AB Industrivärden : 2022 6M

Interim Report

January 1 - June 30, 2022

• Net asset value on June 30, 2022, was SEK 113.6 billion, or SEK 263 per share, a decrease during the first half-year of SEK 69 per share. Including reinvested dividend, net asset value decreased by 19%.
• The total return for the first six months of 2022 was -18% for the Class A shares as well as the Class C shares, compared with -28% for the Stockholm Stock Exchange's total return index (SIXRX).
• During the first half-year of 2022, shares were purchased for a total of SEK 1.9 billion, of which in Volvo for SEK 1.0 billion, in Sandvik for SEK 0.3 billion, in Essity for SEK 0.2 billion, in Handelsbanken for SEK 0.2 billion and in Skanska for SEK 0.2 billion.

	2022	2021	2021
	June 30	June 30	Dec 31
Net asset value, SEK M	113,637	135,398	143,455
Net asset value per share, SEK	263	311	332
Share price Industrivärden C, SEK	227.50	313.20	284.10
Debt-equities ratio, %	5%	3%	4%
	2022	2021	2021
SEK M	Jan - June	Jan - June	Jan - Dec
Earnings per share, SEK	-61.90	40.89	61.57
Dividend income	5,370	7,072	8,081
Dividend paid	2,915	3,590	3,590
Equities portfolio:
Purchases	1,886	2,283	4,263
Sales	-	2,004	2,004

AB Industrivärden (publ) | Reg. no. 556043-4200 | www.industrivarden.net

CEO's message

The overall situation in the world shifted dramatically during the first half of 2022, and the macroeconomic conditions that we have lived with for many years have changed. Following a long period of low interest rates, significant stimulus measures and good economic growth, inflation as well as interest rates rose sharply during the first part of the year. The central banks' measures to fight inflation through interest rate hikes and reduced stimulus measures are expected to dampen demand over time and thereby slow economic growth.

In connection with Russia's invasion of Ukraine, several of the challenges that companies have faced with in recent years have increased. Sharply higher energy and commodity prices along with a shortage of input goods and labor have led to limited supply and put focus on companies' ability to carry out price increases. This, combined with the geopolitical development, has prompted many companies to review their supply chains. On the whole, we are now living in a time of elevated uncertainty in many areas.

The stock market has been strongly affected by the development in the world around us, and the Stockholm Stock Exchange's total return decreased by a full 28% during the first half of the year. As a consequence of falling stock prices, Industrivärden's net asset value decreased by 19%, including reinvested dividend, to SEK 114 billion.

An important part of our strategy is to use part of our cash flow to create investment capacity over time, which enables continuous investments in the portfolio companies. During the past half-year we have invested 1.9 billion in Volvo, Sandvik, Essity, Handelsbanken and Skanska, and seen over the last five-year period we have invested approximately SEK 15 billion, net, in our current portfolio companies.

Given the uncertain situation in the world around us, it is comforting to note that Industrivärden's portfolio companies have proven business models and strong market positions, and that they have good operational and financial flexibility. The companies have successfully taken various measures to deal with the current challenges but have also maintained their focus on a more long-term perspective in terms of, for instance, targeted development and innovation work. It is a good starting point for future value creation.

Helena Stjernholm

Chief Executive Officer

Long-term value creation at balanced risk

Industrivärden is a listed investment company that contributes to long-term development and value creation in its portfolio companies through active ownership.

Operations are based on a concentrated portfolio of quality companies with strong market positions and good value potential.

Industrivärden's active ownership is based on strong positions of influence, long- term perspective and extensive knowledge. Industrivärden thereby contributes to a sustainable perspective, delivering a long-term, attractive return at balanced risk.

2	Industrivärden Interim Report January 1 - June 30, 2022

The period in brief

During the first six months of 2022 the value of the equities portfolio decreased by SEK 32.1 billion, adjusted for purchases and sales. On June 30, 2022, the market value of the equities portfolio was SEK 119.7 billion, or SEK 277 per share.

During the period January 1 until June 30, 2022, shares in portfolio companies were purchased for a total of SEK 1,886 M, of which in Volvo for SEK 1,043 M, in Sandvik for SEK 290 M, in Essity for SEK 199 M, in Handelsbanken for SEK 181 M and in Skanska for SEK 174 M. During the first six months of the year, dividend income from the equities portfolio amounted to SEK 5,370 M.

The equities portfolio have, like the Stockholm Stock Exchange as a whole, developed negatively during the period. The performance of the respective portfolio companies in the equities portfolio is shown in the contribution analysis below.

Composition of equities portfolio

Skanska SEK 5.0 bn; 4%

Other SEK 0.5 bn; 0%

Ericsson SEK 7.2 bn; 6%

SCA SEK 11.0 bn; 9%

Value

June 30, 2022:

SEK 120 bn

Essity SEK 19.1 bn; 16%

Volvo SEK 29.5 bn; 25%

Market value in SEK bn; Portfolio share in %

Sandvik SEK 28.2 bn; 24%

Handelsbanken SEK 19.2 bn; 16%

Contribution analysis			Value performance
January 1 - June 30			January 1 - June 30
SCA	-0.4
Handelsbanken	-1.2			Industrivärden C1
		-18%
Essity	-1.4
Ericsson	-1.4
Skanska	-2.2		Net asset value2
Volvo	-6.2		-19%
Sandvik -14.0
-18-16-14-12-10-8-6-4-2 0
		Total return, SEK bn
				1) Total return
				2) Including reinvested dividend
Industrivärden Interim Report January 1 - June 30, 2022	3

Financial overview

For balance sheet items, the figures in parentheses pertain to the value as per December 31, 2021. For income statement and cash flow items, the figures in parentheses pertain to the value for the corresponding period in the preceding year.

Net asset value

The net asset value consists of the market value of the equities portfolio less net debt. On June 30, 2022, the net asset value was SEK 113.6 billion (143.5), or SEK 263 per share (332), a decrease of SEK 69 per share during the first six months. Including reinvested dividend, net asset value decreased by 19%.

				June 30, 2022
			Share of
			ownership, %		Market value		Share of value
Holdings	No. of shares		Capital	Votes		SEK M	SEK/share	%
Volvo A	166,600,000	8.8	27.8	27,422	68	25
Volvo B	13,100,000	2,075
Sandvik	170,200,000	13.6	13.6	28,228	65	24
Handelsbanken A	219,200,000	11.1	11.3	19,162	44	16
Essity A	33,257,000	10.2	29.6	8,863	44	16
Essity B	38,400,000	10,257
SCA A	33,785,290	10.3	29.3	5,142	25	9
SCA B	38,300,000	5,852
Ericsson A	86,052,615	2.6	15.1	7,125	17	6
Ericsson B	1,000,000	76
Skanska A	12,667,500	7.7	24.5	1,986	12	4
Skanska B	19,500,000	3,058
Other					468	1	0
Equities portfolio					119,715	277	100
Net debt					-6,078	-14
Net asset value					113,637	263
Debt-equities ratio					5%

During the last ten-year period, net asset value has increased from SEK 43.7 billion on June 30, 2012, to SEK 113.6 billion on June 30, 2022, corresponding to an average annual growth of 11% including reinvested dividend. The chart below illustrates the net asset value for respective years as well as for the period ending on June 30, 2022.

Net asset value over time

SEK M

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0 -20,000-40,000

2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022 6M
			Equities portfolio		Net debt		Net asset value

4	Industrivärden Interim Report January 1 - June 30, 2022

Average annual growth of the net asset value and of the Stockholm Stock Exchange's total index (SIXRX) is shown in the table below.

Average annual growth for respective periods

	June 30, 2022
			Total return
	Net asset value*	Index (SIXRX)
2022, 6 months	-19%		-28%
1 year	-14%		-18%
3 years	5%		9%
5 years	6%		8%
7 years	8%		9%
10 years	11%		12%

* Including reinvested dividend

Performance of equities portfolio

During the first six months of 2022, the value of the equities portfolio, adjusted for purchases and sales, decreased by SEK 32,126 M, or 21%. Net purchases amounted to SEK 1,886 M.

Change in value, purchases and sales, dividend income

SEK M	June 30, 2022			January - June 2022
Holdings	Market value		Change in value	Purchase (+) / sales (-)	Dividend
Volvo	29,497	-8,558	1,043	2,317
Sandvik	28,228	-14,676	290	801
Handelsbanken	19,162	-2,273	181	1,096
Essity	19,120	-2,030	199	502
SCA	10,994	-615	-	234
Ericsson	7,201	-1,521	-	109
Skanska	5,044	-2,430	174	312
Other	468	-23	-	-
Total	119,715	-32,126	1,886	5,370

Dividends received

During the first half-year of 2022, dividend income from the holdings amounted to a total of SEK 5,370 M (7,072).

Investment activities

During the first six months, shares were purchased for a total of SEK 1,886 M (2,283), of which in Volvo B for SEK 1,043 M, in Sandvik for SEK 290 M, in Essity B for SEK 199 M, in Handelsbanken A for SEK 181 M and in Skanska B for SEK 174 M.

Industrivärden Interim Report January 1 - June 30, 2022

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