European Utilities Key Player Profiles: Vattenfall

DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
METHODOLOGY 1
ANALYSIS 2
European Utilities Key Player Profile: Vattenfall 2
Datamonitor's Key Player Scorecard examines 31 leading utilities drawn from across Europe's competitive arenas 4
Key Players dominate power generation capacity market share in the Wmed competitive arena 5
Key Players dominate power generation output market share in the Wmed and CEE competitive arenas 6
Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate power supply volume market share 7
Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate gas volume market share 8
The Key Player Scorecard assesses utilities across four pillars: Performance, Scale, Growth and Exposure 9
The Performance pillar combines 5 financial metrics to measure business performance 10
The Scale pillar combines financial and operational metrics to measure the size of a utility 11
The Growth pillar measures the rate of growth of a utility's financial and energy resources 12
The Exposure pillar combines both operational and financial measurements of risk 13
Vattenfall scores 29.1/100 on Datamonitor's European Utility Scorecard and ranks 21 out of the 31 Key Players covered 14
Vattenfall's overall ranking is below the Key Player average 16
Vattenfall achieves an overall ranking of 21, with a utility score of 29.1 21
Vattenfall's overall ranking is helped by its strong Performance and Scale Scores 22
Vattenfall has an average level of Performance, yet an above average level of risk (a lower Exposure score) 23
Compared to the top ten utilities Vattenfall is roughly median on Scale, yet is a low scorer on Growth 24
Vattenfall scores well on return on sales and energy volume, but lags in the other Performance metrics for a ranking of 15 25
Vattenfall overall financial Performance score is 11.1, just below the Key Player average of 10.9 26
Vattenfall has below average operating profit margin and return on fixed assets 27
Vattenfall is slightly ahead of the Key Player average in return on investment and energy volume 28
Vattenfall outperforms the Key Player average in Scale, with a ranking of 9 29
Vattenfall outperforms on all applicable Scale metrics 30
In generation capacity Vattenfall ranks 6 with 32 GW 31
Vattenfall is wholly focused on power, with a supply volume of 200 TWh 32
Vattenfall has a 2.67% share of Key Player power customers 33
At 200 TWh, Vattenfall ranks 5 in terms of power volume 34
Vattenfall ranks 11 and 9 in terms of revenue and net income respectively 35
Vattenfall's Growth ranking of 22 is fuelled by very strong revenue and profit growth 36
The lack of any gas supply pulls Vattenfall's Growth ranking below average, to 22 37
Vattenfall has a low operating profit margin, and the lowest price earnings ratio 38
From 2001 to 2005, Vattenfall's annual profit growth of 37.4% outpaced its revenue growth of 18.4% 39
From 2004 to 2005, Vattenfall's cash flow growth of 1.3% did not keep pace with its power volume growth of -14.5% 40
Vattenfall's high debt leverage and low operating cash flow growth contribute to its Exposure ranking of 29 41
Vattenfall's Exposure metrics vary widely, from slightly above average to near lowest 42
With no gas business, Vattenfall's overall NTR position is much less negative than other Key Players 43
Vattenfall is short on power, with a negative NTR of 8.6% 44
Vattenfall is highly leveraged, with a debt to equity ratio of 585% 45
Vattenfall ranks 30 in terms of debt leverage 46
Vattenfall's cash flow growth of 1.3% has not keep pace with the company's overall growth in energy volume -14.5% 47
The Nordic competitive arena is Vattenfall's main geographic area of operations 48
Coal is Vattenfall's dominant generation capacity fuel type 49
Vattenfall has a significant market presence in two European competitive arenas 50
Vattenfall's generation capacity is centred in the Nordic competitive arena, although Germany is the single largest market 51
Vattenfall has a market share of 2.7% amongst Key Players in terms of power customers 52
Vattenfall does not have gas supply customers 53
APPENDIX 54
Databook 54
Definitions 73
Datamonitor Consulting 73
List of Tables
Table 1: The Key Players are drawn from across a diverse range of markets 3
Table 2: The Performance pillar combines 5 financial metrics to measure business performance 10
Table 3: The Scale pillar combines financial and operational metrics to measure the size of a utility 11
Table 4: The Growth pillar measures the rate of growth of a utility's financial and energy resources 12
Table 5: The Exposure pillar combines both operational and financial measurements of risk 13
Table 6: Vattenfall scores 29.1/100 on Datamonitor's European Utility Scorecard and ranks 21 out of the 31 Key Players covered 15
Table 7: Vattenfall scores 11.1/25 on the Performance pillar, and ranks 15 out of 31 on this measurement 17
Table 8: Vattenfall scores 4.8/25 on the Scale pillar, and ranks 9 out of 31 on this measurement 18
Table 9: Vattenfall scores 8/25 on the Growth pillar, and ranks 22 out of 31 on this measurement 19
Table 10: Vattenfall scores 5.2/25 on the Exposure pillar, and ranks 29 out of 31 on this measurement 20
Table 11: Vattenfall scores well on return on sales and energy volume, but lags in the other Performance metrics for a ranking of 15 25
Table 12: Vattenfall outperforms the Key Player average in Scale, with a ranking of 9 29
Table 13: Vattenfall's Growth ranking of 22 is fuelled by very strong revenue and profit growth 36
Table 14: Vattenfall's high debt leverage and low operating cash flow growth contribute to its Exposure ranking of 29 41
Table 15: Return on fixed assets 54
Table 16: Return on sales 55
Table 17: Operating profit margin 56
Table 18: Return on energy volume 57
Table 19: Return on investment 58
Table 20: Generation Capacity / EU25 market total 59
Table 21: Power Supply Volume / EU25 market total 60
Table 22: Gas Supply Volume / EU25 market total 61
Table 23: Net income / Net income of 94 leading utilities 62
Table 24: Revenue / Revenue of 94 leading utilities 63
Table 25: Revenue growth, 2001-2005 CAGR 64
Table 26: Profit growth, 2001-2005 CAGR 65
Table 27: Growth in operating cash flow, 2004 to 2005 66
Table 28: Gas supply volume growth, 2004-2005 67
Table 29: Growth in power supply volume, 2004 to 2005 68
Table 30: Power NTR / Power supply volume 69
Table 31: Gas NTR / Gas supply volume 70
Table 32: Debt leverage 71
Table 33: Growth in operational cash flow - Growth in energy volume 72
List of Figures
Figure 1: Datamonitor's Key Player Scorecard examines 31 leading utilities drawn from across Europe's competitive arenas 4
Figure 2: Key Players dominate power generation capacity market share in the Wmed competitive arena 5
Figure 3: Key Players dominate power generation output market share in the Wmed and CEE competitive arenas 6
Figure 4: Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate power supply volume market share 7
Figure 5: Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate gas volume market share 8
Figure 6: Vattenfall achieves an overall ranking of 21, with a utility score of 29.1 21
Figure 7: Vattenfall's overall ranking is helped by its strong Performance and Scale Scores 22
Figure 8: Vattenfall has an average level of Performance, yet an above average level of risk (a lower Exposure score) 23
Figure 9: Compared to the top ten utilities Vattenfall is roughly median on Scale, yet is a low scorer on Growth 24
Figure 10: Vattenfall overall financial Performance score is 11.1, just below the Key Player average of 10.9 26
Figure 11: Vattenfall has below average operating profit margin and return on fixed assets 27
Figure 12: Vattenfall is slightly ahead of the Key Player average in return on investment and energy volume 28
Figure 13: Vattenfall outperforms on all applicable Scale metrics 30
Figure 14: In generation capacity Vattenfall ranks 6 with 32 GW 31
Figure 15: Vattenfall is wholly focused on power, with a supply volume of 200 TWh 32
Figure 16: Vattenfall has a 2.67% share of Key Player power customers 33
Figure 17: At 200 TWh, Vattenfall ranks 5 in terms of power volume 34
Figure 18: Vattenfall ranks 11 and 9 in terms of revenue and net income respectively 35
Figure 19: The lack of any gas supply pulls Vattenfall's Growth ranking below average, to 22 37
Figure 20: Vattenfall has a low operating profit margin, and the lowest price earnings ratio 38
Figure 21: From 2001 to 2005, Vattenfall's annual profit growth of 37.4% outpaced its revenue growth of 18.4% 39
Figure 22: From 2004 to 2005, Vattenfall's cash flow growth of 1.3% did not keep pace with its power volume growth of -14.5% 40
Figure 23: Vattenfall's Exposure metrics vary widely, from slightly above average to near lowest 42
Figure 24: With no gas business, Vattenfall's overall NTR position is much less negative than other Key Players 43
Figure 25: Vattenfall is short on power, with a negative NTR of 8.6% 44
Figure 26: Vattenfall is highly leveraged, with a debt to equity ratio of 585% 45
Figure 27: Vattenfall ranks 30 in terms of debt leverage 46
Figure 28: Vattenfall's cash flow growth of 1.3% has not keep pace with the company's overall growth in energy volume -14.5% 47
Figure 29: Coal is Vattenfall's dominant generation capacity fuel type 49
Figure 30: Vattenfall has a significant market presence in two European competitive arenas 50
Figure 31: Vattenfall's generation capacity is centered in the Nordic competitive arena, although Germany is the single largest market 51
Figure 32: Vattenfall has a market share of 2.7% amongst Key Players in terms of power customers 52
Figure 33: Vattenfall does not have gas supply customers 53