FINANCIAL INFORMATION Thanks to increased production and lower operating costs, Vattenfall recorded a better result for the third quarter compared with the previous year. However, the tough market conditions necessitate continued savings.

The underlying operating profit rose to almost SEK 3.4 billion in the third quarter this year from just below SEK 2.8 billion in the corresponding period last year.

There were several reasons for the improved result. A strong quarter for hydro and wind power contributed to increased electricity generation: 41.2 as against 36.8 TWh last year, which boosted profits by half a billion SEK. Fossil electricity generation also rose. The costs were also lower than last year. In addition, sales of electricity, heat and gas all rose, and Distribution also recorded a good quarter, increasing its result by SEK 300 million.

However, despite the good quarterly result for Vattenfall as a whole, the underlying operating profit was worse for the whole period from January to September, dropping by SEK 1.8 billion to SEK 14.1 billion.

Further savings
Vattenfall’s costs have certainly declined, but our savings efforts must nevertheless continue via additional measures, says CFO Ingrid Bonde:

“The market is tough, prices are lower than ever and the hedging operations that have protected us for the last two to three years are running out. We should be proud of the fact that we have been able to mitigate part of the drop through our active measures. But even though we have made considerable savings, the bar has been raised again, and that means that we have to make real efforts to reduce our costs even further.”

Outsourcing benefits examined
One of the savings measures the management is looking at is to outsource parts of its administration and IT operations. In the first place, that applies to IT, Finance, HR, Procurement and Support Services.

“We are talking about processes where highly professional suppliers are working only with these processes and are trying to develop and make them as efficient as possible. I think we must take a look at what outsourcing would mean in terms of benefits and opportunities for us. We don’t have any figures on the cost savings today, but we can clearly see that there would be efficiency benefits,” says Vattenfall’s CEO Magnus Hall.

Wind broadens the base
The new strategic orientation that was recently presented highlighted further investments in wind power as a key area. Because at the same time as the electricity surplus in northern Europe is certainly a cause of the currently low prices, wind power is helping to make Vattenfall less dependent on the electricity market.

“Our investments in wind power are part of our transition towards more sustainable production, and that actually produces a better business mix for us, given that wind power offers a rather more reliable cash flow. That makes us less exposed overall to the very low and highly turbulent energy prices, which is good for the company,” says Ingrid Bonde.

More information about the quarterly results

Hall and Bonde comment the financial report

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