Swedish power giant Vattenfall kicks off massive strategic shake-up.

• FULL STATEMENT: Vattenfall focuses on core markets

Vattenfall, Europe's fifth-largest electricity producer, will focus its business to three core markets – Sweden, Netherlands and Germany – in a move to cut its CO2 exposure exposure and increase profits.

“Vattenfall strives to increase profit and value creation, reduce debt and CO2 exposure and be among the leaders in developing environmentally sustainable energy production”, the company said in a statement Tuesday.

Vattenfall faces a challenging market outlook and has to improve operational efficiency, cut debt levels and reduce its CO₂-exposure which today is above the industry average.

The plan is part of the utility’s new strategic direction of the company, which include operating cost cutting of 6 billion kronor (€648 million).

“Potential divestments of geographic positions and assets that do not support the new strategic direction will be investigated”, the company said.

By this, Vattenfall aims to reduce its CO2-exposure and strengthen the company’s balance sheet, enabling Vattenfall to realize further growth in the future, it said. Expansion and growth is also fore-seen in green power production, such as wind, nuclear, biomass, hydro and in gas power.

The overall investment program in the next five years (2011-2015) is intended to be limited to 165 billion kronor (€17,8 billion) compared to 201 billion kronor (€21,7 billion) in the current investment program period (2010-2014).