Strong operational performance, but lower prices – refocused strategy for continued profitable growth

Core Viewpoint - Statkraft reported strong operational performance in Q2 2025 despite lower power prices, particularly in northern Norway and Sweden, with net results affected by impairments and currency effects [1][2][3] Operational Performance - Power generation reached 15.2 TWh in Q2 2025, an increase from 14.4 TWh in the same quarter of 2024, with a record-high generation of 36.9 TWh in the first half of 2025 [5][16] - The average power price in the Nordic region was 26.5 EUR/MWh, down 8.8 EUR/MWh from Q2 2024 [5][14] - Net operating revenues were NOK 9.3 billion in Q2 2025, compared to NOK 11.2 billion in Q2 2024, with underlying EBITDA at NOK 4.5 billion, down from NOK 6.5 billion [5][17] Financial Development - Statkraft incurred impairments of NOK 6.3 billion in Q2 2025, primarily due to lower estimated future power prices, including NOK 2.5 billion related to Swedish wind power assets [5][20] - Profit before tax was NOK -5.1 billion, and net profit was NOK -6.5 billion, reflecting significant financial challenges [21] - Return on average capital employed (ROACE) for Nordic assets fell to 22.9% from 34.8% due to lower power prices [22] Strategic Refocus - Following the appointment of CEO Birgitte Ringstad Vartdal in April 2024, Statkraft announced a strategy to streamline operations and focus on fewer technologies and markets [4][9] - The company aims to reduce complexity and costs by approximately NOK 2.9 billion annually by 2027 [10][12] - Statkraft plans to invest NOK 16-20 billion annually, focusing on large hydropower capacity upgrades and new onshore wind developments in Norway and Sweden [11] Market Conditions - The energy market is experiencing higher volatility and geopolitical uncertainty, impacting investment capacity and investor confidence [3][12] - Statkraft's strategy includes halting new developments in green hydrogen and offshore wind, except for the North Irish Sea Array project [8][9] International Operations - Statkraft has sold development activities in Croatia and Enerfin assets in the US, with ongoing sales processes for solar and hydropower assets in various countries [6][7] - The company is assessing its investment position in solar, wind, and batteries in Poland, while development activities in Portugal and Australia have been stopped [6]