At Vattenfall we want to contribute to a sustainable energy system throughout the value chain.
Our goal is to be a truly customer centric company while continuing the transition towards a long-term sustainable production portfolio.
Vattenfall's strategy is based on four strategic objectives:
- Leading towards Sustainable Consumption with focus on increasing customer centricity, building a strong position as a provider of decentralised energy solutions and promoting electrification and a climate smart society.
- Leading towards Sustainable Production, which entails growth in renewables and implementing our CO2 roadmap to become fossil free within one generation.
- Having High Performing Operations, which encompasses improving operational efficiency at our plants, in our networks and in our customer service centres through increased digitalisation and by taking social and environmental responsibility throughout the value chain.
- Having Empowered and Engaged People, which means being an attractive employer, promoting an engaging culture, and securing the right competence that reflects the diversity of society as a whole.
To achieve our four strategic objectives, we have six strategic long-term targets in place, see table on how objectives and targets correspond:
|Strategic objective||Strategic targets for 2020||Outcome 2017||Comment|
|Leading towards Sustainable Consumption||Customer engagement, Net Promoter Score relative1 (relative customer satisfaction): +2||+2||The Customers & Solutions operating segment continued its positive trend with a +2 (+7) relative NPS in 2017 and absolute improvements in the end customer market in all four core markets. Relative NPS decreased, however, as competitors made larger improvements.|
|Leading towards Sustainable Production||Commissioned new renewables capacity 2016–2020: ≥2,300 MW||652 MW2||A total of 354 MW (298) of new renewable capacity was installed in 2017. The new capacity consists of the Sandbank offshore wind farm in Germany (72 MW of total 288 MW), and the Ray (54 MW) and Pen y Cymoedd (228 MW) onshore wind farms in the UK. Another 7 GW is in the project development pipeline.|
|Absolute CO2 emissions pro rata: ≤21 Mt||22.6 MT||CO2 emissions of 22.6 Mtonnes (23.2) in 2017 were slightly lower than in 2016. Higher production from certain fossil-based plants in Germany was balanced by lower production from plants in the Netherlands.|
|High Performing Operations||Return On Capital Employed (ROCE): ≥8%3||7.7%4||The return on capital employed was 7.7% (0.5%). The improvement is mainly related to large impairment losses in 2016.|
|Empowered and Engaged People||Lost Time Injury Frequency5 (LTIF): ≤1.25||1.5||Lost Time Injury Frequency (LTIF) was lower than a year ago, at 1.5 (2.0), reflecting the focus that safety is a guiding principle in daily operations.|
|Employee Engagement Index:6 ≥70%||64%||The Employee Engagement Index was 64% (57%) in 2017. The improvement can be credited to a clearer strategy and purpose to drive change.|
- NPS is a tool for measuring customer loyalty and for gaining an understanding of customers’ perceptions of Vattenfall’s products and services.
The target is a positive NPS in absolute terms +2 compared to Vattenfall’s peer competitors.
- Pertains only to wind farms completed and commissioned between 1 January 2016 and 31 December 2017.
- The target for Return on Capital Employed (ROCE) was changed from 9% to 8% by Vattenfall’s owner at an extraordinary general meeting in December 2017.
- The key ratio is based on average capital employed.
- Lost Time Injury Frequency (LTIF) is expressed in terms of the number of lost time work injuries (per 1 million hours worked), i.e. work-related accidents resulting in absence longer than one day, and accidents resulting in
fatality. The ratio pertains only to Vattenfall employees.
- Documentation for measurement of target achievement is derived from the results of the My Opinion employee survey, which is conducted on an annual basis.
There are three financial targets for the Vattenfall Group, set by the owner, the Swedish state. The financial targets are related to profitability, capital structure and the dividend policy, and they are intended to ensure that Vattenfall creates value and generates a market rate of return, that the capital structure is efficient, and that financial risk is kept at a reasonable level. The targets are re-evaluated every business cycle.
The previous targets, set in November 2012, are shown in brackets in the table.
|Financial targets||New targets over a business cycle1||Old targets over a business cycle1||Outcome 2017||Comment|
|Profitability||Return on capital employed: ≥8%||Return on capital employed: ≥9%||7.7%2||The return on capital employed was 7.7% (0.5%).|
|Capital structure||FFO/adjusted net debt: 22%–27%||FFO/adjusted net debt: 22%–30%||21.5%||FFO/adjusted net debt decreased slightly compared with 2016, to 21.5% (21.6%). Adjusted net debt was stable, while FFO decreased slightly mainly due to higher interest paid in 2017 as a result of a partial repurchase of a bond maturing in 2039.|
|Capital structure||Debt/equity ratio3: 50%–90%||63.0%||The debt/equity ratio increased to 63.0% (60.5%) compared with 2016, mainly due to a reclassification of SEK 15.7 billion in nuclear power provisions to debt, which was partly offset by a positive net cash flow of SEK 7.1 billion after investments.|
|Dividend policy||Dividend: 40%–70% of the year’s profit after tax||Dividend: 40%–60% of the year’s profit after tax||2 billion4||The Board of Directors proposes payment of a discretionary dividend of SEK 2 billion for 2017.|
- 5–7 years.
- The key ratio is based on average capital employed.
- The target for debt/equity ratio was removed at an extraordinary general meeting in December 2017 when new financial targets were set by Vattenfall’s owner.
- The proposed dividend will be voted on at the Annual General Meeting on 25 April 2018.