[Report] European Vattenfall Utilities Key Players & Strategies Market Research, Trends, Analysis

CHAPTER 1 INTRODUCTION
- Utility competition is starting to transcend national borders, but a single EU market place remains distant
- Larger utilities need to find a suitable geographical arena in which to pursue their ambitions
- The emergence of pan-European suppliers is an ideal for now, the reality is the emergence of geographic competitive arenas
CHAPTER 2 DATAMONITORS EUROPEAN UTILITY SCORECARD
- E.ON leads the Datamonitor European Utility Ranking, Vattenfall ranks third out of the 12 companies benchmarked
- Vattenfalls supply assets and financial strength push up its score on Datamonitors European Utility Scorecard, to 47* out of 100
- Vattenfall is concentrated in the NWE and CEE European competitive arenas and has some interests in the CEE arena
- Vattenfall is active across 3 of the 5 competitive arenas for power supply and demand assets
- Vattenfall is the eleventh largest supplier of end user volumes for power and gas across 32 European markets, with 1.4%*
CHAPTER 3 POWER SUPPLY VOLUMES AND MARKET SHARES
- Vattenfalls has expanded into the NWE and CEE regions, with an MEU supply bias, abetted by its incumbent position in Sweden
- Vattenfall commands the seventh highest market share, 2.8%* across the EU 32 markets
- Vattenfalls geographic spread of power volumes stretches across 3 markets, the Nordic, NWE and CEE competitive arenas
- Vattenfalls power volume across the Nordic region totals 51TWh, the largest in the region, ahead of E.ON and other regional suppliers
- Vattenfall power volume across the NWE region totals 82TWh, a quarter of E.ONs, wholesale volumes account for half these sales
- Vattenfalls power volumes across CEE total 12TWh, driven from its interests in Poland and behind that of CEZ, E.ON and RWE
- Vattenfall has no power volumes across the WMed region, a region dominated by incumbents, EDF, Enel and Endesa
- Vattenfalls presence in the Swedish and German markets combine to account for around 80% of their I&C and RES end user volumes
- Vattenfall has sizeable market share in one leading competitive market, Sweden, as assessed by Datamonitors MCI rating
- Vattenfalls power supply revenues total €8,401m, with 42% of this derived from supplying MEU customers
- Vattenfalls market presence in Germany outperforms its share of contribution from power supply, the other markets underperform
CHAPTER 4 GAS SUPPLY VOLUMES AND MARKET SHARES
- Vattenfall has no gas interests from assets where it has a greater than 50% majority stake, inhibited by an immature Nordic gas market
- Vattenfall is not active in the gas supply sector, where GDF, E.ON and Centrica have the highest market share across the EU 32 markets
- Vattenfall has no gas interests at present across the competitive arenas
- Vattenfall has no gas volume across the Nordic region, a market that is still immature, with only E.ON and oil majors active
- Vattenfall has no gas volume across the NWE region, where the highest concentration of suppliers are found, led by E.ON
- Vattenfall has no gas volume across the CEE region, E.ON is present, but this region is dominated by Russia and therefore Gazprom
- Vattenfall has no gas volume across the WMed region, an arena dominated by national players, primarily GDF, Eni and Gas Natural
- Vattenfall is not active in any of the leading competitive markets, as assessed by Datamonitors MCI rating for gas
CHAPTER 5 GENERATION CAPACITY AND MARKET SHARE
- Vattenfall is active in 3 competitive arenas, is the fifth largest generator across Europe, with a strategy to grow in the CEE and NWE markets
- Vattenfall ranks as the fifth largest generator across Europe, with 33GW of generation capacity
- Vattenfalls geographic power plant spread encompasses three competitive arenas, Nordic, NWE and CEE
- Vattenfalls plant capacity across the Nordic region totals 17GW, double that of E.ONs, a region dominated by incumbents
- Vattenfalls plant capacity across the NWE region totals 15GW, behind that of RWE, E.ON and Electrabel
- Vattenfalls only assets in CEE are thermal plants in Poland, totalling 928MW, below that of other new entrants, EDF, Enel and Electrabel
- Vattenfall has no power plant assets across WMed region, a region dominated by EDF in France, Enel in Italy and Endesa in Spain
- Vattenfall has a 3.3% and 4.5% market share of total and renewables generation capacity across the EU 32 markets respectively
- Vattenfalls fuel mix is evenly spread between other thermals, hydro and nuclear, a lack of gas is a clear deviation from the EU 32 fuel mix
- Sweden and Germany account for 97% of Vattenfalls generation spread across markets, with high market share in its native market
- Vattenfalls generation output totals 198TWh, two markets dominate its output, 60% accounted in Sweden and 38% Germany
CHAPTER 6 STRUCTURAL HEDGE - POWER
- Datamonitor uses generation and supply market shares to determine if companies are generally long or short in power
- Vattenfall is long in its NTR*, by 146.9TWh, as is the trend with most other European players, generally over 30TWh long
- Reviewing the NTR as a percentage, Vattenfalls additional 146.9TWh makes the company long by 290%
- Vattenfalls NTR* is structurally long in the Nordic and NWE arenas, particularly in Sweden, by 94TWh and in Germany by 58TWh
- Currently energy companies with higher market share are structurally long and profitable
CHAPTER 7 STRUCTURAL HEDGE - GAS
- European utilities gas equity and gas supply market shares determine if these companies are generally long or short in gas
- The trend for the leading energy companies remains being significantly short, buying gas on spot, forward and long term contracts
- A handful of energy companies other than the oil and gas majors have equity gas, those that do are either gas players or have bought major gas businesses
CHAPTER 8 BASE FINANCIALS OVERVIEW
- Vattenfall has driven higher revenue and earnings from its German acquisitions, has an average gearing and comfortable cash flow
- Vattenfalls revenues in 2004 exceeded €12bn, net income was €1.3bn, the companys revenues are a third of the E.ON and EDF
- Over the last five years Vattenfalls revenues and earnings have grown, with a CAGR of 35% and 38% respectively, through its German acquisitions
- Utilities PE ratios are currently performing near or above the sector average
- Vattenfalls gearing is 1.1x earnings, the low amongst the heavily weighted power producers
- Vattenfalls free cash flow amounts to €1.7bn, a mid placed ranking among its peers, but around €1.5bn behind that of Endesa, EDF, E.ON and GDF
CHAPTER 9 APPENDIX
- Understanding Datamonitors European Utility Scorecard rating, focusing on competitive sectors of generation, equity gas and retail volumes
- Scoring methodology
- Scorecard rating component breakdowns and scoring metrics and measures
- Data methodology
- The MCI Index shows how attractive a particular market is to new entrants in terms of the competitive environment
- The MCI Index is calculated by deriving a weighted average of scores over 9 key metrics
- Glossary of terms
- Future readings
- SPP writing team
- How to contact experts in your industry
- List of Tables
  - Table 1: Datamonitors European Utility Scores and ranking for the 12 benchmarked companies
  - Table 2: Vattenfall Competitive Arenas matrix, 2005
  - Table 3: Scoring rating matrix for Datamonitors European Utility Scorecard
- List of Figures
  - Figure 1: 32 European markets divided into 5 regional competitive arenas
  - Figure 2: Vattenfalls Datamonitor European Utility Scorecard, 2005
  - Figure 3: Companies matrix by value chain focus and competitive arena, 2005
  - Figure 4: Top twelve power and gas supply volume market shares across 32 European markets, 2005
  - Figure 5: Leading players power supply volumes (GWh) market share across EU 32 markets, 2005
  - Figure 6: Weighting between I&C and residential power volumes for the key players across EU 32 markets, 2005
  - Figure 7: Power volumes supplied across the EU 32 markets by sector and competitive arena, 2005
  - Figure 8: Power volumes supplied in the Nordic competitive arena by company, 2005
  - Figure 9: Power volumes supplied in the NWE competitive arena by company, 2005
  - Figure 10: Power volumes supplied in the CEE competitive arena by company, 2005
  - Figure 11: Power volumes supplied in the WMed competitive arena by company, 2005
  - Figure 12: Vattenfalls power supply volumes (GWh) RES country breakdown, 2004
  - Figure 13: Vattenfalls power supply volumes (GWh) I&C country breakdown, 2004
  - Figure 14: Scores and geographical distribution of 13 power markets assessed by Datamonitors MCI Index rating, 2005
  - Figure 15: Map representing Vattenfalls size and the geographical distribution of its power market share across EU 32 markets, 2005
  - Figure 16: Vattenfalls power supply volumes revenue breakdown, by sector, 2005
  - Figure 17: Vattenfalls power supply volumes revenue breakdown, by competitive arena, 2005
  - Figure 18: Proportion of revenues vs. end user power volume sales in markets where Vattenfall has a >5% volume market share, 2005
  - Figure 19: Leading players gas supply volumes (GWh) market share across EU 32 markets, 2005
  - Figure 20: Weighting between I&C and residential gas volumes for the key players across EU 32 markets, 2005
  - Figure 21: Gas volumes supplied across the EU 32 markets by sector and competitive arena, 2005
  - Figure 22: Gas volumes supplied in the Nordic competitive arena by company, 2005
  - Figure 23: Gas volumes supplied in the NWE competitive arena by company, 2005
  - Figure 24: Gas volumes supplied in the CEE competitive arena by company, 2005
  - Figure 25: Gas volumes supplied in the WMed competitive arena by company, 2005
  - Figure 26: Scores and geographical distribution of 13 gas markets assessed by Datamonitors MCI Index rating, 2005
  - Figure 27: Map representing Vattenfalls size and the geographical distribution of its gas market share across EU 32 markets, 2005
  - Figure 28: Generation capacity (MW) for 12 leading European energy companies across 32 European markets, broken down by fuel type, 2005
  - Figure 29: Generation capacity (MW) across the EU 32 markets by sector and competitive arena, 2005
  - Figure 30: Generation capacity (MW) across the Nordic competitive arena by company, 2005
  - Figure 31: Generation capacity (MW) across the NWE competitive arena by company, 2005
  - Figure 32: Generation capacity (MW) across the CEE competitive arena by company, 2005
  - Figure 33: Generation capacity (MW) across the WMed competitive arena by company, 2005
  - Figure 34: Vattenfalls generation capacity (MW) market share across 32 European markets, 2005
  - Figure 35: Vattenfalls renewable capacity (MW) market share across 32 European markets, 2005
  - Figure 36: Vattenfalls generation fuel mix across its European asset base, 2005
  - Figure 37: Vattenfalls generation fuel mix across its European asset base against EU 32 market proportions, 2005
  - Figure 38: Vattenfall owned generation capacity (MW) breakdown by country, 2005
  - Figure 39: Vattenfall generation capacity (MW) market share in each European country, 2005
  - Figure 40: Vattenfalls generation output by fuel type, 2005
  - Figure 41: Vattenfalls generation output breakdown, by competitive arena, 2005
  - Figure 42: Estimated absolute Net Trade Requirements (NTR)* for power, for the benchmarked 12 players, 2005
  - Figure 43: Estimated percentage Net Trade Requirements (NTR)* for power, for the benchmarked 12 players, 2005
  - Figure 44: Vattenfall generation capacity (MW) market share in each European country, 2005
  - Figure 45: Operating income vs. NTR position for 12 benchmarked players, 2004/2005
  - Figure 46: Estimated absolute Net Trade Requirements (NTR)* for gas, for the 12 benchmarked players, 2005
  - Figure 47: Estimated percentage Net Trade Requirements (NTR)* for gas, for the 12 benchmarked players, 2005
  - Figure 48: Revenue and net income for 12 energy companies benchmarked, 2004
  - Figure 49: Vattenfalls revenue and net income 5 year summary, 2000 - 2004
  - Figure 50: PE ratio for listed companies, for the 12 companies benchmarked, 2004*
  - Figure 51: Debt/Equity ratio for 12 benchmarked companies, 2004
  - Figure 52: Free Cash Flow for the 12 benchmarked companies, 2004
  - Figure 53: Understanding Datamonitors European Utility Scorecard
  - Figure 54: Datamonitors MCI Index scale for market assessment
  - Figure 55: The MCI Index is calculated by deriving a weighted average of scores over 9 key metrics

European Utilities Key Players and Strategies - Vattenfall

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