President and CEO Pekka Lundmark:
(text from Fortum January-March Interim Report 2018)
"Following the good performance in 2017, the positive trend continued in the first quarter of 2018. The cold weather in February and March and the clearly lower than normal precipitation increased spot prices in the Nordic market. Further, the revision of the EU Emission Trading Scheme and the strengthening of the Market Stability Reserve had a positive impact on the price of CO2 emission allowances, which increased from EUR 8 per tonne to EUR 13 per tonne during the first quarter of 2018. This is a welcome development considering the needed decarbonisation. However, it is not yet sufficient for a large-scale market-based switch from coal to lower-emitting power generation.
Fortum's first quarter results improved significantly with comparable operating profit increasing by 29% to EUR 405 million. The higher achieved power price in combination with high hydro volumes strengthened the results of the Generation segment. The integration of the Hafslund business contributed positively to the results of the City Solutions and Consumer Solutions segments. I am also pleased that Teollisuuden Voima has reached a settlement with the supplier consortium of the Olkiluoto 3 nuclear reactor, which ended a dispute that has dragged on for several years. The agreement enables the successful finalisation of the project.
Fortum's offer period for Uniper shares ended in February 2018. A total of 47.12% of the shares were tendered, which will make Fortum the clearly largest shareholder of Uniper. The regulatory approval processes for the transaction are still ongoing in Russia and the EU, and we expect to receive these approvals by mid-2018. The transaction would close shortly thereafter.
The implementation of Fortum's strategy has proceeded well. Since the divestment of our electricity distribution networks in 2014 and 2015, we have been able to refocus our operations and redeploy our capital with solid and increasing returns through several strategically important acquisitions and organic investments, the most significant of which is our investment in Uniper. Once completed, the Uniper investment will increase our net debt to EBITDA ratio to a level above our long-term target. Our aim is to reduce the leverage and at the same time enable efficient use of our balance sheet and maintain the required financial flexibility. Our focus areas will thus be: prioritisation of our capital expenditure, optimisation of cash flow from our operations and overall efficiency improvements. The capital expenditure for the coming years will be scrutinised with strategic prioritisation both for maintenance and growth initiatives. To further improve our cash flow, we will evaluate the need to streamline our operations and assess the future of non-core assets. Continued cost consciousness is a key priority for us and further emphasis will be put on efficiency improvements and fixed cost scrutiny.
Through its ongoing transformation, Fortum is today well positioned in the energy sector. We possess the expertise required and aim to take an active role in successfully and affordably driving Europe’s transition towards a low-carbon energy system."