Vattenfall AB

This report does not constitute a rating action. Overview Key strengths Key risks With electricity production of 102 terawatt hours (TWh) in 2025 Vattenfall holds a leading position in the Swedish power generation market, generating about 60%-70%% of all power in the country. Exposure to volatile and low prices, especially in northern Sweden where prices tend to be lower. Well positioned for the energy transition, almost all of its electricity generation stems from fossil free production already. Carbon dioxide (CO2) emissions intensity stands at 34 grams of CO2 equivalent per kilowatt hour (gCO2e/kWh), which is very low in a European comparison. Relatively low share of regulated earnings; less than 14% of EBITDA in 2025. A further dilution could weigh negatively

...We expect robust credit ratios for 2026-2028, with FFO to debt at about 40%-45%. We forecast Vattenfall's FFO to average SEK35 billion-SEK40 billion annually over this period, supported by its diversified revenue streams and hedges in place which we expect will mitigating price volatility for its generation assets. However, due to very large capital spending (capex), about SEK165 billion (net) over 2026-2030, that is, about SEK33 billion annually on average and will likely be roughly similar to FFO, which we expect will average SEK35 billion-SEK40 billion annually over 2026-2028. The earnings are aggravated by volatile Nordic electricity prices and execution risks associated with major projects, particularly those involving offshore wind farms, as well as anticipated increases in dividend distributions to about SEK7.5 billion on average over 2026-2027. The shortfall is projected to increase S&P Global Ratings-adjusted debt to about SEK80 billion to SEK90 billion between 2026 and 2028, from...

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