By Nora Buli
OSLO (Reuters) – Norway’s Statkraft posted a 56% drop in fourth-quarter underlying operating profit on Wednesday as power prices fell sharply and cautioned that trade wars could boost the cost of building generation capacity.
“Potential trade wars will, of course, increase costs and thereby reduce efficiencies in the market,” CEO Birgitte Ringstad Vartdal told Reuters.
Statkraft’s underlying earnings before interest and tax (EBIT) fell to 5.1 billion Norwegian crowns ($459 million) from 11.5 billion a year earlier.
The benchmark Nordic system power price fell to an average of 31.10 euros per megawatt hour, down 46.3% year on year, it said.
The state-owned utility’s annual underlying EBIT fell 36% to 26.5 billion crowns from 41.4 billion crowns a year ago.
If global political tensions prompt Europe to expand its industrial production, that would spell more energy demand, Vartdal noted.
Another key uncertainty is the fate of Russian gas supply to Europe, she said, referring to largely curbed Russian supply at the moment and whether a potential peace deal in Ukraine might mean a resumption of flows.
“No Russian gas, or a lot of Russian gas, will have an impact on (energy) prices,” Vartdal said.
Europe has switched away from Russian gas to alternative supplies since Moscow’s invasion of Ukraine in 2022 and also added more wind and solar power generation, reducing its gas requirements.
($1 = 11.1103 Norwegian crowns)
(Reporting by Nora Buli; editing by Terje Solsvik and Jason Neely)
