AB Industrivärden : 2022 12M

Year-End Report

January 1 - December 31, 2022

• Net asset value on December 31, 2022, was SEK 126.5 billion, or SEK 293 per share, a decrease during the year of SEK 39 per share. Including reinvested dividend, net asset value decreased by 10%. On February 2, 2023, net asset value was SEK 329 per share.
• The total return for 2022 was -10% for the Class A shares and -9% for the Class C shares, compared with -23% for the Stockholm Stock Exchange's total return index (SIXRX).
• During August 2022, Alleima became a new portfolio holding due to Sandvik's distribution of the company to the shareholders.
• During 2022, shares were purchased for a total of SEK 3.2 billion, of which in Volvo for SEK 1.3 billion, in Alleima for SEK 0.7 billion, in Sandvik for SEK 0.5 billion, in Handelsbanken for SEK 0.4 billion, in Essity for SEK 0.2 billion and in Skanska for SEK 0.2 billion.
• The Board of Directors proposes a dividend of SEK 7.25 per share (6.75).

	2022	2021
	December 31	December 31
Net asset value, SEK M	126,477	143,455
Net asset value per share, SEK	293	332
Share price Industrivärden C, SEK	253.00	284.10
Debt-equities ratio, %	5%	4%
	2022	2021
SEK M	Jan - Dec	Jan - Dec
Earnings per share, SEK	-32.34	61.57
Dividend income	5,479	8,081
Dividend paid	2,915	3,590
Equities portfolio:
Purchases	3,184	4,263
Sales	-	2,004

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

CEO's message

The full year 2022 was characterized by dramatic changes in the world that affected macroeconomic development. Geopolitical concerns, the war in Ukraine, the pandemic's continued impact on certain regions and the energy crisis in Europe presented significant challenges. At the same time, demand was favorable in several sectors, even though supply was limited by a shortage of labor and disruptions in certain supply chains. Overall these factors in the business environment resulted in sharply rising inflation, which in turn prompted central banks to raise their key interest rates and cut back on stimulus measures. As a result of this development, global GDP growth fell sharply in 2022.

Development in 2022 was reflected in a very weak and volatile stock market, where the total return for the Stockholm Stock Exchange decreased by 23%. A sector rotation can also be noted from more growth-oriented companies with future capital needs to companies with strong finances and a proven ability to generate good earnings and cash flows. This benefited Industrivärden's portfolio companies, which overall showed lower declines in value than the stock exchange as an average. Industrivärden's net asset value at the end of 2022 amounted to SEK 126.5 billion, a decrease during the year by 10%, including reinvested dividend.

The changes in the business environment in recent years are putting great demands on companies. To be able to deal with short-term challenges, flexibility is required at the same time that companies must have focus and resilience to achieve their long-term strategic objectives. Industrivärden's portfolio companies, with proven business models and strong market positions, have been making a determined effort for some time to create operational flexibility and financial strength. Together these are qualities that reduce the portfolio companies' risks and increase their value potential over time.

The dividend policy prescribes that Industrivärden is to generate a positive cash flow, which enables good investment capacity and a strong financial position. With this as a foundation we aim to continually increase the financial return from our active ownership and are therefore making continuous investments in the portfolio companies. During 2022, SEK 3.2 billion was invested in the portfolio companies. Among other things we increased our ownership to 20% in the newly listed portfolio company Alleima, which was distributed from Sandvik during the year.

Industrivärden's distinguished portfolio companies combined with our long-term ownership involvement forms the foundation for good value potential at balanced risk.

Helena Stjernholm

Chief Executive Officer

Long-term value creation at balanced risk

Industrivärden is a listed holding 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 Year-End Report January 1 - December 31, 2022

The period in brief

On December 31, 2022, the market value of the equities portfolio was SEK 133.8 billion, or SEK 310 per share. The equities portfolio decreased by SEK 19.3 billion during 2022, adjusted for purchases and sales.

During the year, shares in portfolio companies were purchased for a total of SEK 3,184 M, of which in Volvo for SEK 1,312 M, in Alleima for SEK 676 M, in Sandvik for SEK 467 M, in Handelsbanken for SEK 357 M, in Essity for SEK 199 M and in Skanska for SEK 174 M. Dividend income from the equities portfolio amounted to SEK 5,479 M during 2022.

The equities portfolio showed a better total return than Stockholm Stock Exchange's total return index (SIXRX) 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

Alleima SEK 1.9 bn; 1%

Skanska SEK 5.3 bn; 4%	Other SEK 0.5 bn; 0%
Ericsson SEK 5.7 bn; 4%
SCA SEK 9.6 bn; 7%
	Value
	December 31, 2022:
Essity SEK 19.5 bn; 15%	SEK 134 bn

Volvo SEK 35.8 bn; 27%

Market value in SEK bn; Portfolio share in %

Sandvik SEK 32.3 bn; 24%

Handelsbanken SEK 23.2 bn; 17%

Contribution analysis

January 1 - December 31

Handelsbanken			2.9
Volvo			0.3
Alleima			0.2
Essity	-1.0
SCA	-1.9
Skanska	-1.9
Ericsson	-2.8
Sandvik	-9.0

-10 -8 -6 -4 -20 2 4 Total return, SEK bn

Value performance

January 1 - December 31

Industrivärden C1

-9%

Net asset value2

-10%

1. Total return
2. Including reinvested dividend

Industrivärden Year-End Report January 1 - December 31, 2022

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Financial overview

For balance sheet items, the figures in parentheses pertain to the value on 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 December 31, 2022, the net asset value was SEK 126.5 billion (143.5), or SEK 293 per share (332), a decrease of SEK 39 per share during the year. Including reinvested dividend, net asset value decreased by 10%. On February 2, 2023, net asset value was SEK 329 per share.

				December 31, 2022
			Share of
			ownership, %		Market value		Share of value
	No. of shares		Capital	Votes		SEK M	SEK/share	%
Volvo A	166,600,000	8.9	27.8	33,003	83	27
Volvo B	14,600,000	2,752
Sandvik	171,200,000	13.6	13.6	32,254	75	24
Handelsbanken A	221,200,000	11.2	11.4	23,248	54	17
Essity A	33,257,000	10.2	29.6	9,046	45	15
Essity B	38,400,000	10,495
SCA A	33,785,290	10.3	29.3	4,507	22	7
SCA B	38,300,000	5,054
Ericsson A	86,052,615	2.6	15.1	5,679	13	4
Ericsson B	1,000,000	61
Skanska A	12,667,500	7.7	24.5	2,090	12	4
Skanska B	19,500,000	3,218
Alleima	50,300,000	20.0	20.0	1,933	4	1
Other					493	1	0
Equities portfolio					133,832	310	100
Net debt					-7,355	-17
Net asset value					126,477	293
Debt-equities ratio					5%

During the last ten-year period, net asset value has increased from SEK 49.8 billion on December 31, 2012, to SEK 126.5 billion on December 31, 2022, corresponding to an average annual growth of 11% including reinvested dividend. The chart below illustrates net asset value at the end of the respective years.

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
			Equities portfolio		Net debt		Net asset value

4	Industrivärden Year-End Report January 1 - December 31, 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

	December 31, 2022
		Total return
	Net asset value*	Index (SIXRX)
1 year	-10%	-23%
3 years	6%	7%
5 years	8%	10%
7 years	11%	10%
10 years	11%	12%

* Including reinvested dividend

Performance of equities portfolio

During 2022, the value of the equities portfolio, adjusted for purchases and sales, decreased by SEK 19,307 M, or 13%.

Change in value, purchases and sales, dividend income

SEK M	December 31, 2022	January - December 2022
Portfolio companies	Market value	Change in value	Purchase (+) / sales (-)	Dividend
Volvo	35,755	-2,570	1,312	2,317
Sandvik*	32,254	-10,047	467	801
Handelsbanken	23,248	1,636	357	1,096
Essity	19,541	-1,609	199	502
SCA	9,561	-2,049	-	234
Ericsson	5,740	-2,982	-	218
Skanska	5,308	-2,166	174	312
Alleima*	1,933	478	676	-
Other	493	2	-	-
Total	133,832	-19,307	3,184	5,479

* Change in value adjusted for shares received in Alleima, for further information see Accounting principles.

Dividends received

During 2022, dividend income from the portfolio companies amounted to a total of SEK 5,479 M (8,081).

Investment activities

On April 27, 2022, the Annual General Meeting in Sandvik decided to distribute all shares in the wholly owned subsidiary Alleima (former Sandvik Materials Technology) to Sandvik's shareholders. The distribution of shares in Alleima was carried out in line with the Swedish lex Asea rules, which means that the distribution is tax exempt. Five shares in Sandvik entitled to one share in Alleima. Through the distribution in kind Industrivärden received 34,239,999 shares in Alleima, corresponding to 13.6% of the capital and the number of votes. The first day of trading in Alleima was on August 31, 2022.

During 2022, shares were purchased for a total of SEK 3,184 M (4,263), of which in Volvo B for SEK 1,312 M, in Alleima for SEK 676 M, in Sandvik for SEK 467 M, in Handelsbanken A for SEK 357 M, in Essity B for SEK 199 M and in Skanska B for SEK 174 M.

Board of Directors' dividend proposal 2023

The Board of Directors' proposes a dividend of SEK 7.25 per share (6.75) for the 2022 financial year, with April 19, 2023, as the record date. In total, the proposed dividend amounts to SEK 3,131 M.

Industrivärden Year-End Report January 1 - December 31, 2022

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