The difficult market conditions are heavily affecting Vattenfall’s result for the first quarter. Magnus Hall cannot foresee any imminent improvement in the conditions on the European energy market.
“The outlook is not good. In order to stay competitive and fit for the future we need to allocate our resources most efficiently. This leads to a range of cost saving measures, amongst which are employee reductions,” he says.
1,000 full time equivalents will be made redundant. Employees in both business areas and staff functions will be affected.
The exact units are not specified at this point according to Hall.
CFO Ingrid Bonde explains that the result in large parts was saved by old hedges ensuring that Vattenfall was paid an electricity price above the current market price.
“We have actually had hedges that enabled us to live on old market prices,” she says. “But we are now getting closer to the level of today’s market prices. If we exclude the benefit we have had of these cushions from the drop in the energy prices, we actually only have half of the result we have delivered for the last two or three years and we would only have half of the result for the first quarter this year. We have been very helped by these hedges.”
Stop and go
According to Bonde there are no imminent signs that energy prices will increase in the near future.
“We know that we will have at least four or five more years before we see prices picking up. Unfortunately, if the trend of downward demand continues, it might be even six, seven or eight years before we are safely out on the other side of this. And that is why we have to make sure that we allocate the money we have so that there is enough if this trend lasts longer so that we can invest properly. That is why we have to have a stop and go approach to make sure that there is something in the vision of 2025.”