October 29, 2019 / 9:45 AM / 25 days ago

UPDATE 1-Hydro, nuclear energy and hedging help lift Vattenfall's Q3 profit

* EBIT boosted by large capital gains

* EBIT ex one-offs 3.6 bln SEK vs yr-ago 2.1 bln

* Wind operations growing from low levels (Adds CEO comment, details, background)

STOCKHOLM, Oct 29 (Reuters) - Swedish state-owned energy group Vattenfall reported on Tuesday a rise in third-quarter operating profit, driven mainly by its hydro and nuclear power businesses and protected by hedging of electricity prices against a fall in spot prices.

Chief Executive Magnus Hall said that in the first nine months of the year, Vattenfall for the first time in a very long time hit its targets for return on capital employed and debt.

Operating profit before items affecting comparability at the electricity and heat producer and distributor rose to 3.6 billion crowns ($369 mln), from 2.1 billion crowns a year earlier, on a 12% increase in sales to 36 billion crowns.

“We saw positive development in the underlying operations with important contributions from higher achieved prices and a growing wind power portfolio,” Hall said.

Vattenfall’s core markets are Sweden, Germany, the Netherlands, Denmark and Britain.

Hydro and nuclear power accounted for the bulk of third-quarter profit growth, on the back of higher prices, Hall told Reuters.

“Net sales increased mainly owing to an improved hedge result. Lower spot prices in the Nordic countries and lower internal sales of CO2 emission allowances had a countering effect,” the group said on its division that includes hydro and nuclear power operations.

“The improved hedge result was also the main contributing factor to the increase in the underlying operating profit.”

Vattenfall sees offshore wind power as a key growth area. Last year it generated 42% of electricity from nuclear power, 27% from hydro power, 24% from coal fired power and 6% from wind power.

In the third quarter, generation from wind grew to 2.2 terawatt hours (TWh) from 1.5, while total generation grew to 29 TWh from 28.

Operating profit including items affecting comparability - in the third quarter of 2019 mainly gains from the sale of a district heating operation in Germany and of production rights for German nuclear power - rose to 8.7 billion crowns from 3.7 billion. ($1 = 9.7236 Swedish crowns) (Reporting by Anna Ringstrom, Editing by Helena Soderpalm and Susan Fenton)

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