LONDON, June 18 (Reuters) - Swedish power producer Vattenfall is on course to pay a dividend on annual profits for a second year in a row as it benefits from higher European electricity prices, its chief executive told Reuters.
After years of losses caused by a financially disastrous expansion out the Nordic region that led to huge writedowns and job losses, Vattenfall announced its first dividend in five years in February, based on its 2017 results.
Meanwhile, an unusually cold winter pushed up power prices in Vattenfall’s markets, creating a positive start to 2018.
“We are working towards increasing our profits. We are now entering a price increase environment ... If nothing very particular happens, I hope to pay dividend,” CEO Magnus Hall said.
Vattenfall aims to establish a dividend-paying run of years, he said, but declined to give a dividend or profit forecast for 2018.
“Dividend is important. If you started to pay dividend I think it is prudent to expect a strategy where you don’t see one year paying a dividend and the next one not paying,” he said.
In February, Vattenfall proposed a dividend of 2.0 billion crowns ($227 million), or 24 percent of its after-tax profit to its owner, the Swedish government, against a target range of 40–70 percent of profit after tax.
In May, Vattenfall announced a deal with Facebook to supply the U.S. company’s Scandinavian data centres with power from Norway and Sweden, and said it was aiming for more such deals.
Although power prices in the two Nordic countries have doubled this summer compared with a year ago, operating data centres there was still more attractive than elsewhere in Europe, Hall said.
“They (data centre operators) look at Sweden and Norway as countries where prices have been traditionally lower than in Europe and where they would expect them to be lower in the future, in comparison,” he said.
Norway and Sweden face higher power costs this summer as much of the snow in their mountains evaporated or melted into the ground during a heat wave from mid-May until early June, instead of reaching hydropower reservoirs. (Editing by Mark Potter)