Vattenfall’s Year-end Report 2015: Low electricity prices put pressure on profitability – continued shift to renewables

Vattenfall’s 2015 full-year results were marked by low electricity prices and substantial impairments losses in the second quarter, but also by continued efficiency improvement aimed at lowering costs. During the year Vattenfall took additional steps in transforming its operations towards more renewable production and a customer-centric focus.

Fourth quarter and full year summary

• Net sales of SEK 45,499 million (48,725) for the quarter and SEK 164,510 million (165,945) for the full year
• Underlying operating profit of SEK 6,449 million (8,223) for the quarter and SEK 20,541 million (24,133) for the full year
• Profit after tax of 2,460 million (3,900) for the quarter and SEK -19,766 million (-8,284) for the full year
• Electricity generation of SEK 46.2 TWh (46.2) for the quarter and 173.4 TWh (172.9) for the full year
• Items affecting comparability of SEK -43.5 billion for the full year (-26.3), of which SEK 36.8 billion in impairment losses (23.8)
• On account of the negative result after tax, the Board of Directors proposes, in accordance with Vattenfall’s dividend policy, that no dividend be paid for 2015

CEO’s comments:
“The major challenge in 2015 continued to be the impact that today’s very low electricity prices have on Vattenfall’s profitability and on the valuation of our assets. Unfortunately, combined with new regulatory requirements this led to the recognition of further impairment losses during the summer,” says Magnus Hall, President and CEO of Vattenfall.

The impairment losses were recognised partly as the result of Vattenfall’s decision to close reactors 1 and 2 at the Ringhals nuclear power plant earlier than planned. The decision was made due to weak profitability and rising costs.

“Continued falling electricity prices and a nuclear tax corresponding to 0,07 SEK per kilowatt-hour have put Swedish nuclear power in a critical situation. The remaining reactors will be needed for many years into the future if we are to be able to shift to an entirely renewable energy system in a responsible and cost-effective manner. Also hydro power, which is the foundation of our long-term power generation, is now being hurt by the combination of low prices and very high taxes,” says Magnus Hall.

During the year Vattenfall continued to review investments and cut costs, which have now been reduced by nearly 30% compared with the cost base in 2010. Parallel with this, Vattenfall has continued its transformation towards a more sustainable production portfolio. During the autumn potential bidders were invited to state their interest in Vattenfall’s German lignite assets.

Vattenfall also decided on a new growth target for renewables, entailing the construction of 2,300 MW of wind power capacity by 2020. Partnerships will play an important part in the growth strategy. In 2015 Vattenfall signed a partnership agreement with Swedish pension fund AMF, which purchased a share of the Ormonde wind farm in the UK.

“The ongoing change of our energy system is dramatic – but also very exciting, and is giving rise to entirely new business opportunities for Vattenfall. I am confident that our strategy and the adaptations we have made and must continue to make will leave us well prepared to secure our position as a reliable partner to our customers and society,” says 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, e-mail: press@vattenfall.com.

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