Large impairment losses – further cost-cutting and strategic review

Vattenfall reports a third quarter operating loss as a result of impairment charges of SEK 23.1 billion and a continued difficult market situation. Vattenfall is now raising its cost-cutting target for next year and conducting a further review of its investment programme. Parallel with this, a strategic review is being initiated.

Period in summary

• Net sales amounted to SEK 34,734 million (37,057) for the quarter and SEK 117,220 million (125,097) for the nine-month period.
• The underlying operating profit was SEK 2,750 million (4,074) for the quarter and SEK 15,911 million (21,129) for the nine-month period.
• Operating profit was SEK -19,435 million (4,893) for the quarter and SEK -9,238 million (-10,112) for the nine-month period.
• Profit was SEK -18,065 million (1,538) for the quarter and SEK -12,182 million (-15,526) for the nine-month period.
• Electricity generation amounted to 36.8 TWh (40.0) for the quarter and 126.6 TWh (133.8) for the nine-month period.
• Impairment losses of SEK 23.1 billion were charged against operating profit for the third quarter, and net after tax, operating profit for the quarter was charged with SEK 19.9 billion in impairment losses.

CEO’s comments:
– As we now present the results for the first nine months of the year I can comment that like other electric utilities, Vattenfall is experiencing difficult market conditions with weak demand, a surplus of generation capacity and historically low electricity prices, comments Magnus Hall, President and CEO of Vattenfall.

Compared with the corresponding nine-month period a year ago, Vattenfall is showing a lower underlying operating profit, which is mainly due to lower production margins and lower production volumes. Lower costs have only partly compensated for these negative factors.

Against the background of the market situation, Vattenfall has decided to recognise impairment losses of SEK 23.1 billion in the third quarter, mainly for fossil-based assets and goodwill in the Trading operation.

Vattenfall is now carrying out a number of additional efficiency-improvement and cost-cutting measures, and is continuing to divest assets that do not belong to the Group’s core businesses or are judged to be unable to meet the company’s return requirements. The cost-cutting programme for 2015 is being expanded, and the investment programme is being reviewed.

Vattenfall will continue to prioritise investments in renewable electricity generation, however. Vattenfall’s thousandth wind turbine was installed this summer. During the quarter a decision was made to build the Sandbank offshore wind farm in Germany and another two land-based wind farms in Sweden.

– It is with a great sense of commitment that I have undertaken to lead Vattenfall as its new President and CEO, and to be able to tackle the challenges we see, a review of Vattenfall’s vision and strategic direction has been initiated, comments Magnus Hall.

 
Vattenfall discloses this information pursuant to the Swedish Securities Market Act.

Issued by Vattenfall’s Press Office, telephone: +46-8-739 50 10, press@vattenfall.com.

  
Vattenfall is a Swedish owned energy company with operations in Sweden, Germany, the Netherlands, Denmark, UK and Finland. Since 1 January 2014 Vattenfall has started to operate from two units; the Nordic region and UK/ Continental Europe. Vattenfall’s vision is to create a strong and diversified European energy portfolio and to be among the leaders in developing an environmentally sustainable energy system.

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