Vattenfall’s first half 2016: Stable operations – impairments due to tough market situation
Owing to lower costs and a stable production Vattenfall’s underlying operating profit improved to approximately SEK 11 billion for the first half of the year. However low electricity prices and margins result in a continued challenging market, which has led to significant impairments, mainly for the lignite operations.
- Net sales of SEK 34,482 million (36,115) for the second quarter and SEK 80,411 million (81,492) for the first half of the year
- Underlying operating profit of SEK 2,907 million (2,966) for the second quarter and SEK 11,044 million (10,703) for the first half of the year
- Profit after tax of SEK -28,644 million (-28,812) for the second quarter and SEK -22,042 million (-23,825) for the first half of the year
- Electricity generation of 39.9 TWh (39.7) for the second quarter and 88.7 TWh (86.1) for the first half of the year
“The first half of the year was characterized by stability in Vattenfall’s operations and a number of important events in our external operating environment that affect the company, such as the Swedish energy agreement. But the business situation remains tough, with low electricity prices and essentially unchanged market volumes. Against this background, it is nevertheless gratifying to report a slightly improved underlying operating profit of SEK 11 billion for the first half of the year,” says Magnus Hall.
The market situation has given rise to a need to recognise impairments – mainly for fossil assets – for a total of SEK 30 billion. Of the impairments, SEK 21 billion is attributable to Vattenfall’s lignite operations. The negative effect would have been even greater if Vattenfall were to hold and continue running the operations, as this would have resulted in larger impairments already in this interim reporting period.
“Through the sale we have clarified Vattenfall’s future focus on delivering what customers want in the form of electricity and heat based on a larger share of renewable production. Germany continues to be one of Vattenfall’s most important markets, with operations in all core business areas”, says Magnus Hall.
As part of Vattenfall’s growth strategy for renewable production, Vattenfall has decided to invest more than SEK 3 billion in a new offshore wind farm off the coast of Aberdeen in the UK.
Vattenfall has also decided to invest in measures to ensure the long-term operation of the nuclear reactors at Forsmark, and currently reviewing the prospects for reactors 3 and 4 at Ringhals. This investment has been made possible by the phase-out of the nuclear capacity tax provided for under the Swedish energy agreement.
“We are continuing our work to transform Vattenfall into a significant player in the new energy landscape in which the focus is on the customer. Hard work combined with growth in several areas and continued efficiency improvements will lead us in the right direction.”says Magnus Hall.
Vattenfall discloses this information pursuant to the Swedish Securities Market Act.
Issued by Vattenfall’s Press Office, telephone: +46-8-739 50 10, e-mail: firstname.lastname@example.org.
The full interim report and other information is available at: corporate.vattenfall.se.
Vattenfall is a Swedish, state owned, energy company with 28,000 employees with operations in Sweden, Germany, the Netherlands, Denmark, UK and Finland. Vattenfall supports the transition to a renewable energy system and has the objective to become leading in sustainable energy production and thereby secure a reliable and cost effective energy supply.