Financial outlook

January-March 2023 Interim Report

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 the first quarter of 2023, approximately 70% of the Generation segment’s estimated Nordic power sales volume was hedged at EUR 50 per MWh for the remainder of 2023 and approximately 45% at EUR 43 per MWh for 2024 (at the end of 2022: 45% at EUR 42 per MWh for 2024).

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 reduced its exposure on the Nasdaq Commodities exchange and increased the share of bilateral agreements.

Capital expenditure

Fortum estimates its capital expenditure, including maintenance but excluding acquisitions and the Russia segment, to be approximately EUR 700 million in 2023, of which the share of maintenance capital expenditure is estimated to be approximately EUR 300 million, below the level of depreciation.


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.

Income taxation

In 2023, considering the effect of the deconsolidation and related impairments of the Russian assets and the temporary windfall tax law in Finland, the comparable effective income tax rate for Fortum is estimated to be in the range of 20−23% and excluding the windfall tax in Finland, in the range of 19−21%. In 2024, the comparable effective income tax rate for Fortum is estimated to be in the range of 19−21%. 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.

Russia segment deconsolidation and impairments

Due to the Presidential decree (No. 302 of 25 April 2023), the Russian authorities seized control of Fortum’s Russian assets. Following the loss of control, the Russia segment will be deconsolidated and the Russian assets will be fully written down in Fortum’s second-quarter 2023 financials. Fortum will record an estimated impairment of EUR 1.7 billion equalling the remaining book value, which will negatively impact the Group’s equity. Fortum recycles cumulative translation losses of EUR 1.9 billion. These cumulative translation differences will be reclassified within equity and recycled through the income statement as required by IFRS. These will not impact group equity.

In its second quarter 2023 reporting, Fortum will classify its Russian operations as discontinued operations. The impairments and translation differences will be recorded as part of discontinued operations.