested more than SEK 2 ,000,000,000 in Sobi related to CTI, and that is an important acquisition within the hematology area that fits very well within Sobi, both from a commercial perspective, but it's also an important part of growing the U.S. presence. We divested shares in Acceleron for SEK 2, in the quarter. In total, that means that we have received SEK 3,600,000,000 plus SEK 100,000,000 in dividends for our stake in Acceleron. And then there has been a number of future-proofing activities in the portfolio companies, and I will come back to that during my presentation. One of them is ABB that has decided to invest up to $280,000,000 in Västerås, Sweden to build out a new robotics hub.
This is important because this is part of ABB's local for local strategy. They have a very sizable operation in China, close to Shanghai, also building out in the U.S. market, and this one will be the central hub within robotics for the European market. If I then move over to Patricia Industries, the total return during the quarter was flat. If we look on the operation. And Helena will come back to the different drivers of that flat development later. If we look on the operational performance, the sales growth was 10% in the quarter, of which 5% organically, and the profit, as I mentioned, was up 18%. Laborie announced the acquisition of Urotronic in the quarter.
Here you can see the development over time, and the bars is the profit per quarter, and the line is the rolling twelve months figure. You can see that Patricia now is up on an annual basis of more than SEK 61,000,000,000 and getting close to the SEK 15,000,000,000 mark in profit. Here you can also see when you look on the profit growth in the third quarter, that 3Q last year was a very tough comparison quarter. If we look into the fourth quarter, of course, the profit growth in the third quarter for Mölnlycke in particular, as you know, was. It was more or less flat because we had a tough comparison last year. For Mölnlycke, last year's third quarter had clearly the highest profit, while the fourth quarter last year had clearly the lowest profit.
So when we entered the fourth quarter, all else equal, we should expect strong profit growth in Mölnlycke. Moving then over to the companies in Patricia or the financials per companies, you can see that eight out of nine subsidiaries reported organic growth, and we had strong profitability for all companies except one. So a very broad-based and strong development in the quarter. Let me just make one comment here on the difference between Advanced Instruments and Atlas Antibodies. We have mentioned for a couple of quarters that both have been negatively affected by the biopharma segment. But now we see a strong growth in Advanced Instruments, while we saw a very big drop in Atlas Antibodies.
And the main reason here for the drop in Atlas Antibodies is that this is a small company, and it sells to a large extent to biotech companies that are smaller and early in the phase, so preclinical and so forth. And we saw a very significant drop in that customer base, especially related to VC-owned companies that are dependent on financing. And as you know, financing is quite tough at the moment. The other part within Atlas Antibodies, which is related to hospital, universities, diagnostics, and larger pharma companies, were actually quite stable. So going forward here, we expect to see stabilization, and we will, of course, implement cost actions given the lower sales. Within Advanced Instruments, we see a much better picture, as you see, and there are a couple of reasons.
First of all, Advanced Instruments sell to more mature companies, later stage companies, and that is one of the important reasons. The second one is that Advanced Instruments actually have about two-thirds of the sale, which is consumables and service, which is more stable. In the quarter, actually, instruments to the biopharma side was still down for Advanced Instruments, but the comparisons is now getting easier, so the drop is much smaller on instrument sales, and we continue to see very high growth in service and consumables. So that's the main explanation for the difference between the two. Moving then over to Mölnlycke. The organic sales amounted to 4% in the quarter.
Important to note this here on that over gross figure is that it has, of course, been negatively affected by the situation in gloves, where we see organic sales being down 14% in the quarter, and that decline was related to the US market, where we continue to see distributors destocking their excess inventories. It might continue going forward. Hopefully, of course, eventually this destocking will start to ease. Wound Care, we saw a continued good development with an organic growth of 8% in the quarter, and also Operating Room Solutions had a good growth of 5%, and that was supported by pricing and continued good growth in trays. Here we also see continued improved value add offering to the customers. Let me then make a few comments about Laborie's strategic acquisition of Urotronic.
Urotronic is a med tech company offering the Optilume drug-coated balloon technology, and Laborie has already bought this product for the urethral strictures application. We are super happy with the development of Optilume for urethral stricture. It's actually developing better than our plan when we bought it. Now we are buying Urotronic with the product for the BPH market, and that is, as you know, for benign enlarged prostate. That's a very significant market, and this company has extremely strong clinical data. If you look on flow rate, if you look on the amount of urine in the bladder, or if you look into how many times you need to revisit the doctors, on all these areas, they actually have superior clinical data.
So we will need to work with this, company now to build the commercial part for that application, work with reimbursement, but we see long term, we see a very big potential for this company. And we will invest, about $232,000,000 upfront, and we will more or less, inject equity for, for all of that, and we expect it to close just within a, a few weeks here. If I then move over to EQT, rather stable development. Total return was, up 1%. The cash flow was negative, as exits were lower than the drawdowns. The development was mainly driven by EQT AB, as you can see, while the fund investments were slightly down in the quarter.
As you know, we report the fund investments with one quarter lag, so this is actually the performance for the second quarter in EQT on the fund investment side. And EQT has already had that trading update to the market, and in that, they were clear that the value development in the third quarter, which would be our fourth quarter, was more or less flat.... So in summary, we will continue our work to drive the strategic initiatives to future-proof our companies. It's very much related to technology, take advantage of the opportunities that we have in many companies within climate change. And we will- but we will also, of course, need to handle the current market environment, and focus on agility and capturing all the opportunities we see out there.
I must say that when I look on our company's performance, I think that they are doing a good job in balancing short-term efficiency focus with investing for the long term in prioritized areas. And as you know, we have a strong financial position, so we are ready to continue to capture opportunities as they arise, and we intend to do that. So with that, I will hand over to Helena.
Thank you, Johan. Thank you very much. And then, let's look at the development of Adjusted Net Asset Value during the quarter. We saw a slight decline, but landed the quarter at SEK 760,000,000,000 , and this corresponds to an average annual growth with dividend added back of 15% compared to SIXRX 8%. And this slight decline of 2% is a result of listed companies being down 3%, Patricia flat, and investments in EQT up 1%. Looking at the year-to-date performance, it's of course stronger, with the 15% growth driven mainly by Patricia Industries and listed companies. While listed companies was down 3%, it still outperformed the SIXRX. And as Johan already mentioned, the main drivers here were SEB and Sobi. Together, these two companies contributed to net asset value by SEK 8,000,000,000 .
Going over to Patricia Industries, the drivers of estimated market values in the quarter were several. Earnings and cash flow contributed positively to the development, while we had multiple contraction and some currency headwind. All this, of course, then resulting in a flat development during the quarter. The overall picture is positive. We see many companies increasing in value, but please note that the 3.5 increase in Vectura's valuation is due to the capital injection from Patricia Industries. Just to comment on the decline in Mölnlycke, of course, this is driven by multiple contraction and also some currency. In Atlas Antibodies, as Johan has already talked about, we see a weaker operational performance and weak end market demand.
We still have a strong financial position, and while leverage in the quarter was up somewhat, we're still at the lower end of our target range. Looking at our balance sheet, it's strong, and we have proactively managed maturities, so they've been extended and refinanced at fixed attractive interest rates, and our average maturity is now 11, more than 11 years, and we do not have a repayment until 2029, as you can see on this graph. As usual, I will end with this picture showing that the return, the total return for the Investor share has been strong. We have not only outperformed our internal return requirement of 8%-9%, we've also managed to outperform SIXRX, not only in the short term, but also in the longer term.
That ends the presentation, and I will hand over to you, Ulrika.
Thank you, Helena. We will now open up for questions, and our facilitator, Sharon, will take the questions over the phone. Over to you, Sharon.
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 the first phone question. One moment, please. And your first question comes from Derek Laliberté , from ABG Sundal Collier. Please go ahead.
Okay, thank you very much, and good morning. So I'd like to ask on Mölnlycke and the price increases in the ORS segment. Are these pertaining to any particular region? And what would you say is the outlook for continued price increases in this segment?
Hi, Derek, thanks for the question. I would say it's a broad-based geographically, but it's mainly related to the product categories within ORS that have the highest value add, for example, trays. We expect to continue to work with pricing, because as you know, this is the segment which has a lower profitability compared to the other segments. So profitability is high on the focus within ORS, so we hope to continue with the price increases.
All right, sounds promising. And this, on the same segment, this added value in the product offering, is this something new here? What is that referring to with regards to the trays?
No, it's part of the strategy that is being implemented within this business unit. Really try to increase the value add and thereby increase the profitability.
... Okay, great. And in Wound Care, strong in the quarter, are there any particular products or product areas to highlight, would you say, contributing to this 8% organic growth in the quarter?
Actually, if we look on the Wound Care development in the quarter, we can see that it was actually a quite broad-based growth in the quarter. We saw good growth in all key geographical regions.
Excellent. And just to clarify on the gloves, the stocking among distributors, they should continue somewhat in the fourth quarter, I suppose it's reasonable to expect or?
Yeah, I unfortunately cannot say that it will not. We saw that it continued also in the latter part of the third quarter. So most likely it will continue into the fourth quarter, but of course, eventually, they will reach the distributor, will reach normalized levels. So but today, it's difficult to see exactly when that will happen.
I understand that. And then moving over to Advanced Instruments, and this good news in the quarter, and clearly the company has a strong growth track record with the 10% organic over the last 15 years before the acquisition. Looking long term, at what pace do you think this company could grow? What's the ambition?
I will not give you a figure, Derek, but I think that if I start with the end markets of this company, if I look into the extremely strong market position they have, and also the work that we are doing internally in the company to grow geographically and also going more direct in certain compared to selling through distributors in certain geographies, we at least have great expectations for this company long term. I think as I mentioned before, it's an excellent well-run company in an attractive niche, super strong market positions, and that is of course also reflected in the financials with a high profitability and good cash conversion.
Great, thanks. Thanks for that favor. And then just to follow and ask on the same company going in, just generally on the customer segments there, I know you can't give a figure, but where should the growth come from in the short term? Is it the sort of biopharma segment recovering, or is it more broad-based also from hospitals and so the consumer food and beverage segment?
Mm-hmm. It's difficult, as you know, to give a specific forecast for a quarter, but I would phrase it like this: if you look on the customer mix of Advanced Instruments, it's about half is to the clinical segment, which is more stable segment with good organic growth, but stable. And then you have about 40% or so that is to the biopharma, and here we have seen swings, as you know, over the last couple of quarters. That is a segment where we see really good long-term growth potential, but of course, where the comparison quarter-over-quarter can play a trick. So and the latter part is more related to certain segments within food and bev.
You can say 50% clinical and 40% biopharma is the exposure.
All right, great. And just finally on geographical perspective there, where should the growth come from long term?
The, the, the-
Or is it more Asian expansion, et cetera?
No, the biggest market for Advanced Instruments is the U.S. market, and we see good growth potential in that market. The region where we are going more structurally now from selling through distributors to in certain certain countries going more direct is the European market. And that's an important initiative for this company. Of course, that is in addition to accelerate the growth, that's also a way to improve growth margins. Then, of course, medium and long term, we also, of course, have the ambition to grow in Asia. Within Advanced Instruments, the biggest exposure to the Asian region is the business Solentim, which is within the cell line business. That was one of the acquisition. They have quite a sizable exposure to the Asian market.
Okay, thanks. Great, great answers. That's, those were all my questions.
Okay, thank you, Derek.
Thank you. We will now go to our next question. One moment, please. And your next question comes from the line of Joachim Gunell from DNB Markets. Please go ahead.
Thank you, and good day. Two questions from me. Starting off with the portfolio pruning here. The divestment of the remainder of the shares in Acceleron was, I would say, quite expected here. But can you say anything about where you are in relation to your stated ambitions when it comes to only own what you believe is core?
I mean, that is, and we are saying the same to all our companies, as you know, it's always a continuous work. We need to continuously evaluate if we are the best owner, and that might not only be the companies, but also actually certain business areas within the companies. So I would say for all our 24 companies and ourselves, this is of course continuous work to make sure that we have the right structure internally. And if you come to the conclusion that you are not the best owner, or if you don't see the potential long term, you should of course try to find a structured solution. It could, for example, be what we did within Vectura, where we divested the elderly care that we announced quite recently. So it's a continuous work.
Great. And then on the more forward-leading side, given the called financial flexibility you currently have, can you comment a bit on what you're doing now in terms of how you're spending your time regarding looking at with new subsidiaries for Patricia and versus bolt-on to the current existing platform?
Well, thank you for that question. We continue to look into both. As I mentioned before, we have a good pipeline when it comes to add-on acquisition, and the Urotronic that we now announced was one of the ones that we have been evaluating for quite some time. And we see many more interesting opportunities for add-ons, and we will try to hit the ones that fits and we can acquire. We are also looking into new platforms. Those are, of course, much fewer, the opportunities we look into, but they are also sizable. So... And that is primarily the opportunities we look into at the moment is primarily within industrial technology and med tech.
Very clear. Thank you, and have a great day.
Thank you.
Thank you. We will now go to your next question. Your next question comes from the line of Johan Sjöberg from Kepler. Please go ahead.
Thank you. Good morning, and I would like to just take a little bit of a broader picture, if I could, looking at the work in the boards now for your companies, Johan, if that's okay. Especially looking at the cap goods companies. I mean, so far we see the ABB out with the figures, but just in general, what is the sort of mood, what is the focus in among the these companies right now as we are likely heading into a sort of a slower environment? Are you sort of taking a precautionary cost measures? And on that note also, looking over the past sort of year or two, we've seen quite substantial order intakes and on the back of supply chain.
Do you in general feel that there's been a sort of overbooking in the past and that we are, it's been, you know, order books are a little bit inflated, or how is that? What is your thinking about that? That would be fantastic.
Since I sit on a number of these boards and they have not released the results, so I will not give a specific comment on it. But as I've said it before-
Of course
... of course, over a period, over the period when we had significant supply disturbances in the global economy, there were most likely a number of customers that put in orders to be in the queue. So that's-
Mm
... that's clear. When it comes to the focus or mood, as you say, in the boards, I would say that all companies today, given the environment, it's a big uncertainty out there, but as you have seen in the economy, it's still held up reasonably well. So companies are continuing to invest in strategic areas, and that's, of course, a positive also for the global economy. Investor AB to bring forward solutions for, and progress for climate change, new technologies, and so forth that we have discussed about. Companies are investing to handle the geopolitical situation. That is also a key area. But also, of course, the companies are preparing for tougher times, should they come.
Here, as we have said many times, I mean, we don't have a crystal ball, but we want that we and our companies are ready to act swiftly if there are changes in the market environment. So that is how it is. And to be fair, we see it in our subsidiaries right now. In certain areas, we are clearly already implementing contingency plans, while most of of-
Mm
... fortunately, most of them are in a growth mode, but in certain areas, we are already implementing. So you need to, within each company, it might actually be that you're continuing to capture all the growth opportunities in certain areas, while in some areas, which is tougher, you might need to adjust the cost base.
Thank you for that answer, and I understand it's difficult to answer, but I appreciate that. Talking about the medical, just coming back to that, I want to ask you about especially the wound care business also. I mean, it was a great presentation by Zlatko and his team you have that in the past. But just looking at sort of going forward here, has there been any change whatsoever among in this business? Because, I mean, of course, I mean, when we are heading into tougher times, I mean, this is a high quality product, and you implement the price increases. But is it still the value sort of, is that still sort of.
Or do you see the potential for a downturn in demand due to cyclical reasons, or do you view this as more non-cyclical?
No, I think it's fair to say that this, compared to most other companies out there, this is a less cyclical companies, and more stable, and we continue to see very good growth opportunities in this company. I can see some of the comments that the growth is fading here. But of course, it is partly related to the fact that the gloves is down 14%.
Yeah.
That is distributors destocking. 8% for Wound Care is a really good performance, and we are very pleased with that.
Mm.
We continue to see very good opportunities for this company.
I think also Zlatko, I think I asked him about this, sort of trying to push him for a figure, and, of course, he was not super willing to give a forecast, and I don't think you are as well, Johan here. But just sort of has the market environment changed for Wound Care since that presentation to start off with? Or do you see sort of the same sort of growth outlook, you know, just going back a few quarters, or has there been any change or anything like that?
No, I will not say there has been any change in the market since that time. But the reason why we do not comment, to be honest, Johan, I think it's the same for me and Zlatko, is that, you know, how will the demand be in the next coming quarter? None of us know.
No, of course.
We will just work extremely hard to capture all opportunities and beat competition. I mean, that, that's what you can do. If sometimes-
Mm
... you have more tailwind than sometimes it's a little bit tougher out there, that's our focus.
Have you seen any change in competition here or anything like that? Because, I mean, typically when you have this sort of growth and margins, they tend to attract the competition.
No, compared to when Zlatko presented, I would say that we, we, we don't see any major changes. But we will have a capital markets day coming up, and you will have chances to, to dig more into that with Zlatko on the Q&A then.
That's super. Can I ask you then also, just, looking at margins also for Mölnlycke. I mean, considering the strong growth rate in wound care and also, you know, its superior margins, you could say, compared with the other business area in that, is it fair to assume, if this trend continues, that you should see the impact on that, on the margins for Mölnlycke? Or is that... Or do you- is this sort of R&D, is that R&D cost, or is that sort of having a negative impact upon margin, so we shouldn't expect any, you know, impact on that, or how should we think here?
I will not give a margin forecast, Johan, but let me give you a couple of... We had, I think it was 29% EBITDA margin compared to 28.5% or so last year in this quarter.
Mm.
If you look on the profitability in the third quarter, what are the dynamics here? First of all, you have a good growth of Wound Care, which of course is supported, supporting both from an operating leverage perspective and a mix effect. On the negative side, gloves is actually a significantly more profitable product category than ORS. So there you have a negative mix since gloves is down compared to ORS. And then the final comment is that this company actually had a negative impact on the margin from currency-
Mm
... which is related mainly to the euro, U.S. dollar rate.
Okay. And also, when it comes to the gloves here, when do you expect this destocking phase to be over?
Actually, I cannot give you an exact figure, but likely it will continue into this quarter. Hopefully, it will not be there next year.
Okay. Okay, that's fine. Can I ask you one more question? It's about Permobil, and I apologize if you have addressed this already, but it was quite an impressive performance, I would say. Also, just looking at the margins clearly up now compared with at least I have been used to. Maybe that is just because we have had the supply chain issues, which has impacted, and the pandemic on from the customers and things like that.
Mm.
But how do you... Is this sort of Permobil past the worst now, and or has there been any development within the, you know, new products coming out? Because it was quite a, you know, very good figure, I must say.
There, there are two parts. Thanks for the question, Johan. There are two parts to your question, I think. First of all, the company is developing really well.
Mm
... company has brought forward a number of very interesting and innovative products that are now being pushed out in the market. So that is clearly one of them, and they have also worked on a number of efficiency improvements, not least within logistics. So that's really good work to Bengt and his team. If you look forward, which is implicit in your question on what should we expect here, I would... You know, if we talk about profit growth, I would caution a bit because, if I compare with Mölnlycke, in the fourth quarter now, we should all else equal see a very strong profit growth because fourth quarter was so low last year.... while for Permobil, the fourth quarter was actually by far the best quarter last year.
So sometimes, of course, when you look on these growth figures between the in the different companies, one needs to look into the comparisons numbers. But the key message is-
Sure
that the company is developing really well.
Yeah, I'm actually a bit more interested, to be honest, looking in sort of into 2024 and beyond that, actually. I mean, given the levels here, I mean, you had 25% EBITDA margin in Q4, and you're on that same level in Q3 now. And I, I'm once again, I'm not trying to... Well, actually, I am. I'm trying to give, you know, a push for a figure. But sort of, is this sort of- is this a normal run rate for Permobil? Because we haven't seen this, you know, 25%.
I'm trying to looking at my own model here, and I find a Q3 2014, but that's but or is this sort of a normal level where Permobil, in your view, should be at?
No, I will not give you an answer to that. And, and the reason for that is that also for this company, the mix between different products will have an impact. So I think the key is that-
Mm.
Of course, if you're running it right now at a 25% margin, if we would see a great opportunity to grow a business with which has, let's say, 15% margin, and it's really value created, we will do that, but that might affect the mix and so forth. So our-
Yeah
... focus is to really maximize the value through organic growth and efficient improvements and investments. And then the mix can and then, of course, also the market currency rates and other factors might play in here. So I will not give you an answer, but the company, I can say that my view is really that the company is in good shape.
Fantastic. Thanks a lot.
Yeah.
Thank you. Once again, if you would like to ask a question, please press star one and one on your telephone. 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 next question. Your next question comes from the line of Oscar Lindström from Danske Bank. Please go ahead.
Good morning. Three questions on my side. I'll try to be quick. I mean, the first one is on your portfolio. So you say you're continuing to look at new subsidiaries for Patricia, and you've been doing so for some time. I mean, if you don't find anything, could share buybacks be an alternative, or is that completely sort of not on the board?
Okay. Of course, when we look into new subsidiaries, what I've said before is that if we acquire a new subsidiary, it's need to fulfill our key criteria. It should be something we understand, attractive niche and a strong position in that niche, but it also needs to have a reasonable size to move the needle. If you put that together, we will be picky. So we have no problem if it takes time. We will work extremely hard to find the right one. But if we find the right one, we are clearly willing to hit it. So that is on that. Share buybacks is not a priority for us.
Our priority is to invest in our companies, develop our companies, and continue to make sure that we deliver on our promise to the shareholders of a steadily rising dividend. That is our priority.
All right. My second question is on Mölnlycke. I mean, we're seeing quite a bit of sort of disinflationary pressures overall in the economy, sort of mounting. I mean, you talked about price increases in the ORS segment, partly driven by mix. I mean, are you seeing any price pressures in the other segments, or do you find yourselves sort of sacrificing volumes in order to either, you know, hold or drive pricing in the other segments of Mölnlycke?
You know, exactly how you handle the pricing, of course, is, sometimes it's partly strategic, but also a tactical question, and that is something for management to handle. What I can say is that if I look on the overall Mölnlycke, the biggest price increases, we have within the ORS segment.
Okay. So my final question then is in Sarnova, where we've seen a very positive margin development for quite some time, and as far as I can see, in this quarter, it was a record EBITDA margin.
Mm.
What's changing in this company? And is this, you know, what we saw in this quarter, a sustainable level or a new level, or is it just a blip?
Thank you, Oscar, for the question. Actually, I will have to come back on mix also here. Because first of all, there is some operating leverage during the quarter where we had this record margin. But one of the key reasons is actually that the highest growth in this quarter we saw in the revenue cycle management being driven by increased transportations for ambulances and so forth. And that business, the Digitech business, is a software-related business and has the highest margins within Sarnova. The second highest growth in the quarter came from the cardiac business, which is basically heart starters, et cetera. And despite that they grew strongly in the third quarter last year, they actually had very strong growth also in this quarter.
The cardiac business has the second highest profitability. The other two businesses, which is the emergency preparedness and acute, they were more flat in the quarter from a growth perspective, and they have lower margins than the other two businesses that I talked about. So that is the key reason for the high margin in this. So if you look forward, if the RCM business and the cardiac business will grow, that will, of course, support and vice versa.
All right. Thank you. Those were all my questions.
Thank you. I will now hand the call back to Viveka for webcast questions.
Thank you. We have a few questions. One is from Thomas Ericsson, who has a question on: what's your plan to improve the performance of Ericsson?
I think that that is actually a question you should put to the Ericsson's management instead of me. What I can see is, of course, that at the moment, Ericsson's big profitability drop is to large extent related to the weak market in the U.S., in networks. I mean, in the quarter, network sales was down 60%, and this is a profitable market for Ericsson. At the same time, they grew in India, which is a lower margin segment or region. The key, of course, what they need to do, of course, they need to face the fact that the market is slow and take out cost, and they have a cost plan now to take out SEK 12,000,000,000 of cost, and that is, we are highly supportive of adjusting.
At the same time, of course, they are investing for the future, so it's back to this balance. But the details, about it, I think, should be asked to the management of Ericsson.
Then we have a question from Samarth Agrawal, also relating to Mölnlycke around the Q on Q decline in Mölnlycke's value. For sequential decline, is it mainly due to lower market multiples?
Yes.
Yes.
That's correct.
Yeah.
There's also currency headwind.
A second question here. While you mentioned strong year-on-year trends for 4Q, on base effects, how should we think about sequential growth for Mölnlycke? You've been into this partly.
I would not go into detail because it comes back to what I said before. We don't have a crystal ball exactly how this will play out. I can just see if I look on Mölnlycke during 2022, I can see if I look on the profit for each quarter, the third quarter was the highest profit, and fourth quarter was the lowest. And then, of course, I can see where we are at the run rate and so forth. So that is my only comment that I want to everybody to remember, that now in the fourth quarter, it will be an easier comp for us.
Yeah, operationally, but we're not commenting the value because it, of course, depends on external multiples and the market in general.
Then also on a general note on multiple contraction within private markets, do you see more willingness from sellers to divest assets at market markdowns versus prior year?
No, I cannot say that I see any big differences. As I've said before, it normally comes back honestly to case by case. And normally, if you want great assets, prices are still high. If it's less attractive businesses, you can buy them at a lower multiple, but that is not our strategy.
No. And then there is yet another question from Saima Hussain, also relating to Mölnlycke. What drove the SEK 3,600,000,000 decrease in Mölnlycke's value?
Yeah, that's the-
That's what we have been discussing.
Yeah.
Yeah.
Some currency.
And then the final last question from Jan Wegner, if Investor has Berkshire Hathaway as a role model?
I have the biggest respect for Warren Buffett. But role model, I think we try to do as good as we can. But of course, he has done a absolutely fantastic job in his career, and I'm a big admirer of him.
That was the last question we had today. So by that, we want to thank you for joining us today. And on December 8, Investor will host a capital markets update, so welcome then. Thank you.
Thank you.