Interim Report January 1 – September 30, 2006

• Industrivärden’s net asset value was SEK 52,156 M on September 30, 2006 (45,744 on September 30, 2005), an increase of SEK 3,904 M since the start of the year. Net asset value on October 27, 2006, was SEK 54,379 M.

• Net asset value per share on September 30, 2006, was SEK 270 (237 on September 30, 2005), an increase of SEK 20 per share. Earnings per share for the first nine months of 2006 were SEK 27.25 (50.12).

• Net asset value per share on October 27, 2006, was SEK 282, an increase of SEK 32, or 13%, since the start of the year. Average annual growth in net asset value over the last ten-year period, including reinvested dividends, was 17%.

• The total return during the last twelve-months for Industrivärden’s Class A stock was 29%, and the total return for the Class C stock was 32%, compared with 35% for the return index. The average annual total return over the last ten-year period was 4 percentage points higher than the return index.


CEO’s Message

In the glow of a continued favorable global economic trend, Industrivärden’s portfolio companies have continued to do well.

A couple of matters of concern for the economic picture have been straightened out in recent months. Due to lower oil prices and the production cuts introduced by OPEC to prevent a further drop in prices, the trend earlier in the year of sharply rising oil prices has been broken. Further, it appears that the U.S. economy is headed for a soft landing and that the fears of a recession have receded. So there is reason for a continued favorable economic outlook for the rest of this year and also for 2007.

In pace with this brighter economic outlook, the world’s stock markets have recovered from the sharp decline that began in May and continued during the summer months. Long-term interest rates, which are in fact the best reflection of the market’s inflation expectations, have fallen since the spring. This, together with the economic outlook, is adding valuation impetus to the stock market’s development.

It is also worth noting the difference between the stock market’s valuation and the private equity market’s valuation of the same companies. When private equity companies can acquire listed companies at a 50% premium over the market price in the absence of any industrial synergies, then the price difference is too high and cannot be explained merely by leveraging and 100% cash flow control. Over time and all else equal, this difference in valuations could possibly decrease and thereby support valuations in the stock markets.

I am happy to note Sandvik’s continued strong performance and that SCA is beginning to show earnings improvements as a result of the efficiency improvement measures it has taken. Moreover, a better balance between supply and demand in SCA’s markets is creating scope for price increases.

Earnings from our short-term trading during the first three quarters of the year amounted to SEK 104 M (69), which more than amply covers our management costs for the period, which totaled SEK 58 M. Our management costs correspond to 0.13% of managed assets on an annualized basis.