Vattenfall’s report for the third quarter shows that several factors are driving its development in the right direction. The final divestment of the company’s lignite operations was an important step in adapting its portfolio and hence to form the new Vattenfall.
“The lignite sell-off has improved our balance sheet, especially as the buyer took over our future undertakings in terms of pensions and mining operations. Also, the political energy agreement in Sweden this summer created better preconditions for Vattenfall’s hydro and nuclear power operations. This, together with other cost reductions that we have achieved ourselves, mean that we have now been able to start recovering part of our financial strength,” says Ingrid Bonde, Vattenfall’s CFO.
Wind in the sails
The third quarter has been positive for Vattenfall in other ways too: Vattenfall won the tendering process for the Danish nearshore wind farm bid off the coast of Jutland, and the German wind farm of Sandbank was able to start production earlier than planned.
“We also acquired 120,000 new customers in electricity sales, electricity distribution and heat since the beginning of the year. And it’s encouraging to see that more and more customers recommend us to others as their energy provider of choice,” says Magnus Hall, President and CEO of Vattenfall.
“We have also taken the decision to convert our lignite power plant at Klingenberg in Berlin to gas-fired operation, which reduces CO2 emissions by 600,000 tonnes annually.”
What are the most important areas for the rest of the year?
“One question addresses our responsibility for the German nuclear waste in line with a recent legal proposal. Then we will continue our efforts within wind, where we have clear growth targets. A third key issue to which there will probably be no answer before the beginning of next year is that we can retain our concession in Berlin,” says Magnus Hall.
Vattenfall reports an underlying operating profit for its remaining operations, i.e. when the lignite operations are subtracted, of SEK 14.6 billion for January to September, which is an increase of SEK 0.5 billion compared with 2015.The focus on reducing costs and significantly lower depreciation as a result of earlier impairment losses contributed to this result, although it was weakened by lower electricity prices.
The quarterly report also shows that Vattenfall’s impairment losses so far this year amount to a total of about SEK 30 billion, of which the divestment of its lignite operations represents SEK 21.6 billion.
Watch the video with comments by Magnus Hall and Ingrid Bonde