Swedish energy firm Vattenfall has reported a 24% drop in underlying half-year operating profits amid weak demand and falling utility prices.
The company said it made an underlying profit of 13.2billion krona ($1.9billion) in the six month period, compared to 17.1billion krona ($2.5billion) in 2013.
Higher provisions totalling $800million for future expenses for the decommissioning of nuclear power in Germany were a major cause for the drop, the company said.
The difficult energy market conditions were partially offset by around $450million in capital gains the company recorded in the period.
“The group’s operations have performed well, with good availability for all types of our generation,” said Øystein Løseth, outgoing president and chief executive of Vattenfall.
“However, demand continues to be weak, the surplus of generation capacity remains, electricity prices have fallen further in 2014, and CO2 prices are low. This is a pattern in the market that we have lived with for quite some time.
“We have managed to counteract this trend to some extent through substantial cost-cutting and by lowering our debt through the sale of some of the company’s non-core businesses.
“We have improved efficiency and increased the availability of our power plants, particularly in nuclear power, and we have strengthened our cash flow by scaling back on investments.
“Our ongoing cost-cutting programme is on track, and by year-end our accumulated cost reductions are expected to amount to approximately 25% compared with the cost base in 2010.”
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