Sweden: Vattenfall Reports Underlying Operating Profit for First 9 Months

Vattenfall is reporting an underlying operating profit for the nine-month period 2012 that is nearly on par with 2011 for continuing operations – despite a challenging market.

The industry is under continuous pressure from overcapacity, low prices and low margins, especially for electricity generation based on natural gas. Vattenfall has therefore recognized impairment losses of SEK 8.6 billion for the book value of goodwill and production assets in the Thermal Power business unit during the third quarter.

• Net sales decreased by 12.0% to SEK 33,679 million (38,276) for the third quarter and by 8.6% to SEK 119,376 million for the nine-month period. For continuing operations, sales decreased by 2.0% during the quarter and increased by 2.5% for the nine-month period.

• Underlying operating profit decreased by 21.8% to SEK 4,517 million (5,774) for the quarter and decreased by 10.4% to 21,010 million (23,450) for the nine-month period. For continuing operations the underlying operating profit decreased by approximately 18% during the quarter and by approximately 3% during the nine month period.

• Reported operating profit amounted to SEK -2,735 million (4,447) for the quarter and to SEK 20,996 million (13,050) for the nine month period. Profit for the third quarter of 2012 was charged with SEK 8.6 billion for impairment of goodwill and production assets in the Thermal Power business unit, mainly in the Netherlands.

• Profit (after tax) amounted to SEK -3,951 million (1,345) and to SEK 10,781 million (5,313) for the ninemonth period.

“Despite difficult market conditions, Vattenfall is reporting an underlying operating profit for the ninemonth period that is nearly on par with 2011 for continuing operations. Higher production volumes have compensated for lower electricity prices received. We have a balanced production portfolio, where half of our production generates no or only small amounts of CO2 emissions, and we have a strong position in stable markets in northern Europe. We have successfully delivered on key parts of our strategy to lower costs and strengthen the balance sheet. Our debt has decreased substantially, and the company’s liquidity position is very good. Our commitment to reducing our CO2 exposure and growing in renewable energy is unchanged”, says Øystein Løseth, president and CEO.

 “The market conditions have continued to worsen, however, and the industry is under pressure from overcapacity, low prices and low margins, especially for electricity generation based on natural gas. As a result, we have been forced to recognise impairment losses for the book value of goodwill and production assets in the Thermal Power business unit, mainly in the Netherlands, for a combined total of SEK 8.6 billion. We are addressing the difficult market conditions through continued focus on efficiency improvement. We are adapting the organisation and stepping up the pace of our change process. For 2013 we have decided on a new goal to cut costs by SEK 3 billion compared with 2012“, says Øystein Løseth.

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Press release, October 30, 2012; Image: