State-owned Swedish energy company Vattenfall announced improved operating profit in the first half of the year, but acknowledged it was involved in a challenging market, resulting in significant impairments for its lignite operations.
“The first half of the year was characterized by stability in Vattenfall’s operations and a number of important events in our external operating environment that affect the company, such as the Swedish energy agreement,” said Magnus Hall, Vattenfall President and CEO. “But the business situation remains tough, with low electricity prices and essentially unchanged market volumes. Against this background, it is nevertheless gratifying to report a slightly improved underlying operating profit of SEK 11 billion for the first half of the year.”
Vattenfall’s underlying operating profit for the first half of the year was SEK 11 billion, or $1.3 billion.
At CleanTechnica, we might normally pass on mentioning Vattenfall’s larger operations, given its involvement in electricity generation in fields other than renewable energy technologies. Vattenfall is undoubtedly one of the most important renewable energy developers in the world, and was recently highlighted for its involvement and now complete ownership of the European Offshore Wind Deployment Centre, also known as the Aberdeen Offshore Wind Farm.
What’s interesting about the larger Vattenfall’s financials is its acknowledgement that “The market situation has given rise to a need to recognize impairments — mainly for fossil fuel assets.” Specifically, Vattenfall labelled the impairment of its fossil fuel assets at a total of SEK 30 billion, of which SEK 21 billion was attributable to its lignite operations.
Vattenfall minimized the economic impact of these fossil fuel impairments by selling off its lignite operations earlier this year, saying that “The negative effect would have been greater if Vattenfall were to hold and continue running the operations, as this would have resulted in larger impairments already in this interim reporting period.”
The Company announced its intention to divest itself of its lignite operations in April (PDF), revealing that it would divest all shares held in its lignite operations to a consortium consisting of Energetický a Průmyslový Holding a.s. (“EPH”) and PPF Investments Ltd (“PPF”).
“Through the sale we have clarified Vattenfall’s future focus on delivering what customers want in the form of electricity and heat based on a larger share of renewable production,” explained Magnus Hall. “Germany continues to be one of Vattenfall’s most important markets, with operations in all core business areas.”
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