Okay. Hello, and welcome, everyone, to Investo, all of you here at the Piazza and everyone attending by the web or by phone as well. My name is Magnus Dahlhammer, and I'm the Acting Head of Communications here at Investo. It's very nice to see so many of you here today. We will present our Q4 year end results, and all the material that we will be talking about will be available online as well.
We will hear more about our year end results from our CEO, Johan Fochel and our CFO, Heliana Saxon. And after that, we will open up for Q and A. And with that, brief introduction, over to you, Johan.
Thank you, Magnus, and welcome, everybody, to the presentation of our full year results. Let me start by presenting the overview maybe we should put this one on. There we have it. The full year was very strong for Investo. We had a growth of our net asset value of some 15%, 16%, 16% if we use the estimated market values for our unlisted companies, 15% on the reported net asset value and then the total share return of 13%.
And all this can be compared to the stock market that was up 9%. You can see that the listed core investment portfolio actually all 11 companies generated a positive return during the year. Within Patricia Industries, there was a mixed performance. We have some companies that develop really well like Permobil and Laboree, to mention a few. But we also have challenges in Alaris, and I will come back to that later on.
A number of the companies made significant acquisitions during the year. One good example is Permobil that has done over the last year, they have done 5 add on acquisition. And in total, that have added about 15% to the total sales of the company. And then we also have received a strong distribution from Melvik and 3 Scandinavia. In total, we have received SEK 6,000,000,000 during the year.
And the majority is coming from Mannliche that once again has delivered a very strong cash flow. Also, EKT had a very strong year, with the return up 21% during the year, and we received a net cash flow of SEK 1,000,000,000. And then finally, we were the board also proposes that the dividend will be increased from SEK 11 per share to SEK 12 per share, which represents an increase of about 9%. Briefly on the quarter. This was a rather flattish quarter, as you see.
Net asset value was slightly up. The stock market was down 3% and the TSR was minus 7%. The listed portfolio was flat compared to the market minus 3%. And within Patricia Industries, I think we saw one positive highlight was that we saw once again an improved sequential improvement in the profitability of Mannliche. And actually, the profitability in the 4th quarter was in line with the Q4 of last year.
And as you know, during the 1st three quarters, profitability has been below. But then we need to intensify the actions to improve the operation in Alaris, and I will come back to EKT actually had a very strong 4th quarter with a value increase of 7%. You can see that we actually injected about SEK 800,000,000 in the quarter, and that was exactly in line with our forecast because we know that we would have drawdowns related to previous acquisitions. Starting then with the list of core investments. As you as I mentioned before, strong return during the year.
In 2017, we have invested SEK 1,200,000,000 in Ericsson. If we add the investments we did in the latter part of 'sixteen, in total, we have invested of about SEK 2,300,000,000 in Ericsson at an average price slightly below NOK 50 per share. There has been during the year hard work when it comes nominating important board members in our companies. Just to mention a few of them, of course, Roni Lehtinen as Chairman of Ericsson is one important part. Another one is Stefan Buhmann that has been appointed Chairman of Electrolux and then also Gunnar Brocht being appointed as a Board of Director for ABB.
As you all understand, there is not an opportunity for me to go through all the activities in the listed core investment. But of course, one company that has a lot on its plate is Atlas Copco since the company is preparing for the split of the company into Epiroc on the mining side and Atlas Copco remaining on the industrial side, while, of course, keeping high focus on the business and the customers. And then we have had also on the listed side a number of the companies doing a lot of acquisitions. I think ABB, Wartsila and Nasdaq 3 companies that have done important strategic acquisitions. With ABB's acquisition of GE Industrial within the electrification being the biggest one.
It's an acquisition of about US2.6 billion dollars Moving then over to Patrician. The adjusted market value, excluding the cash, amounted to USD 97,000,000,000 and the return was plus 10% during the year. As you know, we have 3 priorities within the Patricia, and the first one is to develop the companies. It's like with the Listicore investment, of course, difficult in this short period to try to summarize all the activities, but I can say that we have had announced 3 new CEOs in the portfolio. And if I should try to generalize a little bit about the different phases the companies are in, I would say that for Permobil and BraunAbility, the focus during 2017 has very much been on new product launches and acquisitions.
These companies are in a growth phase, and they are developing in that manner. In Vielandlica, I would say a highlight during the year has been the strong growth in Emerging Markets. And actually, the growth in Emerging Markets in the for the full year was very strong, and we had a very strong growth rate also in the Q4 in Emerging Markets. So it's good to see that, that investment is starting to pay off. If I then turn over to Laboree, Laboree had a good organic growth during the year.
But in Laboree, we are also taking measures to restructure, for example, the European operation to make it more efficient. And then finally on Aliris, Aliris' focus will be improved stability and profitability. If I then turn over to the 3rd priority, which is to manage the financial investment. Here you know, it's the former IGC portfolio. We have decided that we would gradually wind down this portfolio and sell out.
And I'm very pleased, I must say, that this work continues in a good manner. During the during last year, we sold about SEK 1,300,000,000 net debt, money that we can realize and use in our other operations. Moving then over to Melendijk. Melendrete had an organic growth of 2% in the quarter. There was slightly higher growth on the Wound Care side, but both Surgical and Wound Care showed growth in the quarter.
And as I mentioned, there was a very strong growth in Emerging Markets, and as I
said, reached the same level as last year.
And the cash and, as I said, reached the same level as last year. And the cash flow was very strong, actually significantly above EBITDA in the quarter. And then also the company announced an important strategic acquisition. It's a small one, but it's an important one. It's a company that use digital wound platforms.
So basically, a digital solution to support the decision when you treat different kind of wound cares. Moving then over to Alire, starting quickly with the quarter. Organic growth 3%, profitability sharply down, mainly due to restructuring initiatives. If we take away the restructuring cost, the underlying profitability was more or less flat. In Healthcare, it was down in Care.
But the fact is that the profitability in Alaris is unsatisfactory. And therefore, we have decided that we need to intensify the actions to restore stability, profitability and efficiency in the operations. These actions, in combination with some contracts coming under pressure means that the short term outlook will be tougher. Therefore, we have decided to impair the goodwill with a write down of SEK 1,000,000,000. But the booking is not the key challenge or problem.
The thing is that we need to improve the profitability. We need to improve the efficiency in the operation in a sustainable matter. And to do that, we are willing to inject up to SEK 1,000,000,000 in Alaris, the exact amount and when we will decide during the year. But it's important to say why are we doing this. We're doing this because we want management to be able to focus on the necessary restructuring.
And it's also important to say that this is not the SEK 1,000,000,000 cost to do the restructuring. This money will be used to pay down debt. It's not the cost for doing the reorganization. We are doing that because we want management to focus on improving the business, not having to look at the balance sheet. So it's mainly due to paying down debt.
Moving to Permobil, very good growth in the quarter, 9% organic growth. It was the strongest areas were in the power and the seating and positioning. Manual was a bit slower during the quarter. The underlying profitability was up compared to last year, and they did, as you see, a couple of acquisitions. The biggest one is Max Mobility, and that is a power assistant device that you use if you sit in a manual wheelchair.
It actually helps you with propulsion. And that is very important for many sitting in a manual wheelchair because you normally get after a while shoulder injuries. So this is a very nice complementary acquisitions. As you know, Permobil bought highlight in the menu shares and has a very strong position on electric. And now with adding this and some business in seating position, it's a very strong offering in their industry niche.
BraunAbility had an organic growth of 2%. No big difference in terms of growth rate between the different segments. Profitability here is impacted by the move over to the Chrysler Pacifica new model and also recruitment costs for a new CEO and some M and A related costs. Stacy Krohn will take over as CEO after Nick. She has a background in Eton, which is a very respected company in the U.
S. Market. She has good knowledge from the automotive sector and also from the production side, which we believe is important given the face vulnerabilities in. Laboree also here good growth, 7% organic growth, good development, profitability improving despite that we are taking quite significant investment in business development and also some restructuring cost in Europe to make that business more efficient. 3, Scandinavia.
If you look on the graph here to the right, it doesn't look that good. But you should know that the profitability in the quarter was onetime item, and that is SEK563,000,000 related to a dispute that has been going on with the tax authorities in Denmark related to VAT tax. 3 Scandinavia has appealed but paid the amount. Therefore, we take this as a onetime charge. And this charge relates to previous periods.
So if you add it back, it's a clean figure. And I should say, if you adjust for that, the margin was down in the quarter slightly compared to last year, but for the full year, the margin was actually up slightly. EQT, we're not dwell on it. Strong performance during the year, and we now have SEK 16 billion on the balance sheet related to IKG. As many of you know, we have 3 operating priorities, and during 2007, we achieved those.
The first one is to grow net asset value. We achieved growth of 16% during the year, and that is clearly above our return requirement, which is 8% to 9%. It is also above the stock market that was up 9%. The second one is operate efficiently, and our management cost is below the guidance we gave in 2015. And the third one is to pay a steadily rising dividend.
And as I mentioned, we propose to increase the dividend by 9% for the year. And on this graph, you can see the development of the dividend. It looks pretty nice, but it is in line with our ambition to try as well as we can to pay steadily rising dividend. And our strategy, our priorities remains. We are fully dedicated to delivering in line with this strategy also going forward.
So with that, I hand over to you, Helena.
Thank you. Yes. Our reported net asset value was essentially flat in the quarter and landed at DKK 336,000,000,000 Based on estimated market values for Patricia, which we started reporting in the beginning of this year, the adjusted net asset value was SEK 385,000,000,000, an increase of 1%. Looking at this graph showing how the different divisions contributed to the reported net asset value, we can see that it was up roughly SEK 1,000,000,000 and that was mainly driven by EQT. Looking at the listed core investments landed at $284,000,000,000 We can see that the contribution was actually negative, dollars 1,000,000,000 but TSR was flat in the quarter compared to minus 3% for 6 Rx.
And on the graph to the right, we can see that ABB contributed the most and SEB the least. Looking at Patricia Industries. We can see that the estimated market values was DKK 97,000,000,000 at the end of the quarter, and this compares to the DKK 49,000,000,000 of reported value of these assets. The difference of $49,000,000,000 is actually driven by or explained by only 3 companies: Mannlic, Permobil and 3. Looking happened to the estimated market value in the quarter.
We can see that 3 companies made the biggest difference. Mannliche and Vectura were both up, while Alaris, of course, was down. And this is not the impairment that Johan referred to, but how the reported or how the estimated market value changed. The impairment will, of course, affect the reported value of Alaris. So going into these three drivers more specifically, we can see that Maliki was up SEK 4,600,000,000 in the quarter.
This was driven by multiples, cash flow and positive currency effects, while operating profit was actually lower. Vectura, the other positive driver, was up almost €1,000,000,000 because of the yearly market valuation of the property portfolio. And Alaris was down. And this was partly driven by slightly lower multiples, but mainly, it was the operating profit that was lower. Going into the financial portfolio Financial Investments portfolio, which is part of Patricia Industries.
We can say that the realization of this portfolio is continuing. The divestments in the quarter amounted to EUR 350,000,000 roughly, and the remaining value of this portfolio is now SEK 7,200,000,000. This is the final slide for me, the leverage development. I go through this every quarter. I just want to say that we have a very strong balance sheet, and we're ready to invest when we find value creating opportunities.
We have ample investment capacity that you can see here.
Okay. Thank you, Hilian and Johan. Now we will open up for questions. So please go ahead with your questions and please state your name and company. Thank you.
Peter, we have one question. Thank you.
Rutger Smith, I'm a Private Investor through my company AB Collison. I should think that there is no quick fix in Aleris. What exactly is it that you can do to improve the result?
I think there are a couple of things that are important right now. First of all, we need to make sure we have a good decentralized structure, so we can have clear responsibilities in this transformation phase. That's always crucial if you need to do a little bit more of a quick fix here in terms of stability and profitability. What are the actions? First of all, there will for sure be a couple of contracts that are unprofitable that we need to get out of.
Secondly, there will be some units to be closed and there will be also units that will be merged. So there is a lot of different things that needs to be handled to fix this.
Maris Shellya from Nordea. I have three questions on Nelnik. You say that you improved your margin in the Q4. Could you please elaborate on that? And also what happens in the U.
S? You reported flat growth both in Q3 and Q4 now. And also in Europe, is it still France and the reimbursement cuts that are
causing the muted growth? I think on the margin side, I must say that I think the company is doing a good job. Of course, we have the capital of events. We talked about the reimbursement cut in France. And we said at that time, of course, we need to adjust.
That's always the one. You can't always blame you can't blame the weather. You need to adjust. And that's what the company has done in a successful way. It's working hard to improve the efficiency and a couple of things.
On the U. S, actually what you said is true. It is rather flat, and I have nothing more to comment on that. In the EU, in the beginning of last year, we started to see the impacts. So we are still year over year have prices that are down.
Course, gradually that effect will year over year effect will gradually go away. If you look on the development in Europe as such, we actually saw some improvement in France, while U. K. Was weak.
And also on 3, you lost subscribers throughout the whole year. What is your view on that going forward? And also last question on ESKIA. You meant it was very high on the agenda last quarter. Could you give any examples of actions you have taken during the quarter?
Okay. Good question. Let me start by the latter one on ESG. We are doing a lot in this area, both when it comes to internal work, improving our processes, incorporating that into our VCT plants. That we have talked of before.
What we have actually done recently, and that is in the very late part of last year, is that we have implemented a network that focus on sustainability. And the key priority here is to make sure you get in the professionals within this area from our companies. And this is both the companies within Patricia Industries, our unlisted companies and the listed ones. And the purpose is basically to share best practice, learn from each other. And I like that kind of initiative because it's very tangible.
There are always companies that come up with very smart ways to handle different things. So you basically can learn from each other. And we have the advantage that we don't have competing businesses. So we can do that. So that is a very tangible thing that we have started.
On the subscriber base in 3, I can only say I will not give you a forecast how it develops, but I can only say that there is a high ambition and focus in the company to be the market share is about 15% in the company in Sweden and in Denmark. And for sure, the ambition is to continue work hard to continue to gain share in the market.
Joakim Gunal, BNP Markets. Just a follow-up question on Melnik. With lower underlying growth in developed markets, have you seen any changes in terms of the competitive landscape? And secondly, you have earlier communicated that you want to grow the proportion of unlisted assets. So are there any updates on your view?
On the You want to grow the proportion of unlisted assets as a share of the total portfolio?
Yes.
So just an updated view on that, I appreciate. Thank you.
If I start with the latter also here, the proportion of the unlisted assets, what I normally say is that we have for sure, from a strategic point of view, the ambition to find new subsidiaries, but also to continue to do what I talked about and what we have done during the last year, do add on acquisitions in our mix will be what it will be, but we have a high ambition to develop our unlisted part. What was the first question?
The competitive landscape, not ever seeing lower underlying growth in developed markets.
Yes. We haven't seen the quarter for the competitors yet. If we look on the last capital quarters, with the exception of some players that are a little bit smaller, where you can have a higher growth rate from a smaller base. Basically what we have seen, if you talk about the Wound Care space, is that it has been slower growth generally for our competitors. But we will have to see now when we look in the Q4 and they will come in the coming weeks.
Elizabeth Miliades, Bank of America Merrill Lynch. Another question on Molica. On the growth, is this lower growth something we would expect going forward given that yourselves have or Molica has had 1% organic growth for 2 quarters and now 2% this quarter and we've also seen difficulties in the competitors. And what can Molica do to grow that growth rate a little faster? New products, how can it grow ahead of the market?
Okay. Good questions. For sure, I can start with that, that our ambition is clearly to achieve a better growth than we have seen over the last couple of quarters. That's our ambition, but I will not give a forecast. And you know that I never give forecast, but let me give you some more of a fact related to your question how related to the Mannliche growth.
What we can see is, of course, when we move in now to 2018, we can see that if you look on the performance during 2017, we can see that the Q1 was the strongest in terms of organic growth. In the Q1, the organic growth was 5%, and then it turned down to 1.1% and now we're back to 2%. So from that perspective, of course, the comparison period will be tougher in Q1. And we also know that the Easter will be in the Q1 this year. Last year, it was in the second.
So for sure, the Q1 will be the toughest comparison. And gradually, when we move in, in the year, the comparisons will get a bit easier. But that's not me giving a forecast. It's just a fact. That's how I would see it.
What do we do? And that is a more important question. What do we do to get good growth in the company? I think actually you're on the right ones. It's much about innovation.
Innovation, of course, sometimes takes time, but it's also putting smaller improvements, if I call it that, on the product and put more feet on the street to push that out to the market. That is for sure too in incentives. And the third one is to continue, which I think has been a very successful development over the last 18 months to grow in markets outside of Europe and the U. S.
And if I may, the multiple that you've used for Monika is just under 18x EBITDA. We've seen compression actually at Combitec, Coloplast and Smith and Nephew, which I view as quite good comps for Monlika. Would you be able to comment on the discrepancy there? Thank you.
Do you want to take that, Tiena? Yes.
Okay. Well, we never comment explicitly on the peer groups or indices that we use, but the range is quite wide for these kind of companies. So they trade around 10 to almost 28x, I think. And to find the median is a fairly mechanical exercise and not something that we do deliberately every quarter. It's actually done it's outsourced to a supplier of ours, and it's using only public data.
So I cannot comment on that specifically, but it's very possible that some peers have contracted their multiples, but then others have expanded. And the median this quarter was the number that you see in the report.
But maybe I can add one fact to it. When you look on our multiples, we all know that many use adjusted profits when you put multiple. You know that we report reported profits. We try to comment if we have extraordinary costs. But if you take, for example, Mennikki this quarter, we are actually closing 1 out of 3 trays plants.
We take that in the P and L. In Alaris, you saw that the majority of the decline in the profit is actually because we take restructuring charge. We are not adjusting for that. We put the multiple on those reported profits fully loaded with these restructuring costs. But of course, when we take the comparison, when we have this external supplier that do this peer multiples, here since we have reported profit, here you also have the enterprise value related to the reported profits.
So you can say a little bit that compared to if you use that many analysts use adjusted profit where you adjust for all the restructuring, you can say that our multiples then, of course, becomes a little bit high, but we also use it on fully loaded base. It's consistent. We could, of course, report to you better profits and use the peers at adjusted, it would be roughly the same. We do not want to do that because we believe it's create more value if we fully load the P and L because we want the companies to be agile. And you know I talked a lot about it, but I think it's so important.
You need if you have problems, you need to adjust and you need to take those cost adjustment. If you fail in something and you need to adjust, that's not an extraordinary item. It's just that you have failed. That's our mentality.
Coming back to Melendyck, have you apart from add ons, have you contemplated to find areas that are related to Melnik that might have synergistical properties to it, expand Melnik outside of the present business?
It's an excellent question. And I can say that for all our subsidiaries and also our listed companies where we act as an active owner through the boards, we are always looking both for add on acquisition, but also looking at adjacencies that your question is. Adjacencies, if we can find attractive adjacencies where we can see that our company is the right owner for that and can add something and can acquire it at the right price, we will be willing to look at it.
We should
ask if we have any questions by the phone as well.
Thank you. Our first question comes from Gustave Osterberg of Pareto Securities. Please go ahead. Your line is open. Hello.
This is Gustave from Pareto Securities. I think we touched upon the question. My question was in relation to the capital allocation here. In the unlisted portfolio and that has been a theme and we've seen some of that activity. Have you seen any change in terms of this opportunity set that you have between the listed portfolio and unlisted portfolio over the
last year? We had a little bit difficulty hearing you. But if the question is, if we see any differences between the opportunities on the listed side compared to the unlisted side now compared to, let's say, for a year ago, I would say I cannot generalize like that. What I can say is that it's prices are more elevated now than they were, and that goes for both sides. We try always to find opportunities.
Last year, we found it on the listed side. Where it will come in the future, we will see. But we are working on opportunities on both sides.
Okay. Thank you. Thank you. As there are no further questions on the phone, I'll hand back to the room.
Thank you. Do we have any other questions here? Doesn't seem like it. Then we say thank you for coming and for all the questions. I'm looking forward to see you again here.
Thanks.
Thank you.