Statkraft, Norway's largest steel producer, reports a drop in profits and says that politics may have an impact on costs

Statkraft, a Norwegian company, reported a 56% decline in its fourth-quarter operating profit despite soaring power prices. Statkraft also warned that trade wars may increase the cost to build generation capacity.

Birgitte Vartdal, CEO of Birgitte Ringstad, said that "potential trade wars would increase costs, and reduce the efficiency in the market."

Statkraft's earnings before interest and taxes (EBIT) dropped from 11.5 billion Norwegian crowns to 5.1 billion Norwegian Crowns ($459m) a year ago.

It said that the benchmark Nordic System power price has fallen to an average of 31,10 euros per Megawatt-hour, down 46.3% on a year-on-year basis.

The EBIT of the state-owned utility fell by 36% from 41.4 billion crowns to 26.5 billion crowns.

Vartdal said that if global political tensions lead Europe to increase its industrial production then this would result in a higher energy demand.

She said that another key uncertainty is what will happen to the Russian gas supplies to Europe. This refers to the fact that the Russian supply has been largely curtailed at this time and whether or not a possible peace agreement in Ukraine could mean a return of the flows.

Vartdal stated that "no Russian gas or a large amount of Russian gas will have an effect on the (energy) price."

Since Moscow's invasion in Ukraine, 2022, Europe has switched to alternative gas supplies and increased its wind and solar energy generation. This has reduced the gas requirement.

(source: Reuters)