Financials Increased production and reduced costs delivered improved results despite falling electricity prices.

Overall, there was an improvement in Vattenfall's underlying operating profit of about 5 per cent, from SEK 7.7 billion (about EUR 840 million) to SEK 8.1 billion (about EUR 885 million), when the first three months of the year are compared with the same period last year.

The improvement principally derives from increased generation, thanks, among other things, to good water supply within hydro power, higher capacity in Ringhals 4 and greater availability in Forsmark 1. However, other business areas have also contributed to the improved results:

 "Our customer base and sales within Customers & Solutions is growing, at the same time as we are regularly developing new models to sell our products to the customers, and we are also expanding within Wind and Heat. All of this is important as it makes us less dependent on prices on the whole sale electricity market," says Magnus Hall, Vattenfall’s President and CEO.

Prices still going down
Electricity prices are continuing to fall, with reduced production margins as a consequence, which in turn means that Vattenfall will have to continue to cut costs.

"We have achieved a lot in terms of costs, but we are not there yet and we need a lower overall cost base.  The work has to continue. The next step will be to undertake the outsourcing of administrative services that we started previously.  By using external specialists for these services we will save costs and become more flexible," says Ingrid Bonde, Vattenfall's CFO.

The lignite business was sold after the end of the first quarter, and is consequently not included in the figures for the quarter. However, it has already been announced that the sale will have a negative effect of between SEK 22 and 27 billion (about EUR 2.4 billion to 2.9 billion)on the second quarter.

"Nevertheless, this divestment is good for all concerned. It is good for Vattenfall as it clarifies our focus on sustainable production, it is good for the buyer, which is already active in the area, and it is good for the employees who will get an owner who thinks that this is a very important business for them," says Magnus Hall.

Important year ahead
Before the agreement enters into force, Vattenfall's owner will need to confirm the transaction, which will take place within a couple of months. And overall 2016 will be an important year for Vattenfall according to Magnus Hall.

"To start with, the lignite deal has to be completed. In addition to that, there are a number of important issues ahead of us. The costs for the nuclear phase-out in Germany are one such issue. We also have the issue of the output tax on nuclear power in Sweden, which we have already warned will have to be repealed if more nuclear power plants, and thereby energy supply, are not to be threatened. It is a year in which the transformation of Vattenfall will start in earnest, where the core is a climate-neutral generation portfolio, combined with customer-centred energy solutions.  We are also planning bids for a number of substantial wind power projects. When this year is over it will be very interesting to see where we are," says Magnus Hall.

First quarter review and a look ahead

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