Vattenfall may sell off UK division

Swedish state-owned energy group Vattenfall could put its UK operations up for sale after unveiling a massive writedown in the value of its business.

The group, which directly employs nine people in Scotland out of a UK workforce of about 180, is splitting its operations into two divisions in a move that chief executive Øystein Løseth said could bring in outside investors for the first time.

The shake-up came as the firm wrote down the value of its gas- and coal-fired power plants in the Netherlands by 14.5 billion Swedish kroner (£1.5bn) and said it did not expect the “gloomy” energy market to recover in the foreseeable future.

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Vattenfall also took a SKr4.1bn impairment for its German coal-fired plants and raised its cost-cutting targets for the coming year to SKr2.5bn, up from a previous target of SKr1.5bn.

“The numbers do not look good,” Løseth admitted, but said splitting the group’s operations into Nordic and continental European units would give the company “greater financial and strategic flexibility”. He added: “We know the Nordic market and want to strengthen this part.”

While the group may look at bringing in external investors for the European division, which includes its operations in the UK, Løseth refused to rule out the sale of the entire business.

Despite taking total writedowns of SKr29.7bn for the second quarter, underlying operating profits edged up 3.3 per cent to almost SKr17bn. Vattenfall has significant onshore wind power interest throughout Scotland, but is seeking a buyer for its 75 per cent stake in the £230m Aberdeen bay offshore scheme.