Vattenfall has recorded a profit after tax of $1.25bn but warm weather saw a decline in the company’s sales for the first quarter of 2014.

The Swedish company announced its results this week. The profit came about mainly owing to capital gains and an improvement in net financial items.

“We continue to face tough market conditions, and in the near and medium terms we cannot see any fundamental improvement in demand and prices for our products and services,” Vattenfall Chief Executive Oystein Loseth (pictured) said in a statement.
Oystein Loseth
“In terms of production we had a good first quarter, with high availability at all of our plants. Our nuclear power plants achieved availability of nearly 100 per cent, while wind power showed a significant increase. However, on account of warm weather, our revenues fell as a result of lower electricity prices and lower sales of heat and gas, although this was largely compensated by forward hedges.”

Vattenfall carried out a number of divestments during the quarter. Among other things, the majority shareholding in the electricity grid in Hamburg was sold for a capital gain of approximately SEK 3 billion.

Investments in wind power increased and accounted for nearly 40% of investments in electricity generation. This pertained most notably to the construction of the Dan Tysk wind farm in Germany, one of Vattenfall’s largest wind power investments ever.

On 1 January 2014 a new, regional Group structure was implemented – forming the Nordic and Continental/UK regions. This split gives the operations greater opportunities to act according to the specific conditions in the respective markets.

Vattenfall said its ongoing cost-cutting programme worth $690m for the years 2014–2015 is on track, which compared with the cost base in 2010 would entail a cost reduction of approximately 25 per cent by year-end.

“To meet our goals – both our financial and sustainability targets – we must continue to do everything we can to further streamline and reprioritise our operations and deliver under our cost-savings programmes,” added Løseth.

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