"The start of the year has been very strong for Fortum. We pushed ahead with necessary changes to speed up our strategy execution and the market fundamentals supported our businesses in the first quarter, after a considerably more challenging 2020.
In the first quarter, all our segments recorded higher comparable operating profits than a year ago. Nordic power prices increased significantly from last year, despite the persistently high hydro reservoir levels. The higher power prices were also the main driver for the 14% increase in the comparable operating profit of the Generation segment. The Russia segment improved slightly, supported by the profitable sale of Fortum’s 116-MW solar power project to a partly-owned joint venture for renewable power. This profit offset most of the negative effects from the weaker Russian rouble. Excluding these two effects, the Russia segment’s operative results improved somewhat. While the City Solutions segment had some challenges with its performance in 2020, the district heating business benefitted from the clearly colder weather and also the recycling and waste business improved its performance from last year. Improving power margins and the sale of value-added services continued to strengthen the results of Consumer Solutions.
The performance of our newest segment, Uniper, was very strong in the first quarter; even compared to the very good results in the first quarter of 2020. Uniper’s results represent a significant share of Fortum’s first-quarter results and we can now for the first time report its contribution to Fortum’s comparable operating profit for the full twelve-month period of second-quarter 2020 to first-quarter 2021: EUR 1,074 million. As we consistently have been focusing on strengthening of the balance sheet, this puts Fortum’s leverage for the last twelve months, measured as financial net debt-to-comparable EBITDA, at the level of 1.9 times, which is in line with our long-term target of less than 2.0 times.
This spring Fortum took further steps in order to step up cooperation, realise benefits, and accelerate the strategy execution. We made several changes aimed at leveraging the combined strengths more widely and developing a joint culture based on our common values. Our ambition is that the leadership teams of the two companies would work in a more integrated way to ensure efficient decision making and faster value creation, for the benefit of both companies. At the end of March, Klaus-Dieter Maubach took over as the CEO of Uniper and Tiina Tuomela assumed the role of Uniper’s CFO following the departure of the former CEO and CFO. In April, we announced that Sirpa-Helena Sormunen and Risto Penttinen were appointed General Counsel and Executive Vice President Strategy of Uniper, respectively, moving out of their previous roles in Fortum‘s Executive Management. I am happy to welcome Simon-Erik Ollus, Nora Steiner-Forsberg, Eveliina Dahl, and Nebahat Albayrak as new members of the Fortum Executive Management. Nebahat succeeds Arto Räty who will retire later this year. Earlier this week, we announced big concrete steps towards realisation of the cooperation benefits via the ‘One Team’ approach between Fortum and Uniper. The planning phase of the three strategic cooperation areas has now been concluded and the proposal is to combine the Nordic hydro and physical trading optimisation under Fortum’s Generation segment and to adopt a functional cooperation model in wind and solar development as well as in the development of the hydrogen business.
Also the regulatory development within the EU took several positive steps forward at the beginning of 2021. The EU institutions agreed on the European Climate Law, including the tightening of the 2030 climate target to a 55% reduction of GHG emissions and a goal of climate neutrality by 2050. Furthermore, the first delegated act under the EU Sustainable Finance Taxonomy was adopted. The final version saw a clear improvement regarding hydropower, as the criteria are now aligned with the EU Water Framework Directive, making the bulk of the Nordic CO2-free hydropower eligible under the taxonomy. The eligibility of nuclear power and gas will be addressed in a separate complementary delegated act in the summer. The expert group of the Commission’s Joint Research Centre concluded that nuclear power generation causes no more harm than other forms of power generation, and Fortum expects the Commission will respect the view of its own scientific body. As for gas, we are glad that the Commission highlighted a clear transitional role for natural gas in reducing greenhouse gas emissions in the path towards climate neutrality and expect this role to be reflected in the upcoming legislation."