Investor CEO Demands Prudent Dividend Policies In Main Holdings
January 20 2009 - 6:22AM
Dow Jones News
The Nordic region's largest investment company, Investor AB
(INVE-B.SK), Tuesday demanded prudent dividend policies from its
main holdings, which it said should prepare for poorly functioning
credit markets due to a prolonged economic downturn.
Chief Executive Borje Ekholm told a news conference trimming
dividends is a cheap way for companies to raise capital and
strengthen their balance sheets.
The company earlier Tuesday said it was cutting dividends for
2008 to SEK4 from SEK4.75 a year ago as its closely-watched net
asset value per share dipped to SEK150 as of Dec. 31 from SEK170 on
Sept. 30 and from SEK203 on Dec. 31, 2007.
Investor holds significant stakes in some of Sweden's largest
industrial, financial and telecommunications companies, including
Atlas Copco AB (ATCO-A.SK), Electrolux AB (ELUX-B.SK), Husqvarna AB
(HUSQ-B.SK), L.M. Ericsson Telephone Co. (ERIC), Saab AB
(SAAB-B.SK) and Skandinaviska Enskilda Banken AB (SEB-A.SK).
Ekholm said the decline in equity markets and company valuations
has opened up interesting opportunities for Investor, which has
around SEK22 billion available for new investments after deducting
debt payable within five years.
"The current environment is the kind of environment where we
should consider operating with a little bit more than the
normalized gear level," Ekholm said, adding Investor has a maximum
gearing level of 25% and a current net cash position of SEK9.4
billion. Gearing, or leverage, measures the extent to which a
company is funded by debt.
He said: "The trick is to figure out when the timing is right to
be more aggressive in buying, and I think the next year or two will
open very interesting investment opportunities. I would be very
surprised if, when we look at this in a few years time, we are
still operating with a net cash."
Company Web site: http://www.investorab.com
-By Anna Molin; Dow Jones Newswires; +46 8 545 130 91;
anna.molin@dowjones.com
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