Peter Hofvenstam, CEO of Nordstjernan 

Message from the CEO

2020 – a historic marker for the world and at Nordstjernan
2020 was marked by the global pandemic. COVID-19 has had an enormous impact on people’s lives and on our economies, but has also accelerated the change processes that have a lasting effect on our existence. The pandemic serves as a catalyst for the major changes that are already in progress in the wake of digitalization. The digital generation is now entering the economy, which means that we will make the natural transition from digitalizing analog processes to reworking processes based on an entirely digital premise. This fundamental transformation has made an enormous leap due to the pandemic.

People have largely been forced to choose digital channels to gain access to health care and groceries, for example, and have discovered the benefits. E-commerce has expanded to an increasing number of sectors. Business travel and meetings have now been largely replaced by video meetings which, although not an adequate replacement, have benefits that were previously underestimated. In the first instance, the pandemic has forced customer interaction to become digital, but the digitalization is spreading downstream in the supply chains and global companies have seen a strong impact on production and supply chains, which will accelerate the automation of production and change inventory management. All of this entails that all companies need to work in an innovative and creative way in terms of organization and leadership, adjust their business models, review the customer offerings and evaluate their earlier strategies.

Also at Nordstjernan, 2020 was dominated by the pandemic and its consequences. COVID-19 has placed many of our companies in the front line. This applies to Lideta, which currently has about 50 care centers with approximately 300,000 listed patients. Nordstjernan is also the principal owner of Attendo, which is the leading private provider of publicly financed care services in the Nordic region. During the pandemic, Attendo has worked methodically and effectively to prevent the spread of infection among employees and users, particularly in elderly care. The pandemic has put a large amount of pressure on Attendo’s employees, but we can also observe that employee satisfaction and engagement increased significantly in 2020.

New strategy and organization
Already prior to the pandemic, Nordstjernan had decided to initiate work to adjust its strategic approach. The most recent major revision of Nordstjernan’s strategy was in 1999. Since then, the venture capital market has grown rapidly, industries have changed and new trends have evolved. The conditions have now changed so fundamentally that this is a natural point for a new strategy.

Our 130-year industrial history has demonstrated that we have many strengths on which to build further, at the same time as these changeable times are creating new, exciting conditions. During 2020, we deliberately changed our strategy and our organization. Our employees, our Board of Directors and our network were all engaged in the strategy process during the year. This process affects Nordstjernan’s purpose, operational focus, value creation and our organization. Within these main areas, we are now in the process of future-proofing our operations.

At Nordstjernan, the best of both worlds is combined: A financial profit-driven part interacts with a public benefit part. Most of our dividend goes to our owner foundation, the Axel and Margaret Ax:son Johnson Foundation for Public Benefit, which provides support for public research and training. In this way, we are involved in developing people, companies and society. Our focus is to invest in market-leading companies with sustainable competitive advantages in niches with strong structural market trends where we have expertise and a strong network. We are convinced that advanced sector competence and a strong industrial network will create favorable conditions for our companies and employees to realize their best potential.

We choose to invest in selected sectors. Our four sectors are Industry (Rosti, Nobia and Dacke Industri), Health (Etac, Attendo and Lideta), Construction & Real estate (NCC, Bonava, Diös and Sunparadise), as well as Distribution & Trade (Momentum Group). During the year, we added a fifth sector, Growth & New Technology, in which we invest in competitive, rapidly expanding growth companies with the conditions to become leaders in their respective areas of operation. In terms of size, the initial investments will be smaller, with the ambition of increasing our commitment over time. Our goal is to become a long-term active and attractive partner to owners, contractors and company management teams in order to scale up the companies’ operations and accelerate their growth.

We are now working through our investments strategies in all sectors and reviewing the plans for value creation in our companies. We will continue to strive to maximize the potential of the companies we are involved with through active company development. Our fundamental belief is that it takes time to develop high-performing companies. Accordingly, we always have long-term involvement in our companies.

Business and net asset value
During 2020, we also managed to finalize several transactions. In January, we divested our holdings in Rosti Automotive. In February, we sold our shares in PriceRunner. In the spring, Momentum Group merged with Swedol and during the autumn, we increased our holdings in Momentum Group through a mandatory public offer. In December, we sold our holdings in Nordic Nest.

Nordstjernan’s net asset value totaled SEK 35.4 billion at the end of 2020. This yielded a total return of 12 percent in 2020, compared with an increase of 13 percent for the Stockholm Stock Exchange. The net asset value growth for the year is a result of several of Nordstjernan’s unlisted holdings increasing in value. Despite the challenges in 2020, six of our eleven companies delivered a higher profit in 2020 than in 2019. Three of our unlisted holdings – Rosti, Etac and Lideta – also recognized all-time-high profit levels for 2020.

Focus on the future
Building successful companies is Nordstjernan’s primary focus, even during the pandemic year of 2020. But like many other committed companies and organizations, we also strive to contribute in other ways in difficult years like this one. Accordingly, Nordstjernan made a donation to the Karolinska Institute, which made it possible to build up a biobank during the year for COVID-19 research. Everyone researching the virus, regardless of discipline, can use the data that they retrieve from the new biobank. Nordstjernan also contributed testing equipment to our medical and care companies at a time when test kits were a scarcity. Our owner foundation also donated test capacity to health care.

We remain in a challenging situation. On the one hand, we see positive factors, such as the roll-out of vaccines to manage the pandemic, the recovery of the economy and growth opportunities deriving form digitalization and new technology. On the other hand, the pandemic is not under control and despite mass vaccinations, COVID-19 will continue to have a major impact on people’s lives and finances for a long time. The enormous monetary stimulus packages delivered by the central banks have resulted in a very low cost of capital, significant asset inflation and large financial imbalances that could have far-reaching effects on our social structure and economy.

As always, the future is difficult to predict. Accordingly, it is important to be flexible, agile and to have financial strength. Organizationally and financially, Nordstjernan stands strong with ample cash assets for the future. Our investment scope amounts to approximately SEK 5 billion. This will enable us to provide long-term support to the holdings when they face opportunities or problems, not least in the wake of the pandemic.

Finally, I would like to thank all employees, colleagues, the Board and the shareholders for their fine contributions and excellent cooperation over the past year.

Stockholm, April 12, 2021

Peter Hofvenstam

President and CEO