Good morning to Investor's annual accounts press conference and report, and also our Q4 report. Today, our CEO, Johan Forssell, will start the presentation, followed by our CFO, Helena Saxon. This press conference is also a call, we have participants on the phone, and one can also follow our press conference on the web. Welcome, everyone, and please, Johan.
Thank you, Viveka, and welcome everybody to this meeting. Let me start by summarizing 2018. During 2018, the economic activity in the world economy was actually pretty strong. We know that during the second half of the year, we did see leading indicators turning down, and we also saw in a number of areas that the activity actually also slowed down. This led to a sharp fall in the stock markets around the world during the fourth quarter. Basically, most stock markets around the world ended up in negative territory for the year, including the Swedish stock market that was down some 4%-5% in 2018. I think Investor had a solid performance in this tough market. We basically held our net asset value flat during the year, adjusted for dividends.
We had a positive total share return of 4%, which actually was an outperformance compared to the Swedish stock market by 8 percentage points. We invested in three listed core investments, and we acquired two new subsidiaries in our portfolio. We had a strong profit growth in Patricia Industries, Mölnlycke ended the year with a good organic sales growth. We had a strong value growth in EQT investments. Despite the large investments we made, we ended the year with a solid balance sheet with a leverage of only 6%, which is in the lower range of our band of 5%-10%. The board proposes an increase of the dividend with SEK 1 per share or 8% to SEK 13 per share. If I then go through a couple of highlights during the year, I have divided them in three buckets: structural actions, investments, and agility.
If we start with structural actions, during the year, a number of our companies undertook important structural activities. The split of Atlas Copco and Epiroc became our 12th listed core investment. ABB announced the decision to divest the power grids business, Sobi did two acquisitions of products during the year, which is very important for the company, number one, to diversify its business and also to build a stronger franchise in the U.S. market. Our U.S. subsidiary, Laborie, made a very large acquisition in Cogentix during the year and also restructured the European operations. Finally, we have Aleris, where Aleris divested the care business, which is more or less half of the business, and that, of course, led to a significant strengthening of the balance sheet and reduced financial risk. Now the primary focus, of course, is to turn around the healthcare operations.
During the year, we also made a number of investments. In the first quarter of 2018, we invested SEK 1 billion in Ericsson. In the fourth quarter, we invested SEK 500 million in Electrolux, and we also participated in the rights issue of Saab. We believe it's important that Saab get a strong balance sheet that will improve the likelihood for the company to continue to win important large orders around the world. Finally, we acquired the two new subsidiaries, Piab in Sweden and Sarnova in the U.S. I have to say already now that I'm very pleased to see that both these new companies in our portfolio had a very good performance during its first year. Moving over to agility. Most of our companies are working very actively with improving the agility, basically handling up and down swings.
Many companies are also working hard to prepare for potentially tougher times ahead. I don't have a crystal ball, but given where I started this press conference, there is, of course, a possibility that we will enter tougher times. It's important that you are ready, you have planned it, and you have the action in place. Basically, be prepared for potentially tougher times. At Investor, we have also prepared. We have issued a EUR 500 million bond. It's a 12-year bond at very attractive terms, that of course, creates a very good liquidity, so we could also be ready to act if opportunities would arise in the year ahead. I think it's important I mention that we continue to have a very strong balance sheet despite investments of about SEK 13 billion in 2018. I think this is important to highlight. This is our cash flow generation.
We have a strong underlying cash flow generation in Investor that allows us to invest, pay a dividend, and still keep the financials in good shape. If you look over the last four-year period, if we start to the right, you see how we have spent the money. You can see over this four-year period, we have invested SEK 30 billion. SEK 12 billion has been invested in the listed core investments. We have invested SEK 18 billion in buying four new subsidiaries. That's the SEK 30 billion. We have also given dividends of more than SEK 30 billion to our investors. In total, you can say we have spent SEK 60 billion+. The good part is that we have also generated SEK 60 billion+, as you can see to the left.
More than half of that is the dividends from the listed core investment, you can also see the big chunk that we receive in distributions from our subsidiaries, and of course, Mölnlycke here is a big part, but we have also gotten good distribution from Three, BraunAbility, Permobil, during this period. Finally, we have received a net contribution from EQT over this period. You can say despite investments of SEK 30 billion, our net debt at Investor has been more or less unchanged over this period. Since the asset value has gone up, you can see that the leverage has actually gone down from 7% to 6% over this period.
With that summary of 2018 and our cash flow profile, let me then, before that, I should say that when I talked about the dividends of SEK 30 billion+ over this period, we should of course remember that we have continuously increased the dividend over this period of time, and the gray bar to the right here is the proposal from the board of SEK 13 per share. With that, I will then jump into the fourth quarter results. As I mentioned initially, the fourth quarter was characterized by a big fall in the stock market. The stock market in Sweden was down more than 14%. Our adjusted net asset value was down 12%, and our total shareholder return was down 8%.
If we look on the mix between the different parts of Investor, you can see that we fell, which is not good, but we outperformed the market. You can see that our listed portfolio developed more or less in line with the market. You can see that the unlisted part performed better. Patricia Industries was only down 3%, and that is a net effect of increased profits, but multiple contraction among the peer multiples that we use. Profits had a very good development, but multiples came down. We have EQT, that was actually up 14% in the quarter. Here we have some internal transactions related to EQT AB, and I will come back to that later. That has boosted this figure by about 10 percentage points. You can say that the underlying performance of EQT in the quarter was +4%.
That is still a strong performance, especially considering that the stock market was down 14% in the quarter. Let me then go into the companies and start with Mölnlycke. It was good to see that we had an organic sales growth of 6% in constant currency in Mölnlycke in the quarter. Wound care actually grew 8% in the quarter. Surgical grew 4%. We had a good growth, I would say, in all major geographies. If I should give a little bit more color, you can say that emerging markets that I talked about before, China, Middle East, Brazil, and those kind of markets, were growing about 14% in the quarter. We also see a very good growth in the U.S. this quarter. Finally, Europe actually also showed a quite solid performance. Europe was good.
The weakest area in Europe remains U.K., we had a solid growth also in Europe in the quarter. Profitability was down somewhat compared to last year, that is mainly related to that we are putting a lot of efforts behind sales and marketing now to push these new products out to the market. We also had some negative currency effects in this particular quarter. Due to the strong performance in this company, the company was once again able to distribute EUR 100 million to Patricia. In the quarter, they also did a smaller acquisition, an important one. They make a key component to our wound care dressings. This will not only give the technology, but it will also strengthen the R&D capability in the company. Moving over to Permobil. The organic sales growth was -2% in the quarter.
I have to say that the electric power wheelchairs were down in the quarter, but we saw a very good growth in manual and also a good growth in seating and positioning. In the last quarterly report, I said to you that in Permobil, the cost level is too high and that the priority has been to really get the cost level in good shape. I have to say that management has done an excellent job in focusing on this. Even though sales was more or less flat, as you see, actually the profit grew by 30% year-over-year, and we saw a significant margin expansion. If you look into the details of that, we can see that we see cost improvements both on a COGS level and on an OpEx level.
Due to the strong profitability and cash flow in this company, Permobil were able to distribute SEK 600 million in the quarter. Moving over to our new kids on the block, Piab. Good development, organic sales growth of 5%. Europe was the key driver here. Actually, America was down, and that is mainly due to a weak automotive segment in the U.S. market. The profit margin increased quite a lot. It was driven by operating leverage. If you compare with last year, I think our margin this quarter was 30%, and it was 22% last year. We had a good margin development underlying, but last year was also affected by adjustments related to certain areas. The real shift one should, of course, take, but the profit level in itself was very strong, and the underlying profit grew quite a lot.
There is a process here to find a new CEO since Anders Lindqvist will leave in the second quarter. Moving over to Laborie. I have to say it's great to see that the company continued to deliver now. We saw an organic sales growth of 6%. You see most of our companies are delivering very solid organic growth, 6% organic growth, and you can see on the profitability that we're now back to a good profitability after the restructuring and after the integration of this company, Cogentix. The profit margin in the quarter was something like 26%-27%. Sarnova, our second new company in the portfolio, also grew organically by 5% in the quarter. In this quarter, the growth was mainly driven by the acute care segment, while emergency preparedness was more or less flat.
It's good to see also that the private label, Curaplex, continued to show good growth. BraunAbility did not have good growth. It had a very strong growth, as you can see. It had a 17% organic growth. The profitability was somewhat lower than last year, and that is mainly due to the fact that we are investing heavily in improving the supply chain system. Due to the strong cash flow generation over the last year in BraunAbility, they were now able to give the first distribution to Patricia that amounted to about SEK 1.2 billion. We come to Aleris, here you can see that the lines are pointing in the wrong direction. Here I think I need to do a couple of explanation. First of all, I'm very pleased to say that we now in January have closed the sale of Aleris Care.
That means that we now have a strong balance sheet in Aleris, of course, significantly have reduced the financial risk. If you look on the figures, I think it's important to highlight that there are two major things affecting the figures. One is restructuring costs related to the divestiture of Aleris Care. The second one is that the company has made significant provisions for unprofitable contracts following a thorough review that has been done. If we start by adjusting for the restructuring costs that are related to the sale of Care, which I think is fair because that is really a structural activity, the EBITDA would have been positive by SEK 2 million, but you can see that the operating profit after depreciation would still be in negative territory. This result has been significantly affected by this provision for unprofitable contracts.
As you know, we are not adjusting for that because it's not good to enter unprofitable contracts. For your information, if we would adjust, which we don't, for these provisions for unprofitable contracts, the profit level would have been more or less in line with last year. 3 Scandinavia subscription base grew by 37,000 during the quarter. The figures were of course affected by the VAT ruling, but the underlying service revenue was more or less flat, and the underlying profitability, as you can see on the dotted line, was also more or less flat in the quarter. We come to EQT. As I mentioned, EQT was up 14%, but excluding these transactions related to EQT AB, the performance was +4%. These are transactions that have been done to simplify the ownership structure as part of the ongoing review of EQT and the bank.
From an Investor point of view, we have participated. We have, for example, gotten a distribution, and we have participated in certain emissions. Based on this transaction, we now report a value that is different compared to previously. The total value of our EQT investment, including our LP share, is now SEK 21 billion. You can see on the graph, which is over the last five-year period, that in 2018 the cash flow from EQT was actually lower than the normalized level. On the other hand, you can see a strong return within EQT of +25% in constant currency. Adjusting for this one-time effect, the return would have been 14%-15% in the year, which of course is very strong given the stock market development in the year. Let me then summarize and look forward.
I think in these times when there is a lot of uncertainty, I will not mention it because everybody talks about it, but the uncertainty and the rapid changes we see around the world, it is of course extremely important that you have a very clear direction where you're going and that you have clear plans to act, also of course, the organization in place to do it. At Investor, our purpose is very clear, and that is to create value for people and society by building strong and sustainable businesses. This is our genes. We always work as an engaged owner with the ambition to make the companies best in class. That is outperforming competition. We always work to do what is best for each individual company. This is us.
As you have seen many times before, we have clear operating priorities, we will stick to these operating priorities, that is to grow net asset value by, number one, being an engaged owner, and number two, making good investments. Secondly, operate efficiently, keep track on our costs, thirdly, pay a steadily rising dividend. If we succeed with that, we believe that we will continue to generate a good return to our shareholders. If we look on the track record over the last five, 10, or 20 years, you can see on the blue bar, which is Investor's return, that we have exceeded both our return requirement of 8%-9%, and also exceeded the stock market, which is the yellow bar, during all these periods. We will work hard to try to continue to deliver in line with this.
This morning we also issued this press release where we are offering the share persons in our listed core investments to invest with their own money at market terms in long-term options with five-year durations and a strike price of 110%. The reason why we do this, first of all, the share person is very important for us. In a simple way, the share person has two key roles. Number one is to lead the board, the second, of course, is to be a very strong sounding board to the CEO in the company. We believe in this. We believe in skin in the game. We believe in long-term commitment, that is what this is all about. With that, I hand over to Helena Saxon.
Thank you, Johan. Let me go through the financial highlights of the quarter. Our adjusted net asset value amounted to SEK 372 billion at the end of the quarter. This is a decrease of 12%, we all know why. Johan already discussed the tough equity markets in Q4. Looking at our listed core investments, which landed at SEK 275 billion at the end of the quarter, the total contribution was actually -SEK 47 billion due to this weakness in the stock market. The TSR was - 15% compared to the stock market's - 14%. Of course, some of our heavy industrial companies were affected by the worry about the economic outlook about China, we can see in the graph that they were hit especially hard. Across the board, our listed portfolio was weakened in the quarter.
Looking at the value of Patricia Industries, we can see a much smaller value reduction from SEK 119 billion to SEK 115 billion. We can see that three companies contributed positively while the others were negative. We should remember that profit and cash flow generation was strong in the quarter, but mitigated by peer multiple contraction. Again, that is the effect of what happened in the stock market. We can also see in this graph the striped gray bars at the bottom of the company bars, the distribution that was very strong in the quarter, SEK 2.8 billion was distributed from Permobil, BraunAbility, and Mölnlycke. As Johan already mentioned, this is the first distribution from BraunAbility. In this graph, this cash of course lands in the cash pool at the right here.
Looking at what were the major drivers of value in the Patricia portfolio, we can see that Laborie had very strong profit development, and that increased the market value by SEK 1 billion. Permobil was up only SEK 100 million, but also distributed SEK 600 million. For Three, we can see a -SEK 1.2 billion. This is both lower multiples in the telecom operator segment, but also the negative impact from the Swedish VAT ruling that Johan already mentioned. BraunAbility was down SEK 1.5 billion due to lower multiples, but this is also an effect of the distribution of SEK 1.2 billion. Mölnlycke was down SEK 4.5 billion, driven by lower multiples and also a distribution of SEK 1 billion in the quarter. Financial investments is a portfolio within Patricia Industries.
It is SEK 7.3 billion, here the realization of the portfolio continues, and two companies were fully exited in the quarter, Spigit and Innovative Microtechnology. I will end with our financial position as of the last of December 2018 is still solid. Our leverage of 6% is now in the target range of 5%-10%, which we have communicated. Our net debt landed at SEK 21 billion. We still have more than SEK 11 billion of cash, and our average maturity of the debt profile has been extended by the bond that Johan mentioned and is now more than 10 years. This is my final slide, we will end again with our purpose statement.
Thank you, Johan and Helena. Let us move over to a Q&A session, we will start with questions here from the room. We have a microphone. Please also present yourself so the ones on the call know who you are.
Absolutely. Joachim Gunell from DNB Markets. In your comments regarding an economic slowdown, is there anything in particular with regards to your portfolio that you want to highlight in terms of sectors especially?
I think what we see is that especially China, you can say that we see a weakening in a certain part of Asia. In China, you see a weakening. The other key area I would say is for sure the automotive segment, and that goes for sure also in China. Other than that, it of course depends on what sectors you look into, but I would say those two are two clear ones.
Secondly, obviously with regards to the dividend rates, we see an Investor today you have a resilient dividend platform, but how do you think about your portfolio companies now? Should they be more careful with their balance sheets to have a, so to say, financial muscle to act upon if times get rough? Could you elaborate what you feel there?
Unfortunately, I cannot since we are heading into the quarterly reports going forward, I cannot do that.
A question on 3 Scandinavia. It is now one and a half years since you started providing your preliminary market value, so to say. We have seen the valuation or in terms of the multiple you apply to 3 Scandinavia come down about two-thirds. This is perhaps a question for Helena. How are you thinking there?
As we have communicated before, the valuation process is fairly mechanical. We have an external part helping us providing market multiples that were set at the beginning of the period, we haven't changed the way we look at these multiples. It's the same peer group and the same indices that we use. It's the development of the market, actually.
Finally on 3 Scandinavia as well. They lost out on the first spectrum auction here in Sweden. How do you view the competitive landscape from 3 Scandinavia's point of view following that?
I think this is a sector where there is always a very tough competition. I think 3 Scandinavia has the advantage of being a focused company, being nimble, and can act quickly and be in focus. It's always a tough competition, for that kind of business, it's a battle every day.
Thank you.
Marie Scheja, Nordea. Thank you for taking my questions. A question regarding Mölnlycke. Could you give any more information behind the improvements in Mölnlycke, and can we extrapolate this development, or should we see it as possibly affected by one-offs? Also if you could comment if you are taking market share or if the market is growing as a whole.
On the latter one, I can say no because I haven't seen the figures for the others yet, but it will for sure be interesting to see when they report the quarterly results. We don't give forecasts, but what I can say is that our direction is very clear. If you have a company that is as profitable and generates so much cash as Mölnlycke, the biggest driver of value is growth. Of course, we have a high focus on organic growth. That will continue. The priorities I mentioned before, the priorities is to really make sure that we launch the products that we are now launching in the market, work behind that to bring forward new innovative products. We have a pipe coming up after that. Thirdly, of course, to make sure we continue to grow in what I call the emerging markets.
I would say those are the top priorities, and I hope that we will continue to deliver a good, solid organic growth in the years ahead. Of course, I don't know how the market will develop, and that is why I never give a forecast.
Can you give a number on how big emerging market is of total share now?
It is still not huge, but if you look on the double-digit growth that it has, it has a material impact on the growth of the company.
Thank you. Also a question regarding EQT. Your value grew from SEK 227 million in Q3 to SEK 1.7 billion, and I understand that you get a dividend to avoid a dilution in your ownership, but could you give any more comment behind this transaction, where the money comes from, or Yeah.
No, as you say, first of all, it is a number of internal transactions. We have received a distribution, and we have participated in some emissions in the company. Based on that, we report this value. It's not more complicated than that, basically.
Okay. You have participated in the emissions?
Yes.
Okay. Thank you.
[Liz Miliotis], Bank of America. Thank you for taking questions. Perhaps if I could start on your outlook for perhaps new investments. Are you still looking to cash hoard given where we are in the market or, given where multiples are today, perhaps invest in something new?
Thank you for the question. I think we have, as I mentioned before, we issued a bond, a 12-year bond, to make sure we have liquidity, and we still have a strong balance sheet, so we are ready to act if opportunities arise. We have a clear strategy where we prioritize. To be honest, when you enter a year, and that was the same last year, opportunities arise or they don't arise. If we talk about the investments we did, for example, Ericsson in the beginning of last year and Electrolux at the end of the last year, of course, that will depend on when we see opportunities, we are ready, and we are ready to act. We know where we want to invest, and we will do it when we see good value. On the unlisted side, of course, it's different.
On the unlisted side, the opportunities comes when somebody wants to sell. Last year we got two opportunities with Piab and Sarnova, and we thought those were great opportunities, and we invested. I actually cannot give you an answer. We are ready. If the opportunities arise, we are ready to act. We will also, of course, make sure we have a strong balance sheet and liquidity. It's always a balance for us to make sure that we are doing the right things with the ultimate target just to make sure we try to create value.
Is there any particular sector that you might be looking at or listed or non-listed?
No, we will invest where we find the best opportunities.
Okay.
We will of course, continue to invest in the sectors that we understand and know. We stick to what we know.
Another question on the distributions you're receiving. BraunAbility received something for the first time. Is that something that we can expect going forward? Secondly, on Mölnlycke, if we assume a higher growth, which obviously you said you won't comment on, could we see an uplift in the distribution there?
When it comes to the distributions, the best way, instead of me talking and guessing, I think the best way I can say, look on our track record. The reason why I say that I actually cannot answer your question is that if the companies will find great add-on acquisitions that create a lot of value, that will for sure be a preferred route forward. On the other hand, if they do not find big acquisitions and they continue to generate so strong cash, we are fortunate to have a portfolio that generate a lot of cash. Of course, we don't want our company to become banks, so then they should distribute it. Actually, we have the same reasoning in our listed portfolio. We have a number of companies that over years have made redemptions, basically extra distributions when the balance sheet have become too strong.
That is our philosophy.
Okay. Thank you.
Thank you.
Thomas Graf, Handelsbanken. Could you just comment a bit on Aleris here? You said it's reduced the risk now with the divestment, but what's the plan to turn it around or just any comment?
I think you answered it yourself. The focus now, this divestiture of Aleris Care is done. The balance sheet is in good shape, now the focus is to basically turn around healthcare. There is a lot of activities going on within the company.
Okay. Thanks.
Any more questions here in the room? No? Let's see if we have any questions from the participants on the call.
Thank you. Ladies and gentlemen, if you have a question, please press zero one on your telephone keypad, and you'll enter a queue. Okay, there appear to be no audio questions.
Okay. Thank you. Finally, Magnus, do we have any on the web? No. No more questions. I would like to say thank you for joining us this morning, and Johan will be here to answer any questions from the media for individual interviews. Thank you so much.