Vattenfall has reports a substantial second quarter loss due to impairment losses of approximately SEK 36 billion (EUR 3.8 billion). Higher provisions and low electricity prices also have a negative impact. The company added that wind power generation is rising in line with its strategy to shift to a more sustainable energy portfolio.
Very low electricity prices have put pressure on margins for conventional generation. As a result of this, Vattenfall’s board of directors has decided to recognise impairment losses, the company said in a press release.
Weak profitability along with the subsequent closure of Ringhals 1 and 2 entail an impairment loss of SEK 17 billion (EUR 1.8 billion). The lignite operations are also being affected by low prices and higher business risk, which together represent impairment losses of SEK 15 billion (EUR 1.5 billion). Together with SEK 4 billion (EUR 427 million) in impairment losses for the Moorburg plant and higher provisions, profit for the second quarter was charged with approximately SEK 40 billion (EUR 4 billion).
During the quarter, the sale of Vattenfall’s fossil-based generation assets in Denmark was completed, in line with the strategy to shift to a more sustainable energy portfolio. Parallel with this, investments in wind power increased.
The new wind farms – DanTysk in Germany and Clashindarroch in the UK – contributed to an increase in wind power generation corresponding to the electricity consumption of more than 400,000 households.
“Vattenfall’s strategic transformation, with greater customer focus and more renewable power generation, continues. The business area organisation that we have now implemented provides favourable conditions to accelerate the pace of this transformation, but we must also continue working hard to reduce our costs.
“The personnel reduction programme announced during the preceding quarter is under way, but has been delayed somewhat due to the reorganisation. Activities to identify additional cost reductions are in progress in the entire organisation,” said Magnus Hall, President and CEO of Vattenfall .