The Swedish energy giant Vattenfall has announced massive writedowns on its assets as a result of "gloomy" energy markets in Europe. Also, a split in operations is intended to shield the firm from further upheavals.
Assets worth 29.7 billion krona ($4.6 billion/3.5 billion euros) had to be written down in the second quarter of 2013, mainly on gas- and coal-fired power plants in the Netherlands and Germany, the Swedish state-owned energy company Vattenfall announced Tuesday.
Describing the impairments as significant, Vattenfall Chief Executive Oystein Loseth said the company had to react to current the reality in the energy markets.
Much of the impairment involved the Dutch utility company Nuon Energy, which Vattenfall purchased for $13.7 billion (10.4 billion euros) four years ago.
On Tuesday, Sweden's minister for financial markets, Peter Normann, told reporters that the price was rather high, given what he knew today in terms of changing energy markets.
Currently, the energy market is hit by the recession in most eurozone countries, falling electricity prices and mounting uncertainty over Germany's switch to renewables.
Europe's energy market was gloomy and unlikely to recover in the foreseeable future, Vattenfall announced.
As a result, Vattenfall, which is the biggest utility company in Scandinavia, announced it would split its operations into a Nordic unit and a Continental European/Britain branch next year.
According to the company, the measure was needed because of higher business risks and negative market trends in Europe.
uhe/mkg (dpa, AP)