Vattenfall profits rise but chief eyes more cost cuts

Power group Vattenfall today reported higher profits for the third quarter but said it needs to cut more costs in response to tough market conditions.

Vattenfall chief executive Magnus Hall

The Swedish state-owned firm, led by chief executive Magnus Hall, posted an underlying operating profit of SEK3.4 billion (£259.3 million) for the three-month period, up from SEK2.8bn a year earlier, helped by lower costs and higher electricity generation.

However, Hall said production margins were being squeezed by “considerable” capacity surplus and low electricity prices, especially in the Nordic region.

“Despite substantial reductions in Vattenfall’s costs since 2010, cost-cutting efforts must continue,” he said.

“Among other measures we are now looking at opportunities to outsource parts of our administration and IT operations to external service providers. Our purchasing processes will continue to be sharpened and streamlined in an effort to achieve further savings.”

Earlier this year, Hall said the group was putting “real pressure” on turbine suppliers in an attempt to drive down costs as admitted that wind farm operators may have to rely on taxpayer subsidies for another decade.

Vattenfall has two onshore wind farms operating north of the Border – Edinbane on Skye, which has been running since 2010, and Clashindarroch in Aberdeenshire, which officially opened in June.