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Vattenfall cuts losses despite 'tough market'

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Photo: TT
14:28 CEST+02:00
Swedish power group Vattenfall said on Wednesday that second quarter losses had been cut despite trying market conditions, forecasting that energy prices were unlikely to recover in the "foreseeable future".

Net losses between April and June amounted to 1.830 billion kronor ($268 million), sharply down from 23.707 billion kronor a year earlier.

In July 2013, the state-owned firm became one of the first in a series of European energy groups to admit that electricity prices were unlikely to recover "in the foreseeable future", as it wrote down the value of its assets by 29.7 billion kronor.

"Demand for electricity, gas and heat was considerably lower than in 2013, which has had a negative impact on Vattenfall's profit," chief executive Öystein Löseth said in a statement, where he highlighted "the tough market conditions for the energy sector".

In January, Vattenfall split its operations in two regions, the Nordics and the rest of Europe, to achieve a larger financial and strategic flexibility, the company said at the time.

Revenue in the second quarter fell by four percent to 36.575 billion kronor.

"Demand continues to be weak, the surplus of generation capacity remains, electricity prices have fallen further in 2014, and CO2 prices are low," Löseth said.

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"This is a pattern in the market that we have lived with for quite some time."

Vattenfall continues to implement a cost-cutting programme which is expected to reduce spending by around 25 percent by the end of the year compared to the 2010 cost base, the company explained.

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