Vattenfall: Stable result for 2007, challenges increasing

• Net sales 2007 rose 5.8% to SEK 143,639 million (135,802).
• Operating profit 2007 rose 2.7% to SEK 28,583 million (27,821).
• Profit for the year (after tax) rose 4.2% to SEK 20,686 million (19,858).
• Operating profit for the fourth quarter 2007 rose 24.7% to SEK 6,752 million (5,413).

Stable earnings and lower debt
Operating profit for 2007 rose 2.7% to SEK 28,583 million (27,821). The earnings improvement is attributable primarily to German electricity generation and is explained by a high level of available capacity of coal-fired plants and better prices received on the European Energy Exchange in Germany. In the Nordic countries, hedging helped offset the effects of lower spot prices, but operating profit nevertheless decreased by 5.2.
Earnings for Poland improved slightly, mainly due to currency effects. Consolidated net sales rose 5.8% to SEK 143,639 million (135,802). Profit for the year (after tax) rose 4.2% to SEK 20,686 million (19,858).
Net debt decreased by SEK 5,667 million to SEK 43,740 million. The net debt/equity ratio was 35.2% (45.9%) at 31 December 2007.

Sharp rise in wind power generation
Vattenfall's total electricity generation increased by 1.3% in 2007, to 167.6 TWh (165.4). Hydro power generation increased by 4.0% to 36.6 TWh (35.2), due to improved water levels. Nuclear power generation decreased by 7.1% to 51.3 TWh (55.2), mainly due to the outage at the Brunsbüttel plant in Germany during the second half of the year. (The outage at the 50% owned Krümmel nuclear power plant in Germany did not affect consolidated volumes, since the plant is not consolidated in Vattenfall’s accounts.) Fossil-based power increased by 5.3% to 77.7 TWh (73.9), and wind power increased by 117% to 1.3 TWh (0.6). Electricity generation based on biofuels and waste was unchanged at 0.6 TWh. Heat production increased by 2.8% to 36.2 TWh (35.2).
At the end of the year, Vattenfall finished construction of Sweden’s largest wind farm and the world’s third-largest offshore wind farm – Lillgrund – located in the Oresund Strait between Malmö and Copenhagen. The plant comprises 48 wind turbines with a combined installed capacity of 110 MW and production output equivalent to the electricity consumption of 60,000 Swedish households.

Lower allocation of CO 2 emission allowances
The national allocation plan for the second trading period, 2008–2012, was decided on during the autumn. In Germany Vattenfall is expected to have an emission allowance deficit of approximately 28–33 million tonnes/year. Assuming a price of EUR 20/tonne, this will give rise to a higher annual net cost for Vattenfall of approximately EUR 400–500 million (SEK 3.8–4.7 billion). In Denmark the deficit is expected to amount to 1.8 million tonnes, corresponding to an annual cost of approximately SEK 250 million. In Poland the deficit is estimated to be 0.7–1.0 million tonnes, corresponding to an annual cost of approximately SEK 170 million. Vattenfall’s electricity generation in Sweden will be only marginally affected by the new allocation levels, since it is virtually free of CO2 emissions.

Dividend
Profit attributable to shareholders in the Parent Company amounted to SEK 19,769 million (18,729) or SEK 150.11 (142.21) per share. The Board of Directors proposes a dividend of SEK 8,000 million, corre-sponding to SEK 60.74 per share.



Changes in Vattenfall's Executive Group Management
Effective 1 February, Vattenfall’s Executive Group Management has the following composition:

Lars G. Josefsson CEO
Jan Erik Back CFO
Tuomo Hatakka Head of Business Group Central Europe
Hans-Jürgen Meyer Vattenfall Europe AG
Hans von Uthmann Head of Business Group Nordic
Hélène Biström Business Group Nordic
Helmar Rendez Head of Group Function Strategies
Ann-Charlotte Dahlström Head of Group Function Human Resources
Carolina Wallenius Head of Group Function Communication

Vattenfall discloses the information provided herein pursuant to the Swedish Securities Market Act.

The complete report is available on www.vattenfall.com

Conference call
Commencing at 10:00 (CET) Lars G Josefsson, CEO, and Jan Erik Back, CFO, will host a conference call presenting the results, followed by a question & answer session. The conference call will be webcast.

To participate in the conference call, please dial one of the following numbers a few minutes before 10:00 (CET):
+44 (0) 20 7107 0611 (UK)
+46 (0)8 5069 2105 (Sweden)
+33 (0)1 7070 0543 (France)
+49 (0) 69 2 2222 0593 (Germany)

Replay
A replay will be available one hour after the conference call for 72 hrs.
To request the replay, please dial +44 207 108 6233 and enter the code 14340 followed by the # sign.

Presentation slides
To download the presentation slides please go to www.vattenfall.com

Webcast
To follow Vattenfall’s presentation on the Internet (audio and slides), please click on the link “webcast” which will be displayed on www.vattenfall.com. Alternatively you can access the webcast via www.financialhearings.com, select “Vattenfall 7 February”. Please note that you will need “Real Player” or “Windows Media Player” to follow the presentations.



For further information, please contact:
Klaus Aurich, Head of Investor Relations, phone: +46 (0)8 739 65 14, mobile +46-(0)70-539 65 14.
Martin May, Head of Media Relations, phone: +46 (0)8 739 52 70, mobile +46-(0)70-539 52 70.


From Vattenfall's Press Office, telephone: +46 (0)8-739 50 10.