Vattenfall: Higher Underlying Operating Profit - Impairment Losses in Second Quarter Had Negative Effect on Profit for Full Year
Despite challenging market conditions Vattenfall grew its 2013 underlying operating profit. Electricity generation rose, with a high level of availability especially for nuclear power, and further reductions were made in operating expenses. However, net profit for the year experienced a severe negative impact from impairment losses.
Summary January-December 2013
- Net sales rose 2.6% to SEK 171,684 million (167,313).
- The underlying operating profit rose 1.3% to SEK 27,900 million (27,530).
- Operating profit amounted to SEK -6,453 million (25,958). Profit was charged with SEK 30.1 billion in impairment losses.
- Profit for the year (after tax) amounted to SEK -13,543 million (17,047). Profit for the year was charged with impairment losses of SEK 24.8 billion.
- Electricity generation increased by 1.6%, to 181.7 TWh (178.9).
- Due to the negative result after tax, the Board of Directors proposes - in accordance with Vattenfall's dividend policy - no dividend for 2013.
- I am pleased to report a higher underlying operating profit for 2013, despite the challenging market conditions. The positive outcome from previous years' forward hedges and successful cost-cutting measures have compensated for the negative effect of lower German wholesale electricity prices and higher costs for purchases of CO2 emission allowances, comments Øystein Løseth, President and CEO of Vattenfall.
Vattenfall cut its annual operating expenses by a further SEK 3.2 billion during the year and by more than SEK 9 billion during the last three years. Vattenfall also showed strong cash flow after investments. However, as a result of higher business risks, Vattenfall recognized impairments of asset values totaling SEK 30.1 billion in 2013.
In terms of production 2013 was a very good year for Vattenfall, especially in nuclear power, where generation reached the second-highest level since the start of operations 40 years ago. This can be credited in large part to recent years' modernization work. Lignite-fired generation also had very good availability. Wind power generation also increased, while hydro power generation decreased due to lower water supply.
Most of Vattenfall's growth investments are in renewable energy. During the year Vattenfall continued to invest in large-scale wind power projects. For example, in July 2013 Vattenfall decided to build two new wind farms in the UK, encompassing 94 wind turbines.
- Vattenfall's production portfolio, with a large share of hydro power, nuclear power and lignite-based power is very profitable, and through our efficiency improvement measures we have created a solid foundation for successfully continuing to carry out the shift to an environmentally sustainable energy production, concludes Øystein Løseth.
Vattenfall discloses this information pursuant to the Swedish Securities Market Act.
Vattenfall is a Swedish owned energy company with operations in Sweden, Germany, the Netherlands, Denmark, UK, France and Finland. Vattenfall's vision is to create a strong and diversified European energy portfolio and to be among the leaders in developing an environmentally sustainable energy system.