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Swedish state owned Vattenfall in billion writes down as well as a split of North and south divisions

Tuesday, 23 July 2013
Swedish state owned Energy Company, Vatenfall AB, the Nordic region’s largest utility company, writes down the value of its assets by Skr29.7 billion.

The company will invest less and push through deeper cost cuts after writing down the value of its assets in northern Europe by Skr29.7 billion .This is due to the poor market and higher business risks, according to a press release from the company.

At the same time, management has decided to split the business in to Nordic and continental European part.
“Like other European power producers, Vattenfall is feeling the effects of increasingly adverse market conditions and higher business risks,” Vattenfall Chief Executive Officer Oeystein Loeseth said in a statement. “The market will not recover in the foreseeable future, and to reflect the elevated business risk, we have valuated our future cash flows with a higher risk factor.”

According to the press release though, Vattenfall says “The new structure will allow the regions to focus on their respective core issues and will open up opportunities for risk-sharing in Vattenfall’s continental operations over time. Vattenfall’s Chairman of the Board of Directors Lars G Nordström and CEO Øystein Løseth say in a joint statement.

The write down the company is pursuing includes the write-downs of the following in the second quarter

Gas and hard coal-fired power plants in the Netherlands: SEK 14.5 billion,
Hard coal-fired power plants in Germany: SEK 4.1 billion,
Combined heat and power plants in the Nordic region: SEK 2.5 billion,
Goodwill originating mainly from our trading operations: SEK 6.8 billion,
Other assets: SEK 1.8 billion.

"With the package we are presenting today, I feel confident that we are doing the right thing," says Østein Löseth in a press release.
Reduced investments

Additionally Vattenfall wants to pulls down investments planned for the period 2013 to 2017, from Skr123 billion to Skr105 billion.
The company reported a net loss of Skr23.7 billion in the second quarter, compared with a profit of Skr874 million in the same period a year earlier.
by Scancomark.com
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