Okay. Hello, and welcome everyone to Investor, all of you here at the Piazza and everyone attending by the web or by phone as well. My name is Magnus Dalhammar, and I am the acting head of communications here at Investor. It is very nice to see so many of you here today. We will present our Q4 and 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 Forssell, and our CFO, Helena Saxon. After that, we will open up for Q&A. With that brief introduction, over to you, Johan.
Thank you, Magnus, and welcome everybody to the presentation of our full year result. 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 Investor. 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, a total share return of 13%. All this can be compared to the stock market that was up 9%. You can see that the listed core investment portfolio had a very strong performance, being up 17%, significantly better than the stock market, and actually all 11 companies generated a positive return during the year. Within Patricia Industries, there was a mixed performance.
We have some companies that developed really well, like Permobil and Laborie to mention a few. We also have challenges in Aleris, 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. Over the last year, they have done five add-on acquisitions, in total that have added about 15% to the total sales of the company. We also have received a strong distribution from Mölnlycke and 3 Scandinavia. In total, we have received SEK 6 billion during the year, the majority is coming from Mölnlycke, that once again has delivered a very strong cash flow. Also, EQT had a very strong year with the return up 21% during the year, and we received a net cash flow of SEK 1 billion.
Finally, 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 -7%. The listed portfolio was flat compared to the market -3%. Within Patricia Industries, I think we saw one positive highlight was that we saw once again an improved sequential improvement in the profitability of Mölnlycke. Actually, the profitability in the fourth quarter was in line with the fourth quarter of last year. As you know, during the first three quarters, profitability has been below. We need to intensify the actions to improve the operation in Aleris, and I will come back to that.
EQT actually had a very strong fourth quarter with a value increase of 7%. You can see that we actually injected about SEK 800 million to EQT in the quarter. That was exactly in line with our forecast because we know that we would have drawdowns related to previous acquisitions. Starting with the listed core investments, as I mentioned before, strong return during the year. In 2017, we have invested SEK 1.2 billion in Ericsson. If we add the investments we did in the latter part of 2016, in total, we have invested of about SEK 2.3 billion in Ericsson at an average price slightly below SEK 50 per share. There has been, during the year, hard work when it comes to nominating important board members in our companies. Just to mention a few of them, of course, Ronnie Leten as chairman of Ericsson is one important part.
Another one is Staffan Böhman that has been appointed chairman of Electrolux. Also Gunnar Brock 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. 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. We have had also on the listed side, a number of the companies doing a lot of acquisitions. I think ABB, Wärtsilä and Nasdaq are three companies that have done important strategic acquisitions. With ABB's acquisition of GE Industrial Solutions within the electrification being the biggest one.
It's an acquisition of about $2.6 billion. Moving over to Patricia Industries. The adjusted market value excluding the cash amounted to SEK 97 billion, and the return was +10% during the year. As you know, we have three priorities within the Patricia Industries, the first one is to develop the companies. It's like with the listed core investment, of course, difficult in this short period to try to summarize all the activities, but I can say that we have had announced three new CEOs in the portfolio. 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 Mölnlycke, I would say a highlight during the year has been the strong growth in emerging markets. Actually, the growth in emerging markets for the full year was very strong, and we had a very strong growth rate also in the fourth quarter in emerging markets. It's good to see that that investment is starting to pay off. If I turn over to Laborie had a good organic growth during the year. In Laborie, we are also taking measures to restructure, for example, the European operation to make it more efficient. Finally on Aleris. Aleris focus will be improved stability and profitability. If I turn over to the third priority, which is to manage the financial investment, here you know it's the former Investor Growth Capital portfolio. We have decided that we would gradually wind down this portfolio and sell out.
I'm very pleased, I must say, that this work continues in a good manner. During last year, we sold about SEK 1.3 billion net debt, money that we can realize and use in our other operations. Moving over to Mölnlycke. Mölnlycke 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. As I mentioned, there was a very strong growth in emerging markets, while U.S. and Europe were more flattish. The underlying profitability was once again up sequentially, as I said, reached the same level as last year. The cash flow was very strong, actually significantly above EBITDA in the quarter. 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, basically a digital solution to support the decision when you treat different kind of wound cares. Moving over to Aleris, 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. The fact is that the profitability in Aleris is unsatisfactory, 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 the write-down of SEK 1 billion. 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. To do that, we are willing to inject up to SEK 1 billion in Aleris. The exact amount and when, we will decide during the year. 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. It's also important to say that this is not the SEK 1 billion 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. It's mainly due to paying down debt. Moving to Permobil.
Very good growth in the quarter, 9% organic growth. 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. That is very important for many sitting in a manual wheelchair because you normally get, after a while, shoulder injuries. This is a very nice complementary acquisitions. As you know, Permobil bought TiLite in the manual chairs and has a very strong position on electric. 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 cost for a new CEO and some M&A related costs. Staci Kroon will take over as CEO after Nick. She has a background in Eaton, 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 phase BraunAbility is in. Laborie 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 costs 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.
You should know that the profitability in the quarter was affected by a one-time item, that is SEK 563 million 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. We take this as a one-time charge, and this charge relates to previous periods. If you add it back, it's a clean figure. 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 will not dwell on it. Strong performance during the year, and we now have SEK 16 billion on the balance sheet related to EQT. As many of you know, we have three operating priorities, and during 2017 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%-9%, and it's 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. 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. On this graph you can see the development of the dividend. It looks pretty nice. It is in line with our ambitions to try as well as we can to pay a steadily rising dividend. Our strategy, our priorities remains. We are fully dedicated to delivering in line with this strategy also going forward.
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 SEK 336 billion. Based on estimated market values for Patricia Industries, which we started reporting in the beginning of this year, the adjusted net asset value was SEK 385 billion, 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 billion, and that was mainly driven by EQT. Looking at the listed core investments landed at SEK 284 billion, we can see that the contribution was actually negative SEK 1 billion, but TSR was flat in the quarter compared to -3% for SIXRX. 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 SEK 97 billion at the end of the quarter, and this compares to the SEK 49 billion of reported value of these assets. The difference of SEK 49 billion is actually driven by or explained by only three companies, Mölnlycke, Permobil, and 3 Scandinavia. Looking at what happened to the estimated market value in the quarter, we can see that three companies made the biggest difference. Mölnlycke and Vectura were both up while Aleris, of course, was down. 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 Aleris. Going into these three drivers more specifically, we can see that Mölnlycke was up SEK 4.6 billion in the quarter.
This was driven by multiples, cash flow, and positive currency effects, while operating profits was actually lower. Vectura, the other positive driver, was up almost SEK 1 billion because of the yearly market valuation of the property portfolio. Aleris 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 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 SEK 350 million, roughly, and the remaining value of this portfolio is now SEK 7.2 billion. 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 as you can see here.
Okay. Thank you, Helena and Johan. We will open up for questions. Please go ahead with your questions and please state your name and company. Thank you. Here 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. There is a lot of different things that needs to be handled to fix this.
Maria Seija from Nordea. I have three questions on Mölnlycke. You say that you improved your margins in the fourth quarter. Could you please elaborate on that? What happens in the U.S.? You reported flat growth both in Q3 and Q4 now. In Europe, is it still France and the reimbursement cuts that are causing the muted growth?
Yeah. I think on the margin side, I must say that I think the company is doing a good job. Of course, we had a couple of events. We talked about the reimbursement cut in France. We said at that time, of course, we need to adjust. That's always the one you can't blame the weather. You need to adjust. That's what the company has done in a successful way. It's working hard to improve the efficiency on a couple of things. On the U.S., actually what you said is true. It is rather flat. I have nothing more to comment on that. In the E.U., in the beginning of last year, we started to see the impact. We are still year-over-year have prices that are down. Of course, gradually that 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.
Also on Three, you lost subscribers throughout the whole year. What is your view on that going forward? Also the last question on ESG. 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 VCP plans. That we have talked of before. What we have actually done recently, that is in the very late part of last year, is that we have implemented a network that focus on sustainability. The key priority here is to make sure you get in the professionals within this area from our companies. This is both the companies within Patricia Industries, our unlisted companies, and the listed ones. The purpose is basically to share best practice, learn from each other. 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.
You basically can learn from each other. We have the advantage that we don't have competing businesses, so we can do that. That is a very tangible thing that we have started. On the subscriber base in Three, I will not give you a forecast how it develops. I can only say that there is a high ambition and focus in the company. The market share is about 15% in the company in Sweden and in Denmark. For sure, the ambition is to continue work hard to continue to gain share in the market.
Joachim Gunell, DNB Markets. Just a follow-up question on Mölnlycke. With lower underlying growth in developed markets, have you seen any changes in terms of the competitive landscape? Secondly, you have earlier communicated that you want to grow the proportion of unlisted assets. Are there any updates on your view?
Sorry, on the?
You want to grow the proportion of unlisted assets-
Yes
as a share of the total portfolio.
Yep.
Just an updated view on that, I'd appreciate it.
Okay.
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 subsidiaries. The portion, how it will be between listed and the unlisted, it will depend on the stock market, and it will depend on where we find the opportunities. Last year we, for example, invested in Ericsson. The mix will be what it will be. We have a high ambition to develop our unlisted part. What was the first question?
The competitive landscape-
Competitive one.
Now that we're seeing lower underlying growth in developed markets.
Yeah. We haven't seen the quarter for the competitors yet. If we look on the last couple of 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, also for our competitors. We will have to see now when we look in the fourth quarter, and they will come in the coming weeks.
Elizabeth Miliatis, Bank of America Merrill Lynch. Another question on Mölnlycke. On the growth, is this lower growth something we would expect going forward, given that yourselves have, or Mölnlycke has had 1% organic growth for two quarters and now 2% this quarter, we've also seen difficulties in the competitors. What can Mölnlycke 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 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. You know that I never give forecast. Let me give you some more of a fact, related to your question, related to the Mölnlycke 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 first quarter was the strongest in terms of organic growth. In the first quarter, the organic growth was 5%, then it turned down to 1%, 1%, and now we're back to 2%. From that perspective, of course, the comparison period will be tougher in first quarter.
We also know that Easter will be in the first quarter this year. Last year it was in the second. For sure, the first quarter will be the toughest comparison, and gradually when we move in the year, the comparisons will get a bit easier. That's not me giving a forecast, it's just a fact. That's how I would see it. What do we do? 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. 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 two initiatives.
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.
If I may, the multiple that you've used for Mölnlycke is just under 18 times EV/EBITDA. We've seen compression actually at Convatec, Coloplast, and Smith & Nephew, which I view as quite good comps for Mölnlycke. Would you be able to comment on the discrepancy there? Thank you.
Do you want to take that, Helena?
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. They trade around 10 to almost 28 times, I think. To find the median is a fairly mechanical exercise and not something that we do deliberately every quarter. It's actually outsourced to a supplier of ours, and it's using only public data. I cannot comment on that specifically, but it's very possible that some peers have contracted their multiples, then others have expanded. The median this quarter was the number that you see in the report.
Maybe I can just 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. If you take, for example, Mölnlycke this quarter, we are actually closing one out of three trace plants. We take that in the P&L. In Aleris, 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. Of course, when we take the comparison, when we have this external supplier that do these peer multiples here, since we have reported profit, here you also have the enterprise value related to the reported profits.
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 creates more value if we fully load the P&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. If you have problems, you need to adjust, and you need to take those cost adjustments. 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.
I'm coming back to Mölnlycke. Apart from add-ons, have you contemplated to find areas that are related to Mölnlycke that might have synergistical properties to it, expand Mölnlycke outside of the present business?
It's an excellent question. 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, also looking at adjacencies that your question is. 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. To the participants on the phone, if you wish to ask a question, please dial zero one on your telephone keypad now. Our first question comes from Gustav Osterberg of Pareto Securities. Please go ahead, your line is open.
Hello, this is Gustav Osterberg from Pareto Securities. I think we touched upon the question. My question was in relation to the capital allocation here. You mentioned the add-on acquisitions 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?
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 its 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. We are working on opportunities on both sides.
Okay, thank you.
Thank you. Once again, if there are any further questions on the phones, please dial zero one now. 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. We say thank you for coming and for all the questions, and looking forward to see you again here. Thanks.
Thank you.
Thank you.