Vattenfall’s profits steady at $1.7bn but cost cutting will continue

Swedish energy company Vattenfall has posted a first quarter operating profit of SEK 11bn ($1.7bn), a result level to the same period of 2012.

The profits came despite what chief executive Oystein Loseth (pictured) called “challenging market conditions” and the company’s books were boosted by the SEK 8.2bn sale of its electricity distribution and heating business in Finland.

Despite the result, which Loseth said today was “strong”, the market outlook remains weak and he said Vattenfall would continue with its cost-cutting programme, which has so far seen the loss of around 2500 jobs.

The company wants to lower costs by SEK 3 billion in 2013 and by another SEK 1.5 billion in 2014.

In a press conference today, Loseth said Vattenfall was looking at selling its stake in a German coal plant and three Danish plants with a combined capacity of 1400 MW.

He said the company was “on track” with its divestment programme and said of the market outlook now, compared to Q1 of 2012: “Not a lot has changed. We have relatively low prices and it looks like we are going to have them at this level for a very long time.”

He said “growth in the economy and growth in demand” could lift market conditions but added that the situation was flatlining at the moment: “There is not a lot of upside, but there is not a lot of downside either.”

He said that conditions would worsen if we have a “collapse of the EU ETS system ” which is almost there now”, but stressed that he believed the “ETS is probably the best system to make sure we have an efficient market in Europe”.

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