Strong winds help lift Vattenfall's 9-mo profit

Swedish utility Vattenfall AB reported a 10.7% year-on-year increase in underlying operating profit for January-September 2019 as it enjoyed a “solid contribution” from its wind business, coupled with improvement at its nuclear and hydropower operations.

The state-owned utility closed the first nine months of the year with an underlying operating profit of SEK 16.9 billion (USD 1.74bn/EUR 1.57bn), up from SEK 15.3 billion a year before, as all of its underlying operations showed a positive development, helped by higher prices, increased power generation and sales.

The Power Generation division, which includes hydropower and nuclear power production and trading operations, was the main contributor, accounting for SEK 11.3 billion of the total operating profit. The result of the Customers and Solutions and Distribution segment, however, halved as gas sales dropped due to the warmer weather. The underlying operating profit of the wind business rose to SEK 2.5 billion from SEK 1.9 billion in the year-ago period as generation was up after the commissioning of the 407-MW Horns Rev 3 offshore wind complex in Denmark and the 29-MW Slufterdam wind farm in the Netherlands.

Thanks to the divestment of its heat operations in Hamburg and the sale of production rights to German nuclear assets, the company boosted its net profit to SEK 14.4 billion from SEK 8.9 billion. This result, however, includes costs related to Storm Alfrida at the start of the year. Net sales grew by 12% in annual terms to SEK 120.2 billion.

More details about the company's performance are available in the table below.

Vattenfall stressed on the fact that it has managed to achieve for the first time its targets for return on capital employed (ROCE) and funds from operations in relation to adjusted net debt (FFO/adjusted net debt) in the 12 months through September. ROCE stood at 9.2%, while the company's target is 8% for the full 2019. The funds from operations in relation to adjusted net debt (FFO/adjusted net debt) target is 22%-27%, with a result of 24.5%, on a rolling 12-month basis.

WIND BUSINESS

The wind division's underlying operating profit before depreciation, amortisation and impairment losses came at SEK 6.5 billion, rising from SEK 5.28 billion a year back. The improvement came as a result of the addition of fresh capacity and improved production at existing power plants due to the strong wind conditions. Net sales of the segment increased to SEK 9.5 billion from SEK 7.84 billion.

The reporting period was marked by the winning of the tender for sites III and IV of the Hollandse Kust Zuid zone off the coast of the Netherlands. In line with its sustainability goals, Vattenfall aims to commission at least 2,300 MW of wind and solar capacity between 2016 and 2020, which will expand its overall renewables capacity to 4,100 MW by end-2020. Some 1,162 MW went online in the third quarter of this year.

(SEK 1.0 = USD 0.103/EUR 0.093)

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