Strong dividends expected from upcoming Swedish reporting season

Despite further news of large redundancies being implemented at one of Sweden’s biggest exporters – ball-bearing maker SKF – equities analysts are predicting a rise in dividend payments to shareholders through the spring.

The payout could hit SEK171bn (€19.8bn), up from SEK167bn in the same period last year, according to analysis at SEB of 118 locally listed firms, reports daily Dagens Industri.

Among those most like to pay out are pharmaceutical firm AstraZeneca, and clothing retailer Hennes & Mauritz. Telecoms firms Telia Sonera, currently embroiled in a corporate governance scandal, is still set to deliver considerable dividends.

The key date for shareholders in Swedish companies is 31 January, when ten of the country’s biggest firms report latest quarterly and full year results, including Ericsson, Atlas Copco, Telia Sonera and SKF.

Looking forward, the country’s industrials sector is set for continued uncertainty after the announcement by SKF that it is to cut its workforce by another 2,500 in order to speed up cost cutting.

The company wants to save some SEK3bn (about €350m) as part of a programme running into 2015, including shifting production to Eastern Europe and Asia, reports daily Svenska Dagbladet. The company said in a statement that its orders in the last quarter of 2012 were worse than expected.

Funds implications

Data from FE lists some 3,476 funds with some exposure to Sweden.

Of these, 2,783 are equities funds. And of these, 296 pay dividends at least once a year or more – which are likely to be the funds most interested in rising levels of dividend payments.

The news of positive growth in dividend payouts for investors, including fund investors, comes on top of data published by the Swedish Investment Fund Association, which shows that net new investments in 2012 hit SEK75bn (€8.68bn), helping overall assets under management to rise by SEK230bn and taking the industry to a new record above SEK2trn (€232bn) in total AUM.

The Association said that in restrospect, 2012 had been a surprisingly good year for funds.

Over the year net new investments were greatest in balanced funds, followed by equity funds and bond funds. It was not clear at times during the year that this would be the case. For example, in months where there were net investments into money market funds, there were equivalent net redemptions from equity funds, as investors struggled with high levels of volatility on global stock markets.

Total net new investments 2012  SEKbn
Equity funds 30.8
Balanced funds 34.6
Bond funds 20.8
Money market funds -5.3
Hedge funds -6.2
Others -0.1
Total 74.5

Sweden equity funds remained the investment of choice according to the Association’s year-end figures. It also notes that there was a certain level of correlation between the months when the local stock market did well and levels of net investments in equities increased.

Sector Equity AUM end Dec 2012 (SEKm)  2012 Return %
Sweden 312,925 15
Nordic 43,566 17
Eastern Europe 52,560 17
Europe 50,983 16
Global 282,687 9
Sweden & Global  157,867 13
North America 36,372 6
India 7,773 18
China 9,797 10
Japan 4,940 1
Asia 28,246 15
Other markets 61,692 14
Sectors 40,347 8
Total 1,089,755 11

 

 

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