Release Date: July 17, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Investor AB (IVSBF, Financial) reported a strong Q2 performance with an 8% growth in adjusted net asset value and a 9% total return.
- Listed companies in the portfolio had a total return of 11%, driven by strong Q1 results from major holdings like Ericsson.
- Patricia Industries, representing 20% of the portfolio, saw a 2% total return, with major subsidiaries growing organically by 7% and adjusted earnings by 10%.
- Significant investments were made in Q2, totaling almost SEK10 billion across all three business areas.
- Molnlycke achieved 8% organic growth, with all business areas and regions contributing positively.
Negative Points
- Investments in EQT, which make up about 10% of the portfolio, saw a negative 4% return due to EQT AB's share price performance.
- Piab faced headwinds in demand, particularly within vacuum conveying, impacting margins due to costs for strategic projects and continued investments.
- Atlas Antibodies' sales remained low and stable, impacted by biopharma end market demand, with management focusing on cost control to protect profit.
- Logistics costs increased towards the end of the quarter, impacting margins in several companies.
- The company faces challenges in the Chinese market, particularly in the Wound Care segment, due to a slower market environment.
Q & A Highlights
Q: From Molnlycke, it's good to finally see an acquisition in Wound Care and another solid quarter in terms of growth. Could you expand on the margin a bit? Are you satisfied with the margin given the higher organic growth?
A: It's a bit of both. With our high gross margin profile, sales growth tends to generate some operating leverage. However, we have chosen to invest heavily in the organization to drive growth, and we also see some inflationary pressures, particularly in logistics costs.
Q: Could you elaborate on the drivers for Laborie's growth, particularly Optilume, and the impact on margins?
A: Optilume was a significant contributor to Laborie's growth this quarter. We have two Optilume products, one for urethral strictures and a newer one for BPH. Both are seeing good market reception. However, we expect continued investment in this area, impacting margins in the short term.
Q: Atlas Antibodies has been facing some headwinds. Could you elaborate on the results and whether the business is stabilizing?
A: The business has seen a significant demand drop, particularly from biopharma customers investing less in R&D. Management has done a good job protecting profit by working on costs. While the drop started around this time last year, recent quarters have shown more stability.
Q: Regarding the add-on acquisitions in Sarnova and BraunAbility, how do they affect your outlook for these companies?
A: Since we acquired majority stakes in these companies in 2020 and 2021, their sales and EBITDA have been consolidated. The increased ownership will further integrate these businesses into Sarnova and BraunAbility, contributing to their long-term development.
Q: Given the recent sizable investment in Ericsson, should we expect more investments into the listed portfolio going forward?
A: We have consistently invested in listed companies, averaging SEK2.6 billion each year since 2015. This is not a change in trend or direction. We remain open to good opportunities across all three business areas.
Q: What are you seeing in the Chinese market for Molnlycke, given some other players are experiencing weakness?
A: While no one is entirely immune to a slower market, we have generally seen good traction in China, particularly in the Wound Care business.
Q: How might proposed tariffs on Chinese medtech products, including surgical gloves, affect Molnlycke?
A: Molnlycke primarily competes in the high-end surgical gloves segment, where competition is not mainly from Chinese players. We don't anticipate a significant change in market dynamics due to these tariffs.
Q: What's the rationale behind the MediWound acquisition?
A: MediWound offers an enzymatic solution for wound debridement, complementing our organic R&D. We believe in partnering or acquiring innovative solutions to bolster our product offerings, similar to our approach with Optilume.
Q: Could you provide more detail on your investment in Ericsson?
A: Ericsson has world-leading technology and strong market shares. Its core mobile network business is profitable, and we believe the company is well-positioned to explore new growth avenues, such as enterprise solutions and network APIs.
Q: Given Molnlycke's sustained growth, how sustainable is this level of growth, and how are competitors reacting?
A: We continue to invest in growth and believe in the high demand for our leading products. While there has been volatility around COVID, we are focused on both existing products and innovation to maintain our market position.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
