High electricity prices and income from acquisitions were key contributors to the sharp rise in profits reported by Vattenfall, the Swedish state-owned energy company.

Announcing the figures yesterday, Vattenfall’s President and CEO, Lars Josefsson said that during the first half of 2001 acquisitions had doubled to 32bn Swedish Krona ($3.1bn) and operating profit had risen to 5.1bn Krona compared with 3.3bn Krona for the corresponding period last year.

Average daily electricity prices on the Nord Pool spot market had risen during the early part of 2001 after record lows for a number of years.

Vattenfall, the Nordic region’s biggest power firm, said the company was set to enter a “consolidation phase” following a period of strong expansion in the liberalising European energy market. Expansion into the German market following the acquisition of HEW, had positioned the company as the third largest electricity supplier in the country.

“During the coming period, we shall focus on operations and customers as a necessary step to achieve our objectives,” said Josefsson.

Other additions to the group during the year to June included the purchase of the Parnu Soojuus heat plant, Swedpower International and AB Kallstrommen. In its effort to shift its focus to its core business and concentrate in the northern European power market, Vattenfall sold assets in Southeast Asia and South America during the first half of the year.

Vattenfall acquired assets via its German partner, energy firm HEW . It recently signed a shareholders’ agreement with US energy company Mirant to each hold 44.76 per cent of Berlin-based utility Bewag’s capital stock and 46 per cent of voting rights.

In Poland, the company acquired 32 per cent of distribution company GZE.

Vattenfall in mid-July agreed to sell its wholly owned subsidiary Oslo Energi to Norwegian power group Hafslund , and will become part owner of a new Norwegian power group that will be formed as a result of the deal.

Josefsson said that liberalization of energy markets in Europe was offering greater freedom to customers, more effective pricing and lower transaction costs. But he cautioned that with further consolidation, competition would become tougher and margins would decrease – leading to the need for greater economies of scale.

The company said it would be concentrating on business in the Nordic countries, Germany and Poland. It aimed to increase sales from 28 to 100 billion Swedish Krona and to triple its current 2 million customer base.