Vattenfall has reported a higher underlying operating profit for Q3, with the Swedish utility’s chief executive Magnus Hall putting the performance down to successful cost cutting and higher production.

The company posted an underlying operating profit of 3,388 million crowns ($398.10 million) versus 2,750 million crowns during the same quarter a year ago.
Magnus Hall of Vattenfall
“The profit increase is mainly attributable to higher production volumes and lower operating costs,” Hall said, adding, “Despite substantial reductions in Vattenfall’s costs since 2010, cost-cutting efforts must continue.”

The company’s strategy is informed by market conditions remaining challenging, with a capacity surplus and low electricity prices squeezing margins, especially in the Nordic countries.

Meanwhile the company also announced that it expects to reach an agreement on the sale of its lignite coal-fired power plants in Germany during the first half of 2016, after inviting potential buyers to place bids in September.

In line with Germany’s move to reduce output from polluting lignite plants, the utility said on that it had agreed to put two units of its Janschwalde lignite power plant on stand-by mode in October 2018 and October 2019 respectively, shutting them down permanently in four years.

That would reduce its lignite power fleet by 1,000 MW from about 7,800 MW, and would help to save about 8 million tonnes of carbon emissions each year.