Scandinavian corporate profits to rise 10% in 2013 – DNB

Karl Høgtun,head of the Nordic Equity team and portfolio manager of DNB Asset Management’s range of Nordic funds, has predicted corporate profits in the region will rise 10% this year.

Høgtun said the improvement would be “due to factors including the improvement of global macro indicators.”

“We anticipate a steady recovery of the world economy in the current year.”

Positive data from China and India in particular are having an impact on Nordic countries, as companies benefit from their links to emerging markets. Some, such as insulin maker Novo Nordisk, have been cultivating these links since the 1960s, Høgtun added.

“Average dividend yields are expected to come in at around four per cent. On the whole, the Scandinavian economies are very likely to once again perform more solidly than the average for the 15 eurozone countries, because their global market leaders are continuing to benefit from extremely healthy economic figures in their domestic markets.”

At a constant forward P/E, the yield suggests earnings growth potential of between 4%-14%. “Thus, we have good reason to view the prospects for our Scandinavia Portfolio with optimism.”


Norway is benefiting from strong employment levels. The rate of unemployment is just 3% currently, which points to strong consumption growth this year.

Høgtun expects interest rates to remain low and employment to continue rising, with average wages to rise about 4% in nominal terms, which means a rise in real income levels.

Export levels remain stable, but little improvement will take place because of the strength of the NOK.


Sweden has started 2013 weakly, but should improve as the year progresses, Høgtun said.

Unemployment may rise above 8% again, while investment and exports could be sluggish. However, consumption could remain strong, helped by economic policy.

One of the key signals for improvement is in PMI figures, which rose from 44.6 in December to 49.2 in January.


Finland remains sluggish because its key industries are heavily cyclical, Høgtun said.

However, capacity utilisation is high, and increased lending by banks could lead to more investment this year and in 2014.

With weaker inflation, real incomes should improve, leading to a rise in consumption this year.


This remains perhaps the most challenged of the four main Nordic economies. Real incomes may continue to decline this year, resulting in weaker consumption.

However, 2013 could be the year when the economy turns. Høgtun said he sees room for manoeuvre for modest economic programmes, which could lead to GDP growth of around 1% for the year.

Høgtun concludes that with their small and relatively open economies, these four markets remain dependent on an upturn in the global economy. Crucially, however, their economies are in relatively healthy shape compared to many others in Europe, which leaves room for less economic belt-tightening.


To view Høgtun’s 2012 year-end outlook on the region, click on the video below:



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