Vattenfall reported an operating profit of SEK 10 billion (EUR 1.08 billion) for the first half of the year. Availability for all types of generation was favourable, but demand remained weak, and electricity prices fell further.
Operating profit was positively affected by SEK 3.1 billion (EUR 0.34 billion) in capital gains and negatively affected by higher provisions totalling SEK 5.5 billion (EUR 0.6 billion) for future expenses for the decommissioning of nuclear power in Germany.
Profit for the period after tax was negatively affected by SEK 4 billion in higher provisions primarily for future expenses for the decommissioning of nuclear power in Germany. Following an extended period of falling interest rates, Vattenfall has decided to lower the discount rate it uses to calculate provisions, resulting in an increase in these. Cash flow and the underlying operating profit are not affected.
“The Group’s operations have performed well, with good availability for all types of our generation,” comments Øystein Løseth, President and CEO of Vattenfall.
“ However, demand continues to be weak, the surplus of generation capacity remains, electricity prices have fallen further in 2014, and CO2 prices are low. This is a pattern in the market that we have lived with for quite some time.
“We have managed to counteract this trend to some extent through substantial cost-cutting and by lowering our debt through the sale of some of the company’s non-core businesses. We have improved efficiency and increased the availability of our power plants, particularly in nuclear power, and we have strengthened our cash flow by scaling back on investments. Our ongoing cost-cutting programme is on track, and by year-end our accumulated cost reductions are expected to amount to approximately 25% compared with the cost base in 2010. I am proud about what we have achieved at Vattenfall.”