Swedish energy firm Vattenfall is to split in two after admitting it was writing down its assets by almost £3billion due to weakening markets.
The company, which announced earlier this month it was investing £400million in a new onshore windfarm in South Wales, will divide into two separate regional units from the beginning of 2014.
One will focus on the Nordic countries, with the other to concentrate on the UK and conintental Europe, as the company admits to increased uncertainty about the development of a single energy market.
“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,” chairman Lars G Nordström said.
The writedowns include coal power plants in Germany and the Netherlands, and power stations across the Nordic regions, despite the company seeing profits rise by more than 3%.
Cost reductions and savings targets have been increased and recruitment frozen as the company warned it did not expect the energy market across Europe to improve for the foreseeable future.
“The impairments are significant and this is obviously a difficult task,” said Nordström .
“This is the reality we are facing and we have to react according to what we know about the marketplace today. It means that we must adjust the book value of our assets.
“It also means that we have to take steps that we deem are necessary to ensure in the long term a sustainable and strong Vattenfall.”
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