Vattenfall to Axe 2,500 Jobs

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - Swedish energy company Vattenfall AB (Stockholm, Sweden) is to axe 2,500 jobs by the end of next year.

The company claimed that the decision has been forced by a combination of factors, including low electricity demand, an oversupply of CO2-emission allowances, production overcapacity and low electricity market prices. Vattenfall expects these conditions to continue in the coming years. Germany will bear the brunt of the cuts with around 1,500 jobs expected to go there, while the Swedish workforce will be reduced by 400. The remainder will come from Vattenfall's other European operations.

"This new reality requires efforts in further improving our efficiency and strengthening our financial position," said Øystein Løseth, President and CEO of Vattenfall. "We cannot see that synergies and savings have been fully realised yet in our staff and support functions, following the new business-led organization that we introduced in 2011. We see a strong potential for cost improvements in these areas, which will require staff reductions in all countries we operate in."

Vattenfall's Ingrid Bonde, CFO and Deputy CEO, said the company will have to "adapt to a greatly changed market situation" through divestments, job cuts and a decreased investment in new energy projects.

"We also have to continue evaluating our assets," Bonde added. " We have recently announced the potential divestment of our Danish thermal business and the evaluation of a sale of our share of the lignite power plant Lippendorf in Germany. Other initiatives, which are currently being further explored, include potential divestments of non-core assets and the evaluation of strategic alternatives for underperforming generation assets."

Lippendorf, located south of Leipzig, is a combined heat and power (CHP) plant with a generating capacity of 1,782-megawatts electricity (MWe) and 330 MW thermal (MWt). It was commissioned in 1999 and is 50% owned by Energie Baden-Württemberg AG (EnBW) (Karlsruhe, Germany).

Last September, Vattenfall announced that its investment strategy going forward was to focus on nuclear and renewable energy projects. For additional information, see September 25, 2012, article - Vattenfall to Focus on Renewables and Nuclear.

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