Vattenfall with strong third quarter results despite drop in Nordic electricity generation

• Net sales rose 14.2 % to SEK 104,951 million (91,878)
• Operating profit excluding items affecting comparability rose 25.4 % to SEK 21,418 million (17,075)
• For the third quarter, operating profit excluding items affecting comparability rose 6.9 % to SEK 3,286 million (3,073)
• Profit for the period rose 28.1 % to SEK 13,249 million (10,343)

Operating profit for the first nine months, excluding items affecting comparability, rose 25.4% to SEK 21,418 million (17,075). Net sales rose 14.2% to SEK 104,951 million (91,878). During the third quarter, op-erating profit excluding items affecting comparability rose 6.9% to SEK 3,286 million (3,073). This can be credited primarily to a strong improvement in the German electricity generation operations.

The Nordic operations showed a lower operating profit – despite higher electricity prices and an earnings contribution from the combined heat and power assets acquired in Denmark – mainly due to a substantial loss of nuclear power generation, considerably lower hydro power generation due to low precipitation, and higher costs in the electricity sales and network operations. Poland has once again contributed with a strongly improved operating profit, mainly from distribution activities.

Return on equity was 19.3%, and the return on net assets was 17.7% – in both cases excluding items affect-ing comparability. Net debt increased during the third quarter by SEK 1,201 million, to SEK 55,380 million. Gross debt increased by SEK 3,180 million to SEK 72,222 million. The increase is mainly attributable to the takeover of SEK 3,015 million in liabilities as a result of the deal between Vattenfall and DONG. The net debt/equity ratio was 0.59, compared with 0.58 as per 30 June 2006 and 0.71 at the start of the year.

Vattenfall’s total electricity generation during the third quarter decreased by 2.5 TWh to 34.5 TWh, com-pared with 37.0 TWh for the corresponding period a year ago. Hydro-power generation was 6.7 TWh (8.9), nuclear power generation was 10.6 TWh (12.8), and fossil-based and other power amounted to 17.2 TWh (15.3). Of the increase, Denmark accounted for approximately 1.5 TWh. In the Nordic region as a whole, res-ervoir storage levels during the third quarter hit their lowest level since 1996. The deficit in the Nordic hy-drological balance was approximately 20 TWh at the end of September.

The entire report is available at www.vattenfall.com (select “Investors” -> “Financial Reports”).

Conference Call
At 9:30 (CET) Lars G Josefsson, CEO and Matts Ekman, CFO will host a conference call presenting the re-sults, 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 9:30 CET.
+44 (0) 207 107 0611 (UK)
+46 (0) 8 5069 2105 (Sweden)
+45 80 883 140 (Denmark)
+33 (0) 1 7070 0543 (France)
+49 (0) 69 2 2222 0593 (Germany)
Playback: A recorded version of the conference call will be available one hour after the conference call for 72 hours. To listen to the Playback please dial +44 207 108 6233 (number in UK) and enter the ID code 147 followed by the # sign.
Presentation slides: To download the presentation slides please go to http://www.vattenfall.com and select Investors -> Presentations. Slides will be available at around 09:15 CET

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 under Investors -> Presentations. Alternatively you can ac-cess the webcast via www.financialhearings.com and select “Vattenfall 31 October”. Please note that you will need “Real Player” or “Windows Media Player” to follow the presentations. Presentation images can also be downloaded from www.vattenfall.com / Investors / Presentations.

For further information, please contact:
Knut Leman, Senior Vice President Communications, phone: +46 (0) 8 739 50 31.
Klaus Aurich, Head of Investor Relations, phone: +46 (0) 8 739 65 14.
Martin May, Head of Media Relations, phone: +46 (0) 8 739 52 70.


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