 |
| (Canada) |
Vattenfall, one of Europe’s biggest energy firms, wrote down the value of its business by 30 billion Swedish crowns ($4.79-billion), saying there was no recovery in sight for the region’s ailing electricity markets.
The Swedish state-owned group, which operates across the Nordic region, Germany and the Netherlands, also said on Tuesday it would split into two divisions – one for the Nordics and the other central Europe.
That could allow the government, trailing in opinion polls ahead of national elections next year, to eventually bring outside investors into the European division where Vattenfall is in deepest trouble.
Vattenfall and other utilities like Germany’s E.ON and RWE and Finnish state-controlled Fortum are grappling with a combination of fragile European economies and pressure from regulators, which has cut demand for electricity.
Vattenfall, Germany’s third-biggest power group by output, is the first major utility to cite market conditions as the reason for a substantial asset writedown.
Weakened by huge debts built up during a decade of takeovers sparked by liberalization of European energy markets in the 1990s, utilities were ill-prepared for the euro zone crisis.
The European Union’s energy-efficiency drive has further reduced power consumption as homes and offices become better insulated and heaters and other appliances more efficient.
“Like other European energy producers, Vattenfall is affected by the increasingly gloomy market prospects,” chief executive Oystein Loseth said in a statement.
“The company now makes the assessment that the market will not recover in the foreseeable future.”
Loseth predicted in June that European utilities would remain in dire straits until at least 2020.
The Swedish state-owned group, which operates across the Nordic region, Germany and the Netherlands, also said on Tuesday it would split into two divisions – one for the Nordics and the other central Europe.
That could allow the government, trailing in opinion polls ahead of national elections next year, to eventually bring outside investors into the European division where Vattenfall is in deepest trouble.
Vattenfall and other utilities like Germany’s E.ON and RWE and Finnish state-controlled Fortum are grappling with a combination of fragile European economies and pressure from regulators, which has cut demand for electricity.
Vattenfall, Germany’s third-biggest power group by output, is the first major utility to cite market conditions as the reason for a substantial asset writedown.
Weakened by huge debts built up during a decade of takeovers sparked by liberalization of European energy markets in the 1990s, utilities were ill-prepared for the euro zone crisis.
The European Union’s energy-efficiency drive has further reduced power consumption as homes and offices become better insulated and heaters and other appliances more efficient.
“Like other European energy producers, Vattenfall is affected by the increasingly gloomy market prospects,” chief executive Oystein Loseth said in a statement.
“The company now makes the assessment that the market will not recover in the foreseeable future.”
Loseth predicted in June that European utilities would remain in dire straits until at least 2020.
