According to preliminary information, Fortum's operating profit for the fourth
quarter 2010 is affected more than usually by the IFRS accounting treatment
(IAS 39) of derivatives used for hedging Fortum's power production. The effect
on the October-December 2010 earnings per share is EUR -0.18. The decrease is
based on IFRS requirements on mark-to-market accounting of Fortum's hedging
portfolio. The effect does not have an impact on Fortum's cash flow or
comparable operating profit.
During the fourth quarter 2010, power forward price for the first quarter of
2011 in Nord Pool increased from EUR 51 per megawatt-hour (MWh) at the
beginning of the quarter to EUR 84 per MWh at year-end. Most of the increase,
EUR 22 per MWh, took place during December. Also the full-year 2011 forward
price increased significantly during December.
The effect has reversed to a large extent during the first weeks of 2011,
driven by a rapid decline of especially 2011 Nord Pool forward prices. During
January, for example, the February 2011 forward price has decreased to EUR 63
According to IFRS (IAS 39), some of the derivative positions Fortum uses for
hedging its electricity generation do not qualify for Hedge Accounting. Hedge
Accounting allows booking fair value changes resulting from derivative position
market value changes in equity in the balance sheet. If the Hedge Accounting is
not applied, the mark-to-market value change has to be booked in the profit and
loss statement. In the fourth quarter 2010, the impact of this accounting
treatment was exceptionally high.
Fortum will publish its financial statements bulletin for 2010 on 2 February
2011 at 9 a.m. EET.
Executive Vice President, Corporate Relations and Sustainability
Fortum's Investor Relations, tel. +358 10 453 6150 and +358 10 453 2552,
Mika Paloranta, Head of Asset Backed Trading, tel. +358 10 452 4138
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