Vattenfall reports a strong result for the first half of the year.
Vattenfall’s President and CEO Anna Borg comments on the interim report for January-June 2021
“Vattenfall reports a strong result for the first half of the year, with higher contributions from both production and sales of electricity and heat. Strategic agreements have been entered into in which we are working together with partners to drive the energy transition. We can finally also put a number of prioritised legal matters behind us and instead look forward with focus on our core businesses and our customers.
Comparison affected by large one-off items
Profit for the period totalled SEK 23.6 billion for the first half of the year and SEK 13.2 billion for the second quarter. In Germany we have been entitled for some time to compensation for the country’s nuclear power phase-out. This has now been approved by Germany’s Bundestag, with an earnings impact of SEK 11.1 billion in the second quarter. Payment will be made in the fourth quarter.
Strong performance for operating activities in a market with higher electricity prices
The market is experiencing wide fluctuations, and electricity prices in the Nordic countries have had a strong recovery since last year’s historically low levels. Unusually cold weather during the first quarter of the year was followed by low precipitation during the second quarter. On the Continent we are seeing the impact of higher prices for fuel and CO2 emission allowances. All in all, the impact of the higher electricity prices was positive for Vattenfall during the first half of the year. However, large differences between price areas and the system price in the Nordic countries pressed down the price achieved after hedges, which was especially noticeable during the second quarter.
The operating activities performed well. Underlying operating profit increased by SEK 4.3 billion to SEK 17.3 billion for the first half of the year and by SEK 2.5 billion to SEK 5.3 billion for the second quarter. Supported by high availability of nuclear power and favourable reservoir levels, we increased electricity generation despite the closure of Ringhals 1 at the end of 2020. We are also seeing positive development for both the sales and heat businesses. Plus we reported a higher realised profit from trading.
Clear path forward for operations in Berlin
After the close of the second quarter we completed the transaction for the sale of the distribution business in Berlin (Stromnetz Berlin). We also received the positive and final ruling from the Higher Administrative Court in Berlin that the district heating network belongs to Vattenfall after the city made a claim to take over the network. We are now looking forward to continued good cooperation with the City of Berlin to achieve our joint climate targets.
Partnerships support the energy transition of our customers
Achieving our goal of enabling fossil-free living within one generation requires that we cooperate with customers and other partners – also outside of the energy sector. Partnerships therefore have a central role in Vattenfall’s strategy. Accordingly, we are now selling 49.5% of the Hollandse Kust Zuid offshore wind farm to BASF. This is the first time a major industrial company is buying a substantial stake in one of our large-scale wind farms. Together we will be able to both reduce emissions in the chemical industry and deliver fossil-free electricity to our customers with a project that contributes to the energy transition. I am truly looking forward to this cooperation, which is unique.”
Business highlights, April–June 2021
- Agreement on sale of 49.5% of the Hollandse Kust Zuid offshore wind farm
- Approval by Germany’s Bundestag of compensation for nuclear plant closures which affected results in the second quarter by SEK 11.1 billion
- Decision by Swedish Parliament on special investment scope for electricity grid investments
Important events after the balance sheet date
- Sale of electricity distribution business Stromnetz Berlin completed on 1 July. The purchase price was EUR 2.1 billion and the transaction will impact the results in the third quarter.
Financial highlights, January–June 2021
- Net sales increased by 1% (5% excluding currency effects) to SEK 80,465 million (79,440)
- Underlying operating profit of SEK 17,308 million (12,982)
- Operating profit of SEK 29,595 million (5,287)
- Profit for the period of SEK 23,635 million (-1,594)
Financial highlights, April–June 2021
- Net sales increased by 10% (14% excluding currency effects) to SEK 34,554 million (31,280)
- Underlying operating profit of SEK 5,256 million (2,792)
- Operating profit of SEK 16,210 million (-7,027)
- Profit for the period of SEK 13,212 million (-8,495)