In spite of lower revenues, Swedish utility Vattenfall AB closed the first quarter of 2020 with a 5.3% year-on-year rise in underlying operating profit, fuelled by asset sales and an expansion in the wind energy field.
The state-owned utility posted a first-quarter profit of SEK 6.9 billion (USD 704.8m/EUR 643.2m), up from SEK 6.42 billion a year before, due to increased earnings from operating activities and a one-off effect from the sale of nuclear power production rights in Germany. The improvement was partly offset by a drop in power prices and a decline in electricity consumption caused by restrictive measures related to the COVID-19 coronavirus pandemic. Underlying operating profit climbed to SEK 10.19 billion from SEK 9.67 billion.
Operations in the wind segment have still not been significantly affected by the COVID-19 crisis, though the economic environment has made the company change some of its plans, betting on “stricter prioritisation of projects.” One such step is the decision to not compete in the upcoming tender for the 700-MW Hollandse Kust North zone off the Netherlands.
With increased wind power production and net sales, first-quarter underlying operating profit for the Wind segment grew to SEK 2.15 billion from SEK 1.49 billion a year back. This was mainly a result of the strong wind conditions and the commissioning of the 407-MW Horns Rev 3 offshore wind farm in Denmark.
“Thus far we have not seen any significant impact from COVID-19 on our renewable energy investment projects,” said CEO and president Magnus Hall.
The following table shows more details about the Q1 performance.
| Amounts in SEK millions, unless otherwise noted |
Q1 2020 |
Q1 2019 |
| Net sales |
48,160 |
49,552 |
| - of which from Wind segment |
4,732 |
3,657 |
| EBITDA |
16,900 |
12,587 |
| Operating profit (EBIT) |
12,313 |
8,168 |
| Underlying operating profit |
10,187 |
9,673 |
| - of which from Wind segment |
2,146 |
1,486 |
| Profit for the period |
6,900 |
6,420 |
| Electricity generation (TWh) |
33.1 |
35.9 |
| - of which wind power (TWh) |
3.6 |
2.5 |
| ROCE (%) |
9.4 |
7.1 |
| FFO/adjusted net debt (%) |
25.2 |
18.1 |
Due to the overall economic uncertainty and sluggish market conditions, Vattenfall’s board of directors has proposed the payout of a reduced quarterly dividend of SEK 3.6 billion, instead of the previously planned total allocation of SEK 7.2 billion.
In a “situation with dramatically deteriorated market conditions,” the utility is working intensively to align costs, investments and risks, it said. It remains committed to pursuing its goal for fossil-free generation. Last year, it brought live 1,226 MW of renewables capacity.
(SEK 1.0 = USD 0.102/EUR 0.093)
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EOWDC. Source: Vattenfall AB (group.vattenfall.com)
