Interim Report, January - March 2001

Interim Report, January-March 2001 Investor's net asset value* on March 31, 2001 amounted to SEK 126,216 m. (compared with SEK 157,772 m. on March 31, 2000), corresponding to SEK 165 per share (206). At year-end 2000, Investor's net asset value amounted to SEK 144,433 m. In the first three months of 2001, the net asset value changed by SEK -18,217 m. (8,414) or -13 percent (6). The value of all Investor's holdings was SEK 133,462 m. on March 31, 2001 (178,401), compared with SEK 154,561 m. at year-end 2000, a decrease of SEK 21,099 m. during the three-month period. Net debt decreased SEK 2,882 m. to SEK 7,246 m. during the period. Net debt in relation to total assets corresponds to 5 percent. The total return on Investor shares amounted to -11 (15) percent during the period. Investor increased its holdings in AstraZeneca and OM through the purchase of shares for a total of SEK 1,143 m. and SEK 298 m., respectively. In the New investments business, SEK 538 m. (2,147) was invested. Divestments totaled SEK 725 m. (586). Realized capital gains amounted to SEK 65 m. (443). The value of new investments declined SEK 1,283 m. (+2,534) or 11 percent. Income of the Investor Group totaled SEK 1,412 m. (2,583) for the period. The Annual General Meeting of Investor AB, held April, 2, 2001, approved a dividend of SEK 5.50 per share for fiscal 2000. The Meeting also extended the authorization of the Board of Directors to decide on the purchase and transfer of own shares. Koichi Nishimura, Chairman, President and CEO of Selectron Corporation (United States), was elected a new member of the Board. The interim report can also be accessed on the Internet at www.investorab.com * During the quarter Investor eliminated its holding of own convertibles. Comparative figures have been adjusted in net asset value calculations to take this into account. President's comments Dear shareholders, The beginning of 2001 has been characterized by continuing economic uncertainty and high volatility in financial markets. Growth forecasts have been adjusted downwards for the major economies of the world. Reports about company profits warnings and layoffs have continued to be issued. The scene has changed dramatically, compared to about a year ago. Stock exchanges experienced a very weak first quarter. Nasdaq recorded a decline of 26 percent, one of the worst quarters in its 30- year history. The S&P 500 recorded a decline of 12 percent and the London Stock Exchange closed the period down 9 percent. In Stockholm, the market declined about 20 percent. Investor shares have performed relatively well, declining 11 percent up to the end of the quarter. The negative trend of the global economy has naturally impacted Investor and the valuations of companies in our portfolio. Investor's net asset value decreased 13 percent. The core holdings had the greatest negative effect, although the valuations of new investments were also adjusted downwards during the period. Investor's core holdings represent more than 80 percent of total assets and therefore play a decisive role in Investor's net asset value growth. Major efforts are being made to actively support all core holdings and participate in their ongoing restructuring and change processes on a long-term basis. Among the core holdings, Ericsson's value declined the most during the quarter - by SEK 13.8 billion, or 46 percent. Recently, Ericsson has been going through a difficult and challenging period operationally and on the stock exchange. As it is known, the industry has experienced a considerable slowdown, which has negatively affected all manufacturers of telecom equipment and their share price levels. Ericsson is implementing corrective measures and Investor, as an owner, supports the company in their efforts to restore profitability and secure its competitive leadership. AstraZeneca, Investor's largest holding in terms of value, is continuing to develop well. The company's successful merger is more or less finished, even if additional positive effects could be realized for a while to come. Nexium, the successor to Prilosec, has been launched on a wide scale in Europe and is now being introduced in the United States. AstraZeneca also has a number of very interesting potential drugs in its research portfolio. AstraZeneca's Swedish operations have expanded substantially in terms of capital investment, exports and employees. Investor increased its holdings in AstraZeneca and OM during the first quarter. Saab AB is another core holding that recently completed a successful merger program. The company's merger with Celsius has developed positively. SEB also stands on the threshold of an interesting and challenging period because of the proposed merger with Swedbank. The combined organization will have the potential of becoming a competitive leader in the Nordic banking industry with possibilities for further expansion in Europe. The negative sentiment in stock markets and the venture capital market has impacted the valuation of both unlisted and listed holdings in the New Investments business. The value of these holdings declined around 11 percent during the quarter. In New investments, most of the decrease in value was related to Internet and telecom-related holdings. Since the middle of last year, Investor Growth Capital has increased its focus on developing existing holdings, but is also continuing to make select investments in attractive growth companies. EQT recently closed its newest private equity fund, EQT Northern Europe. The fund has received commitments totaling EUR 2 billion, of which Investor's commitment is approximately EUR 630 m. The fact that the fund was substantially oversubscribed in this difficult market environment is an acknowledgement of EQT. Other private equity units in Investor's network, Investor Capital Partners - Asia Fund, Hong Kong-based imGO and b-business partners, are also well capitalized and have only utilized a small portion of their committed capital. Investor has committed a total of about SEK 30 billion to the New investments business, of which around one-third has been invested. The economic and market environment in which Investor operates is different today, compared with one year ago. However, our strategy remains firm. As an industrial holding company, Investor must always focus on being an active and professional owner of companies with high growth and profit potential. As always, we must attract and retain competent professionals to successfully execute our well-defined investment and evaluation process that has evolved over a long period of international business experience. This continues to be the way to reach the goal of growing net asset value in excess of market cost of capital over a business cycle, which has also been the case historically. No one knows when economic indicators will turn more positive again. We are in a transitional environment that is difficult to assess. The slowdown might last for a long time, although a turnaround could come quickly. Today, companies must be well prepared to react quickly in times of downturns and upturns. Financially, Investor is well equipped with a leverage of 5 percent. The year will be characterized by intensive involvement with our core holdings and new investments. As an active owner, Investor aims to support these companies through the current economic uncertainties. Marcus Wallenberg ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/04/11/20010411BIT00140/bit0003.doc The full report http://www.bit.se/bitonline/2001/04/11/20010411BIT00140/bit0004.pdf The full report