Customer growth and increased generation contributed to the continued increase of profit and turnover in Q1 2018.
The positive trend continues for Vattenfall. Net sales increased by 11 per cent and the underlying operating profit increased by close to SEK 1 billion compared with the same period last year. The large-scale generation in Sweden was a strong contributor. Not least, hydro power generation increased.
"This quarter we especially see three things happening. The first one is that Business Area Generation is showing a very strong quarter mainly due to cold weather and high prices in the Nordics, with good results from both hydro and nuclear. Second, we see a good result in Customers & Solutions in the Netherlands, also due to cold weather and an increased inflow of customers, especially in Germany," says Anna Borg, Vattenfall's CFO.
For Customers & Solutions, the underlying operating profit rose from SEK 800 million to SEK 1 billion, an increase of 25 per cent. Strong customer growth, in Germany especially, contributed to the increase.Vattenfall now has over 3.5 million electricity and gas customers in Germany and approximately 8.8 million customers in total.
"There is a very strong drive in Customers & Solutions to serve our customers, we see that in the Net Promoter Score. We are of course also active in acquiring customers through various sales channels. Then it’s very important to keep them, and that we are very good at," says Vattenfall's CEO Magnus Hall. (Net Promoter Score is one of Vattenfall's important customer satisfaction indicators.)
Increased Nordic hydro power generation
Power Generation's turnover increased by over SEK 2.5 billion, and the underlying operating profit by SEK 1.2 billion, primarily due to high electricity prices in the Nordic region resulting from cold weather and an increased Nordic hydro power generation by 1.5 terawatt hours, as well as a stable, high nuclear power generation.
Wind operations turnover also increased and the underlying operating profit rose to over SEK 1 billion. During the quarter, the world's largest wind turbine was installed in Vattenfall's wind farm in the bay outside Aberdeen, Scotland. In the coming years, Vattenfall will invest SEK 13 billion in new wind capacity.
In the Netherlands, Vattenfall won the tender to build Hollandse Kust Zuid 1 and 2, the first offshore wind farm to be built without state support:
"We have been able to drive down our costs. That’s the reason why we participated in this auction. We also need to connect this investment to the market in various ways, for example with long term contracts. This puts us in a good position to make money out of this kind of investment," says Hall.
Large investments in electricity grids
The cold weather during the quarter also contributed to Distribution's increased turnover and profit. And despite heavy precipitation and heavy snow, the security of supply was stable, a result of maintenance and investments in recent years. During the last 12 months alone, SEK 5.5 billion have been invested in electricity grids.
Higher prices on CO2 emissions
Heat was the only area that did not see an increased turnover during the quarter, and the underlying operating profit dropped from SEK 2.2 billion to just under SEK 1.6 billion. The cause is higher costs of gas and carbon dioxide emission allowances.
Financial highlights, January–March 2018
- Net sales increased by 11% to SEK 44,328 million (40,112).
- Underlying operating profit increased to SEK 9,359 million (8,408).
- Operating profit of SEK 6,975 million (6,091).
- Profit for the period amounted to SEK 4,158 million (3,829).