My name is Virgika Hirdmann Ruhrberg, New Head of Corporate Communication here at Investo. We will start out today with our CEO, Johan Poissel, going through the results, followed by our CFO, Helena Saxon. And then, of course, there will be a Q and A session and also opportunities for media afterwards to have individual interviews. Of course, the presentation from the press conference will also be available on our website directly after the presentation. So warm welcome, everyone, and please go on.
Thank you, Vivek, and once again, welcome to this Q3 report. Let's quickly dig into some key figures. In the quarter, we had the net asset value that amounted to adjusted net asset value that amounted to SEK 421,000,000,000. That was up 7% compared to previous. And you can see that in this quarter, the main driver was the listed core investment that was up 9%, while Patricia Industries was up 2%.
And in this quarter, actually, the EBIT was down 2%. Our total share of the return amounted to 13%, which is above the Swedish stock market that was up 7%. But we all know that after the end of this quarter, have seen a correction in the market. So the question, of course, is what is happening out there in the world. And I think it's fair to say that we have seen a good development, a good development of the macro economy for some time.
And the level where we are right now is at a good level. But we are also seeing that leading indicators are coming back. And that might indicate that we are heading into a softer demand environment. I will not speculate how this will play out, the macro economy, but this is what we see. And for us, the most important part is that we make sure that we are prepared if we are entering a tougher environment.
And on that note, I think it's important to highlight that during the quarter, we issued a 12 year bond, EUR 500,000,000 bond at a fixed rate of 1.5%. That will, of course, give investor a good financial flexibility for the years ahead. Secondly, you have heard me many, many times talk about the importance of flexibility and agility among our companies, And that is the second area that is a top priority, supporting our companies to make sure they can handle both strong and weak markets. So that is our focus, being prepared for whatever comes up. With that comment about the word, let's go back to the quarter, starting with the listed core investments.
You can see here that there were a number of important activities on the listed listed side during the quarter. Boeing was awarded a $9,200,000,000 deal from the U. S. Air Force. And of course, this is highly important for Saab being risk sharing partner to Boeing.
Atlas Copco, you now have brought up this vacuum technology business area over the last 4 or 5 years. During the quarter, they did another sizable acquisition to further strengthen this business. And now I think it's sad to say that they are really a market leader in this business. Ericsson also awarded a $3,500,000,000 order from T Mobile in the U. S.
In the quarter. Of course, a very important one, both for the importance of the U. S. Market and also given the size of the order. And then finally, Husqvarna here.
You know Husqvarna have 4 divisions and we had 4 divisions. 3 of them are working very well. 1 has been not performed in line with expectation, and that's the Consumer Brands division. Now they take decisive actions to focus on the core brands of Husqvarna and GADIANA and basically resolve the Consumer Brands division. And we are fully supportive of taking that action.
Nasdaq has announced a bid for the Swedish fintech company, Cinnober, and this one will strengthen the position within the market technology area. And finally, in Baixle, Baixle is reorganizing the business, basically putting the service closer to the energy market and the Marine, the 2 key segments to act even more efficient and faster towards both these 2 end markets. So as you can see, a number of important activities in the quarter in the List portfolio. Moving then over to Patricia Industries. The major subsidiaries, if we looked at if we would have owned Clearburn Sonova last year, pro form a, you can see that the reported growth was 14%, and out of that, 3% was organic growth.
And you can see that the profit growth was 13% in the quarter. When it comes to Nelliek, the organic growth was 2%. In this quarter, wound care was flat, But important sorry, the surgical part was flat. But importantly, wound care grew by 4% organically. And this is actually the 3rd quarter in a row that wound care is growing 4% organically.
I think we have a good development of our 2 latest acquisitions that we did this year with Keyabens and Novak. Both these companies were growing 6% organically in the quarter. And then perhaps, if I can say, the highlight of the quarter is the development of Laboree that generated a very strong organic growth, double digit growth and where we importantly saw the profitability coming back to more normalized levels. And in the quarter, the profit margin was about 25% in this business. And then moving then over to Alaris Before moving over to yesterday's announcement, just a short comment about the quarter.
The organic growth was 1% in the quarter, and we saw an improvement in the margin in the Care side, but we saw it coming back in the Health Care side. So yesterday's big announcement then. If I can take a step back, investor acquired Alaris in 2010. And since then, we have invested in total DKK 5,400,000,000 into Alaris. On the one hand side, the positive part of the development during our time is that both on the Healthcare and on the Care side, the company has really developed a high quality Care services, and we have received high user satisfaction for these two businesses.
But it's also fair to say that the financial development has not been satisfactory. And as of today, it's just fair to say that so far from a financial perspective, this has not been a good deal. But sometimes, the environment around you changes. Sometimes, the plans does not play out as you planned. That is part of business life.
What happens in our view, if that happens, what you do is you pull up your sleeves, you try to fix it, you do the best to really develop from where you are. And that is what we are trying to do. What have we then done? Well, since some time, the company has been internally split in 2 divisions, Care and Healthcare. The businesses have been decentralized.
And yesterday, it was announced then that the Care part of the business is divested to Ambea. We believe that deal is truly a win win deal. First of all, we believe we give care for good home with Ambiya. This will be a pure play market leader within the Care segment. And we also get a good price for our business that will lead us to or for the company to reduce the net debt in the company by EUR 2,600,000,000 to EUR 2,700,000,000.
And if you look on our quarterly report to date, you will see that the net debt in Ares as of the latest quarter is EUR 2,800,000,000. And with this deal, we can reduce it by SEK 2,600,000,000 to SEK 2,700,000,000. So the financial situation will significantly improve. And then our focus can now be to really make sure to develop the pure play health care company in Alaris. Just to show a little bit figures then.
What we divest. The company, Alaris, has sales of SEK 10,500,000,000 to SEK 11,000,000,000. What we divest now is the Care business with revenues of about €5,000,000,000,000 and 6,000 employees. What we will keep is the Healthcare business with revenues of about EUR 5,700,000,000 and about 5,000 employees. And this will now be the focus of our development.
What are then the key priorities going forward? First of all, of course, we need to make sure that we close the transaction, which we believe will happen at the latest during the Q2 next year. High focus, of course, on quality, service and efficiency in the operations. But then there are also a number of specific areas that the company right now is focusing on. Number 1 is to improve the Healthcare business in Sweden that is not performing in line with expectations.
And they have recently announced a big restructuring of that operation. Secondly, to grow and develop the digital offering, Doctor. 24. And finally, adapt and manage the new radiology contract that will come into force during the Q1 next year. And the fact is that contract will have lower prices.
That is why it's so important for us now to manage this, work as hard as possible with efficiency improvement to try to counteract this. As you can hear, restructuring Health Care, handling this contract, this will not be a quick fix. But being having a good position, both within Radiology and in Specialty Care, we believe that with these actions, we should really be able to develop this. But of course, in the short term, we will need to take a couple of actions to drive this business forward. All right.
With that on Alaris, let's move over to Van Ligt. I mentioned the growth figures before. If I should give you a couple of additional remarks on that. The Emerging Markets business is really a good key growth driver. And in the quarter, Emerging Markets grew by a little bit more than 20%.
If we look on the development on the other geographical regions, U. S. Was more or less flat. And then if we look on the European side, we can see that the northern part of Europe performed well. While it was tougher, it continued, I should say, to be tough in the UK.
So strong markets were, for example, here in the Nordics. The underlying profitability was more or less unchanged. And importantly, right now is the launch of the Neplex Borderflex Woundressing. And in this quarter, it was launched in 2, of course, very important market, being the U. S.
And the U. K. And the initial response has been positive. Moving then over to Permobil, organic growth of 1%. If you look here on the different product categories, different geographical regions, no big differences.
The profit margin declined. This is partially related to some costs related to the CEO transition. We also had an asset disposal loss related to one of the acquisitions. Small part that after the acquisition, the company decided this is not our core business. But I would say the main focus is now that we need to address or the company needs to address the operating expenses, and actions have already been implemented to make sure that happens.
The EMEA, as I mentioned, good organic growth, 6% in the quarter. The profit margin at a good level of 28%. If you compare it with last year, it's down a little bit, but we should also remember they have done a couple of acquisitions within the gripping area that has lower margins than the vacuum automation business. But overall, I must say it's a good start of this company. If you look on the different business line and the different geographic regions for PEA during the quarter, geographically, all key geographies grew in the quarter.
And if you look on the 3 business lines, backcomb automation, vacuum conveying and ergonomic handling, they were all growing in the quarter. Sernova, our U. S. Acquisitions that acquisition that we did this year, strong development, 6% organic growth and margin expansion quarter over quarter. So we saw profit growth once again exceeding the base growth.
And here, it's good to see that the 2 initiatives are really bearing fruit. 1 is the private labor CuraPlex brand that they are driving in the market, good development on that one. And the other one is these custom kits where you put things together in a kit that is ready, if you, for example, have school shootings, etcetera. Both those business lines are doing well. Vulnerability, organic growth 3% in the quarter.
The profit margin was impacted by a Voluntali product recall. And this is a product or a component that was not good enough, And they were very quick. Of course, safety is the top priority for vulnerability. So what they did was voluntarily bringing back that. And they will, of course, do it free of charge.
And the good part there has been no incidents about it, but they will, of course, take the cost for that. And that you saw having an impact in the quarter. And then Landry, that I mentioned a little bit before that, I saw as a little bit of a highlight. You see that the organic growth was 15% in the quarter. And here, you can see after a capital period, I actually mentioned that in the last quarter when we had the negative profit that we actually expect the profitability to come back because they have been working with 2 things, integrating the large acquisition, Cogentix, and restructuring the European operations.
And both those actions are actually going well according to plan. So it's very good to see that profitability came back. 3, good development. Subscriber base increased 15,000, driven by the Halon and Oyster brands. Service revenue was up 1%, but we should acknowledge that we had some help by the currency.
If you look on the EBITDA in our quarterly report, you will see that the profit is up in the quarter compared to last year. But here, we have to remember that the accounting is actually helping us because IFRS 15 now demands that we capitalize certain customer acquisition costs. So if we adjust for that, the profit is actually not up. It's actually down 1%. But then on the other hand, we have a new Danish VAT ruling that is having a negative impact compared to last year.
So if we adjust for both of these, the profit is actually flat to slightly up in the quarter. Then on Equity, I mentioned that the value change was minus 2%. I normally do not comment on individual companies. But since one of the companies in the China one of the China funds, LBX, is a listed company. And you have seen what has happened on the Shenzhen and Shanghai Stock Exchanges, and this has also affected this company.
This is a company active in pharmacy retail chain. Actually, the company is developing well from an operational perspective, but the stock market has come down, and that has a big impact. If we adjust for the Chinese company, LVEK, actually, the value growth in constant currency was up slightly for us. The net cash flow was positive SEK 300,000,000 plus in the quarter. And then you have seen that the decision has been taken, that it is reviewing the options how to develop the business going forward, including strengthening the balance sheet.
And this is something that we support these initiatives. And of course, we will gradually, as an owner, participate in that work. Our strategic priorities, they are there, they are firm, and we are working towards reaching them. So with that, I will hand over to Helena.
Thank you, Johan. May I have the quick group? Thank you. So let's look at some of the financial highlights. The net asset value or I should say the adjusted net asset value, which is based on estimated market value for Patricia, landed at the end of the quarter at SEK 421,000,000,000.
This is an increase of 7% in the quarter. This was mainly driven by the listed core investments. And we can see that the 2 major drivers here were SCB and Sobe. SARB also had a great return in the quarter, while Husqvarna and Nasdaq had a tougher quarter. So the TSR of this division was 9% compared to 7% of the soft market.
Looking at the market or the estimated market values of Patricia Industries. We can see that in the quarter, the value was up 2%, and this was mainly driven by Malmuche, Lavalier, Primobil and Free, while Alirets had a more difficult quarter and estimated market value actually decreased. If we go into details on all the specifics, you can see that for Melike, both higher profits and cash flow that increased the the cash flow actually lowered the net debt and currency, unfortunately, impacted negatively, but we still had an estimated market value increase of 1 point 2,000,000,000. Thermobil was up BRL 0.8 billion, and this was driven by both cash flow and higher profit. Labouli was also up EUR 800,000,000 because of the higher profit that you saw in Johan's graph there.
Free was up DKK 300,000,000. Cash flow was higher. Profits were also higher, but multiples contracted in the quarter. And Alaris was down EUR 300,000,000 due to lower profit. Looking at the financial investment portfolio, which is part of Patricia Industries, we can see that it's still around BRL8 1,000,000,000.
So the value development was essentially flat in the quarter. And our strategic intent here remains, I. E, to realize the value of this portfolio through exits. Looking at our leverage development, we can see that we ended the quarter at 4.9 percent leverage, which is in line with our target range. The net debt is BRL 19,000,000,000 and our cash position ended the quarter at BRL 13,600,000,000.
Johan mentioned that we raised a EUR 500,000,000 bond, a 12 year money at 1.52 percent interest rate. And at the same time, we bought back EUR230,000,000 of Eurobond maturing in 2021. And together, that's extended our maturity profile to 10.6 years. That's about what I was going to say. So that ends my presentation.
I will hand over to Birbica. Okay. Thank you, Johan, and thank you, Hilianna. Now we will have a Q and A session, and we will start with you in the room, and we have a handout that will be circulated. So Emily, please.
Joakim Geran from DNB Markets. So one question on the ECG strategic strategic review and 3 growth related questions in Patricia. So in regards to timeline, when would you say that you will have taken a stance on what strategic options would be the best for EQT? Basically, we could start there, and I'll get back to the industry afterwards.
I mean the process has been initiated, and I cannot give you a comment on how fast it will go.
Going to Patricia then. In terms of growth, in permeability and vulnerability, the growth rates came down quite substantially in the sequential development. What is driving those declines? You didn't elaborate on that.
Okay. If I start with Perma Bill, what we can see is that it doesn't look like we have lost market share. So on Permobil, I think the answer is that we have seen a weakening of the market in the quarter. When it comes to vulnerability, what we can see in the quarter, as you know, there are a couple of different business lines. We have the commercial side, we have the lifts and we have the consumer vans.
If you look on the commercial side and the lifts and look on year over year, both business lines had good growth. So what came down in the quarter was the consumer business.
And I'll hand over to Magnus just briefly. In Nenlika, I mean, we saw Combotech, so to say, up here in the Wound Care segment with a profit warning earlier this week. However, you still managed to accomplish quite significant growth rates in the Wound Care business. Emerging markets is obviously driving growth here. But yes, the basis there is significantly lower if we compare where you said that Emerging Roads were or Emerging Markets were as a share of the total sales split?
I must say, I cannot comment, of course, because I only saw the headline that Comtech were growing 0.8% compared to the 4% that Nelvik is growing. What I can say so I cannot comment on what's the mix from their business point of view. What I can say is that I think we have 1st of all, we have a strong momentum in emerging markets. And that we see both in Asia and in Latin America, good momentum. And I would guess that those could be areas where we outperform.
And the second area is that we do believe we have a good momentum when it comes out to the rollout of certain products.
You mentioned price pressure in developed markets, and you mentioned that UK is obviously challenging here. Is that something that you are seeing as well?
In this in the medtech area and in the health care area, it is very common that you have price pressure. That's part of the game. So for sure, in certain markets, you have price pressure, and you need to handle that. And the way you handle that is, of course, to work with efficiency, but even more important is to work with product innovation because prices on old products, they are going in one direction, and that is slightly down. So you need to continuously bring out new innovative products, and that's what we're working on.
Just a final question then. With Piazza and Cenova in Patricia, could you elaborate on the strategic priorities there in terms of or split between organic growth and structural growth? Are these companies in fragmented markets? Are you looking at consolidating those? Or how would you say the strategic is for growth there?
I think it's always, to be honest, it's very difficult to say how fast can you grow through acquisitions because it always boils down to when does great opportunities arise. If great opportunities arise for these companies, we are willing to grow through acquisitions for sure. These are platforms We believe we have good growth potential both organically and through acquisitions, but the timing will always depend on what becomes available. As always, it takes 2 to tango. If I should say something about the priorities from a more structured long term point of view, if I take TEA, 2 prioritized areas for us in the long term is to grow faster in China and to grow the Automotive business faster.
In Saernova, the priorities area is, 1st, really work hard where we stand today, much more to do. Of course, we should evaluate, can we add other product categories to the portfolio? And then finally, I would add also add on acquisitions.
Magnus Herman, Handelsbanken. I'm getting back to EQT. And you mentioned here, of course, the goal to strengthen the balance sheet. But can you describe to us why you want to strengthen the balance sheet on the mother company level? So we understand that because I guess the model now works in the way that you raise capital in the funds itself.
I think that is actually a question you should raise to EKG, but that could be numerous. So the question should be raised to them. But that could, of course, be numerous reasons why you want to have a good balance sheet. One reason just to mention one reason could, for example, be if you enter a new business line as a private equity company, initially, you might not have a track record. You haven't started it.
If you have on your own balance sheet, you can, of course, start to get going. And after you have done that, you can raise capital. You can gain a little bit speed. That is one example. But there are a number of examples why that could be a strength to have a strong balance sheet, but you should take that question with Thomas.
Right. And I mean do you see other alternatives for it in strengthening the balance sheet than a public listing?
I will not make any comments. I mean they have said that they will really look into the opportunities to do that, and that's an evaluation that will take place, and we'll see what comes up. Okay. In the valuation of EQT fund investors' valuation of your EQT fund stakes, I guess, that is valued at
the cash that you have invested. How come you do not evaluate or value those funds on a market value estimate basis as we do in the
I mean the investments we have done in the funds, call it as an LP, of course, they are valued in line with the market values. But our ownership in ETT, we have a book value. And that is for sure lower than the true market value. And the reason why we are not doing, call it, estimated market value on that side as we do for Patricia is actually due to the fact that for competitive reasons for EQT, we do not want to reveal it.
Okay. And then on you have mentioned that you when it comes to your unlisted subsidiaries on the Petitian Industries that you want to in the organization to focus on the existing holdings to develop those for some time after having done several acquisitions as of lately. What is that time line that you see there? And you think that you have enough capacity in the Patricia Industries Organization to make the number of acquisitions that you have capacity financially to do?
On the first question, I think it's extremely important. Some of the companies we have owned for a long time, like the Melendriques and the Panmobil, etcetera, we know them well. If you make acquisitions like we have done this year with Fiat and Sanova, we believe they're great companies. But of course, when you get them new, you really need to get your arms around them. You need to make sure you have the right board.
You need to work closely with the management. And to be honest, you need to really learn more of the details into the business. So for that reason, I believe it's important that when you acquire new companies, you focus on really getting your arms around them. And I think we have had a good start on that with both Piyat and Saenova. Do we have the right financial resources in Patricia to find new investments in the medium term?
Yes, I do. So we have done a capital of recruitments during the year on the Patricia side, on the investment side, both in the U. S. And here in Sweden.
Okay. As a final one, perhaps to Helena. On Aliras, when you showed the breakdown in the divested care unit and the health care division that you will keep. And on the health care division side, I saw that depreciations were quite high. What expectations should we have for depreciations going forward?
The Healthcare business is, as you have already figured out, more CapEx in terms. We're talking about radiology, for example, where you have to invest in significant machines to actually carry out the services. So I think this level is nothing extraordinary for Alaris. And I mean it's something that you should expect for this type of business.
But you should also remember that both when it comes to the figures on profits on and EBITDA of both Care and Healthcare, we have, over the last year, taken a capital or big restructuring, and that could, of course, affect those figures. But of course, call it the radiology business has a higher capital intensity than some other business.
Would you care to comment the radiology business share of group revenues in Healthcare?
No, we will not do that. But it is well the company has a very strong position in radiology. It's a size of the business with good profitability, and we have also built up a good business on that side in Norway.
But I guess when you mentioned profitability in that perspective, you mean historic profitability. And now with the new tender, there's another situation.
That's what we need to handle.
And that's the tender in Stockholm, while the Norwegian business is the crude oil to business that we acquired from I'm sorry, it's not affected by that standard. Yes. I think
for us, it's hard to know the speed.
Of course. Yes, I know.
Thank you. Mariusz Sheyhanodia. Regarding the ongoing review in Iketi with an IPO being one option, are you considering putting a market value already now on your
holding Niketi? No.
And also with regards to the discount thing at so elevated levels, are you considering the share buyback program?
I mean, if you look on the discount, yes, to get the thanks. I mean, on the reported figures, the discount at the end of the quarter was about 16%. And then adjusted, it was 25%. If you take 10 20 years on the reported, which is where we have the previous average, has been 25%. So of course, this fluctuates over time.
Having said that, as I've said before, our key job is to make sure we get our ultimate target is to create a good total share of the returns. Of course, if the discount can be lowered, we will be happy that it needs to be structured lower. So that is the top priority. Our priority to achieve that is what we have talked about today, trying to really work as an active, engaged owner in our companies, build new platforms like the Clearband and the Svanova and develop those companies, work continued efficiency on our cost and then stick to our dividend policy of a continued gradual increase in that. By doing that and executing and generated good TSR as we have done historically, that is our way to do it and our priority is not to buy back shares.
Okay. And one final question on Aleris. With Aleris operating close to debt free, if the transaction is approved. Can we expect to see a distribution to investor in 2019?
It's too early to I mean, we have been totally focused now on closing this deal, and the next focus will be on really taking care of the Health Care and developing that business. So it's a little bit too early to look into that question. I'm Gustaf Lobsterberg from Pareto Securities. I was wondering whether you could provide you mentioned detail on that. Do Do you see certain sectors?
What is it more specifically that you're worrying about? And perhaps most importantly, do you see any effect on business activity as of now? Or is just that you see these leading indicators kind of losing momentum? I think my comments refers to the overall economy and the things we look if we look on all the things, the data that comes out from a macroeconomic perspective. If I take a couple of ones, if you learned that you always have to bring up the positives because otherwise, it looks so bleak.
And I have to say, I don't see any ghost out there. But what I do see is that we are at a good level. That in combination with a couple of things that I will mention, I mean, it indicates that we might enter a softer period. But I don't have the crystal ball. For us, as I said before, it's important to be ready if it happens.
So what do we see? Well, if you look on the leading indicators in Europe, in Asia and China and a couple of areas, you will see that leading indicators are coming down. There are, for example, JPMorgan's global leading indicator. If you look at that, you will see trends down. Secondly, you see on the auto side, you see weaker.
You see it in Europe. You see it in China. If I remember correctly, the September figure was down 12%. So the water sector is 1. I think we are most likely starting to see some effects of the trade war in China.
If you look on the emerging markets, you can see countries like Turkey, Argentina. Those countries have currencies that have devalued by about 40%, 50%. These companies also have a large foreign debt. So of course, that puts the state in a very difficult situation. But in addition, of course, if these countries have a currency that looks 40%, 50%, they will have many companies in those countries will have difficulties buying stuff priced in euros or dollars.
And then finally, we have the situation in Europe with Italy, Brexit and so forth. And if you look in Italy, you can see rates have come up if you look on the 10 year bond. And Brexit, I will not even try to see what will happen on that side. The only conclusion that I think one can draw is that the difficulties for them to come to an agreement, I think, shows how integrated the countries really are in Europe. And then, of course, as you would expect, I hope that they will come to a reasonable agreement because otherwise, it will be a lot of uncertainty.
Uncertainty is never good for
business.
Any final questions here from the room? No? And we'll see if we have any questions from the participants on the call.
Thank you. Okay. There seems to be no questions from the phones at this time.
Okay. Now we'll see if we have any questions that come in on looking questions. No, no questions. By that, thank you for joining us today, all of you who are here in the room and also all the participants on the call. Thank you for today, and we will now do some interviews with Johan.