Vattenfall Gives Its Financial Targets a Renewables Reality Check

December 13, 2017

Vattenfall set its new financial targets at an extraordinary general meeting on 12 December, as the renewable energy sector has matured and changed market conditions, resulting in lower risks and thus a lower and more stable financial return.

Illustration; Thanet offshore wind farm; Image source: Vattenfall

The new financial targets will replace the old ones set in November 2012. Vattenfall now aims for a profitability target of 8%, instead of the previously set 9%.

The company also decided on its capital structure by targeting funds from operations/ adjusted net debt of 22–27%, compared to the old target of 22-30%, and removed its net debt/equity ratio previously set at 50-90%.

“The new targets are an adjustment reflecting the reality we live in,” said Vattenfall’s CEO Magnus Hall, adding that assets in which Vattenfall will invest in the future are mostly in the renewable energy sector, with returns now lower than in the past. “As such, the goals reflect our strategy of continuously delivering energy solutions that are better for the climate. The ambition is of course for returns to be higher than our owner’s requirements.”

Vattenfall’s owner, the Swedish state, announced the proposal for new financial targets on 20 November. The extraordinary general meeting also resolved on a revised dividend policy, stating that the dividend should amount to 40–70% of profit after tax (previous target: 40-60%).