Tomas Billing, CEO of Nordstjernan

Excerpt from Tomas Billing’s comments in Nordstjernan’s 2017 Annual Report


Good year…
In many ways, 2017 was a favorable year for Nordstjernan. For example, two thirds of our holdings generated higher profit during 2017 than in 2016. The average increase in profit was a full 17 percent, which clearly exceeded average annual profit growth in the past decade. There are many reasons for the successes noted in the various holdings, but I would especially like to highlight the hard work conducted by the operations and the focus on profitable growth. Sales by our holdings grew an average of 8 percent, which is a high rate for the mature types of businesses owned by Nordstjernan.

…but also a year of challenges
2017 was a challenging year, particularly for our largest listed holding, NCC. We, as the principal owner, and NCC’s Board of Directors were dissatisfied with the company’s performance. The margin generated by NCC’s core business, construction and civil engineering operations, was around 1.5 percent, compared with 3 percent for its competitors and NCC’s internal objective of 3.5 percent, despite a favorable economic climate. It was announced in January 2018 that Tomas Carlsson will be NCC’s new CEO, effective May 2018. Tomas has nearly 20 years of experience of working at NCC, but for the past five years he has been CEO of the architecture and engineering consultancy Sweco. In my estimation, Tomas’s experience is a perfect fit for NCC.

In addition to the internal problems at NCC, there were also market issues. The very strong housing market in Stockholm and the rest of Sweden started to falter during the autumn, which resulted in the share prices of our construction-related holdings weakening. In turn, the declining share prices for these holdings led to Nordstjernan’s total return during the year ending up at +8 percent, while the stock exchange as a whole was up 10 percent. The fact that the return was still positive and that net asset value increased to SEK 30 billion was due to strong value growth in our unlisted holdings, primarily Rosti, Dacke Industri and Etac.

A completely different incident that occurred in 2017 was that our building at Stureplan was just eight meters away from one of the worst fires in central Stockholm in 100 years.

To read Tomas Billing’s full comments, download Nordstjernan’s 2017 Annual Report (in Swedish) here