State-owned Vattenfall report a pre-tax loss of SKr 30.7 billion for the first nine months in 2015, and Jakob Magnussen, senior analyst at Danske Bank, warns there is a real risk that the utility will make a net loss after tax of SKr 20-25 billion.
With Sweden’s nuclear power industry going through a serious financial crisis, and the possible sale of its lignite business in Germany, Vattenfall is set to face new losses, says Magnussen. “The biggest risk is that the value of the lignite business will need to be written down further. Vattenfall is trying to divest the business, but even if a deal is struck, the price tag is unlikely to be high,” he comments.
Energy Minister Ibrahim Baylan says the government will do what is needed to ensure Sweden’s remaining six reactors do not close ahead of time, while Prime Minister Stefan Löfven tells Dagens Industri “we are facing a new reality”.
The business daily writes that the Social Democrats are prepared to cut tax on nuclear power capacity, which was raised only last year. There is every indication that the Green Party, the Social Democrats’ coalition partner, will accept such a cut, even though it goes against party policy. The explanation is that the Greens already see themselves as the victors, following the decision to close four reactors early. Furthermore, all talk of building new reactors to replace old ones has died out.
With 3,400 employees and an annual turnover of SKr 20 billion, civil authority FMV is something of a colossus. FMV says on its website that it provides the technology for Sweden’s security (ed.); structurally this means that FMV orders military equipment and the Armed Forces pay the bill.
Revelations earlier this week that FMV had failed to hedge an order for 60 Jas Gripen E fighter jets have led to calls that the civil authority should either merge with the Armed Forces or be closed down.
Anders Brännström, army inspector at the Armed Forces’ HQ, and responsible for placing orders with FM, believes a great deal of taxpayers’ money could be saved by such a move.
In an interview with Dagens Industri on Monday, Foreign Minister Margot Wallström claimed that Sweden’s diplomatic spat with Saudi Arabia last year did not affect trade with the country.
“That’s not true. It had a devastating effect in the months afterwards, but things are improving now,” says Torbjörn Kronander, CEO of medical IT solutions company Sectra, in Tuesday’s edition of the business daily.
“Orders we believed we would win just disappeared into thin air. We had a much better order intake in Saudi Arabia before this palaver,” he adds.
For example, prior to the row, Sectra had been in talks with the country about initiating a pilot project to screen women for osteoporosis, but afterwards the talks just petered out.
Following last week’s revelations that Vattenfall may close all its reactors early, the Liberals have slammed the government’s tax on nuclear power capacity and called for an emergency meeting to discuss what to do. The party has also said it will boycott the Energy Commission, if Vattenfall initiates further closures than those already announced.
The Moderates and the Christian Democrats back the Liberals’ call while Energy Minister Ibrahim Baylan refuses to comment the news.
On Thursday the Chinese stock market plunged dramatically resulting in trade being suspended early again. Fears about the situation in China spread to Stockholm where a number of large companies have a considerable portion of their sales in China, including Hexagon, Autoliv and Assa Abloy.
Assa Abloy, which has just over 9 percent of its turnover in China, has noticed weaker demand. CEO Johan Molin notes a decline of 7 percent so far this year. He now believes a long period of growth is being corrected. He estimates that China will remain weak for the next year as “these things take time”.
In September the decision was taken to close early two of the four reactors in the nuclear power plant, Ringhals. Shortly after the same fate was decided for two of the three reactors in Oskarshamn. The remaining reactors were to remain operational until 2040.
However now Torbjörn Wahlborg, head of Vattenfall Generation, warns that the crisis that has shaken Swedish nuclear power production has worsened. If the tax on nuclear power capacity is not scrapped the power company may be forced to close all its reactors in Sweden early. “The current situation is unsustainable. Electricity prices on the futures market for several years ahead have continued to fall, and with a tax on nuclear power capacity of 7 öre per kilowatt hour none of our reactors are profitable.”
Recruitment firms in the Öresund area are preparing for a slowdown. Life science, IT, airlines and a long list of other international companies are among those affected as the journey across the Öresund Bridge transforms from a regular commute to an overseas visit due to newly introduced ID checks. The region’s recruitment firms have positions in Sweden and Denmark but do not now expect many applications from both sides.
“For the 15,000 who commute, longer travel times, nursery runs and other practical details are not going to fit together,” says Per Tryding, vice president of the Chamber of Commerce and Industry of Southern Sweden. He continues, “A larger region means better job matches. Controls now being built into the Öresund region threaten growth.”
Plans are underway to construct a new high-speed train route from Stockholm, via Jönköping and Gothenburg, to Malmö. Originally the cost was estimated at SKr 170 billion but a new report from the Swedish Transport Administration (Trafikverket) indicates this could rise to SKr 320 billion.
Minister for Infrastructure Anna Johansson considers it a necessary investment to help bring down the number of flights between Stockholm and Malmö/Gothenburg. She says that the original price was a rough estimate and the construction was always going to be a big challenge.
A group is now working to find other ways of financing the project to prevent it taking taxpayers’ money from other projects.