Financial outlook

Financial Statements Bulletin 2023

In the near term, the ongoing disruption of the energy sector is impacted by geopolitical tensions, the general negative economic outlook with high inflation and interest rates, tightening regulations and volatile commodity markets. In addition, in the short-term, price elasticity to counter high electricity prices has an impact on power consumption.

In the long-term, electricity is expected to continue to gain a significantly higher share of total energy consumption. The electricity demand growth rate will largely be determined by classic drivers, such as macroeconomic and demographic development, but also increasingly by decarbonisation of energy-intensive industrial, transport and heating sectors through direct electrification and green hydrogen. 


At the end of 2023, approximately 70% of the Generation segment’s estimated Nordic power sales volume was hedged at EUR 47 per MWh for 2024 (at the end of the third quarter of 2023: 65% at EUR 47 per MWh) and approximately 40% at EUR 43 per MWh for 2025 (at the end of the third quarter of 2023: 30% at EUR 43 per MWh).

At the end of 2023, for the rolling 10-year period of 2024-2033, approximately 15% of the Generation segment’s estimated Nordic power sales volume was hedged. These hedges relate to Fortum’s new strategic target of a hedged share of rolling 10-year outright generation volume more than 20% by end of 2026. 

The reported hedge ratios are based on the hedges and power generation forecasts of the Generation segment. 

The reported hedge ratios may vary significantly, depending on Fortum’s actions on the electricity derivatives markets. Hedges are mainly financial contracts, most of which are electricity derivatives quoted on Nasdaq Commodities and traded either on Nasdaq Commodities or with bilateral counterparties. As an additional liquidity risk mitigation measure, Fortum has mainly been hedging with bilateral agreements, and the exposure on the Nasdaq Commodities exchange has been clearly lower during the past year. 

In the fourth quarter of 2023, Fortum continued to utilise dual channels for its hedging: both trading on the Nasdaq Commodities exchange, depending on the market liquidity and financial optimisation, as well as with bilateral arrangements. The majority of the trades still remained in bilateral contracts.

Capital expenditure

Fortum estimates its capital expenditure, including maintenance but excluding acquisitions, to be approximately EUR 550 million in 2024, of which the share of maintenance capital expenditure is estimated to be approximately EUR 300 million, below the level of depreciation. For 2024-2026, Fortum’s capital expenditure is expected to be approximately EUR 1.7 billion (excluding acquisitions), of which growth capital expenditure is expected to be EUR 800 million and annual maintenance capital expenditure EUR 300 million. Of the growth capital expenditure of EUR 800 million, EUR 300 million is uncommitted.


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 (currently approximately 45 TWh), a EUR 1 per MWh change in the Generation segment’s achieved Nordic power price will result in an approximately EUR 45 million change in the segment’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. Historically, the optimisation margin included in the achieved power price has been in the range of EUR 1-3 per MWh. Due to the increased price volatility, Fortum updated in the third quarter of 2023 the estimated optimisation margin and expects it to be in the range of EUR 6-8 per MWh, depending on the overall market conditions, level of volatility and electricity prices. 

Income taxation

The comparable effective income tax rate for Fortum is estimated to be in the range of 18-20% for 2024-2026. Fortum’s comparable effective tax rate is impacted by the weight of the profit in different jurisdictions and differences in standard nominal tax rates in these jurisdictions. The tax rate guidance excludes items affecting comparability.