Vattenfall attributed its declining profits primarily to its business in Nordic countries, where operating profit fell by SEK1.2 billion, or 21.2%. The company said that this was mainly due to higher costs in its electricity network business caused primarily by the Per storm, and to lower margins in its sales operations.
The company also revealed that, in Q1 2007, its German and Polish operations were weak. Operating profit in Germany fell 7.4%, while Poland’s operating profit (excluding items affecting comparability) fell by 26.9%, mainly due to lower heat sales resulting from warmer weather. Nevertheless, Vattenfall’s electricity trading activities posted a strong operating profit that improved by nearly SEK500 million.
Commenting on its new long-term emissions target, Vattenfall said that intends to reach the 50% reduction while also maintaining or even increasing its energy production levels. The company is working internationally to promote a global agreement on the reduction of greenhouse gas emissions and is also increasing its efforts to help its customers save energy through a number of initiatives, including the distribution of low-energy light bulbs to Swedish and Finnish households.
In terms of its own carbon dioxide emissions, Vattenfall plans to upgrade its existing power plants and ensure that future plants are highly efficient and employ forms of emission-free energy production. Over the next four years, Vattenfall said that it will invest a total of SEK134 billion in the development and renewal of its energy production and distribution systems.
The company added that its main focus would be on carbon capture and storage technology. Construction of the company’s pilot lignite-fired carbon capture plant in Germany began in May 2006. Vattenfall said that it is investing approximately SEK600 million in the pilot plant, which will be commissioned in 2008.
