Financial outlook

From January-March 2020 Interim Report


At the end of the first quarter 2020, approximately 85% of the Generation segment’s estimated Nordic power sales volume was hedged at EUR 33 per MWh for the remainder of 2020 and approximately 50% at EUR 34 per MWh for 2021 (at the end of 2019: 40% at EUR 33 per MWh).

At the end of the first quarter 2020, approximately 95% of the Uniper segment’s estimated Nordic power sales volume was hedged at EUR 28 per MWh for the remainder of 2020, approximately 70% at EUR 28 per MWh for 2021, and approximately 15% at EUR 23 per MWh for 2022.

The reported hedge ratios are based on the hedges and power generation forecasts of the Generation segment and of Uniper’s Nordic generation. The underlying generation assets and definition of hedges differ to some extent and are thus not fully comparable.

The reported hedge ratios may vary significantly, depending on Fortum’s and Uniper’s actions on the electricity derivatives markets. Hedges are mainly financial contracts, most of them electricity derivatives quoted on Nasdaq Commodities.

Capital expenditure and divestments

Fortum currently estimates its capital expenditure, including maintenance but excluding acquisitions, to be approximately EUR 700 million in 2020, excluding Uniper. This includes approximately EUR 200 million of solar and wind investments, which are subject to the capital recycling business model. The maintenance capital expenditure in 2020 is estimated to be approximately EUR 300 million, well below the level of depreciation.

Fortum and Uniper share the view of the importance of credit rating and take it into account when making new decisions on capital expenditures.


The Generation segment’s achieved Nordic power price typically depends on factors such as hedge ratios, hedge prices, spot prices, availability and utilisation of Fortum’s flexible generation portfolio, as well as currency fluctuations. Excluding the potential effects from changes in the power generation mix, a 1 EUR/MWh change in the Generation segment’s achieved Nordic power price will result in an approximately EUR 45 million change in Fortum’s annual comparable operating profit. The achieved power price also includes the results of optimisation of Fortum’s hydro and nuclear generation, as well as operations in the physical and financial commodity markets.

The Swedish hydropower real-estate tax decreased from 1.0% to 0.5% in January 2020. In 2019, the tax amounted to EUR 40 million and is expected to be approximately EUR 25 million in 2020.

City Solutions

The development of Fortum Oslo Varme’s business operations is estimated to require one-time integration-related costs and investments over the coming years. The cost synergies materialised gradually during 2019, with targeted annual synergies of EUR 5‑10 million expected to be achieved by the end of 2020.

Uniper guidance

With regard to Uniper, reference is made to the guidance that the company publishes quarterly.

Income taxation

In 2020, the comparable effective corporate income tax rate for Fortum is estimated to increase from the current level (22.4% in 2019) as Uniper is consolidated into Fortum’s results from the end of the first quarter. The increase is mainly a consequence of the exposure to new operative countries and changes in the weight of profits to be taxed at different local tax rates.

In June 2018, the Swedish Government decided to lower the Swedish corporate tax in two steps, from 22.0% to 21.4%, effective January 2019, and to 20.6%, effective January 2021.