Stock exchange release

Fortum Corporation: January-March 2020 Interim Report - Solid results in a volatile market environment

15 May 2020, 9:00 EEST


This release is a summary of Fortum’s January-March 2020 Interim Report. The complete report is attached to this release as a pdf file. It is also available on the company's website at

January-March 2020

  • Comparable EBITDA was EUR 543 (545) million
  • Comparable operating profit was EUR 393 (408) million, -4%
  • Operating profit was EUR 592 (358) million, +65%, impacted by the EUR 431 million sales gain from the Joensuu divestment and a one-time, non-cash income statement impact of EUR -222 million from Uniper becoming Fortum’s subsidiary
  • Share of profits of associates and joint ventures was EUR 479 (111) million, mainly related to Fortum’s share of Uniper’s profits, including Fortum’s share of Uniper’s fourth-quarter 2019 profits of EUR 162 (49) million and first-quarter 2020 profits of EUR 307 (-) million
  • Earnings per share were EUR 1.05 (0.38), of which EUR 0.22 ( 0.04) related to items affecting comparability and EUR 0.53 (0.06) to Uniper
  • Cash flow from operating activities totalled EUR 1,114 (751) million
  • No major immediate effects from Covid-19 on Fortum’s business
  • Fortum finalised the divestment of its district heating and cooling business in Joensuu, Finland, for approximately EUR 530 million
  • Fortum became majority owner in Uniper in March, consolidated Uniper as a subsidiary

Events after the balance sheet date

  • Fortum further increased its ownership in Uniper to 73.4% in May
  • Fortum aims to set new long-term financial targets by the end of the year at the latest, as Fortum’s business profile has changed following the consolidation of Uniper. The current long-term financial targets return on capital employed and comparable net debt-to-EBITDA do not appropriately reflect the Group and have consequently been removed
  • Fortum closed the transaction to sell a share of its Nordic wind portfolio in May

Summary of outlook

  • The Generation segment’s Nordic generation hedges: approximately 85% at EUR 33 per MWh for the remainder of 2020 and approximately 50% at EUR 34 per MWh for 2021
  • The Uniper segment’s Nordic generation hedges: approximately 95% 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
  • Capital expenditure, including maintenance but excluding acquisitions, is expected 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

Key figures

EUR million I/2020 I/2019 2019 LTM
Sales  1,357  1,690  5,447  5,114
Comparable EBITDA  543  545  1,766  1,764
Comparable operating profit  393  408  1,191  1,176
Operating profit  592  358  1,110  1,344
Share of profit/loss of associates and joint ventures  479  111  744  1,112
Profit before income taxes  1,014  424  1,728  2,318
Earnings per share, EUR  1.05  0.38  1.67  2.33
Net cash from operating activities  1,114  751  2,015  2,378
Shareholders’ equity per share, EUR  15.51  13.14  14.61  
Financial net debt (at period-end)*  6,983    4,833  
Adjusted net debt (at period-end)*  9,104    4,978  
Interest-bearing net debt (at period-end)* -  4,995  5,260  


Fortum’s President and CEO Pekka Lundmark:

"The market environment during the first quarter was volatile and challenging. Already in December 2019, the Nordic hydrology turned clearly wetter and the same trend continued to depress prices substantially in the beginning of 2020. In March, the ‘price war’ on oil and the Covid-19 pandemic shocked the market. This put further downward pressure on the already depressed commodities and Nordic power prices. Even though several countries are slowly easing the restrictions put in place to limit the spreading of the virus, it is still impossible to determine the long-term economic effects of the pandemic.

Operationally, Fortum has managed well under the challenging circumstances and our society-critical power and heat production is running smoothly. Also our other operations are running normally with employees mainly working remotely. So far Covid-19 has not had any major immediate effects on Fortum’s business. Our fairly high Nordic power price hedge ratio for 2020 has paid off and also the hedges for 2021 are on a higher than normal level, which alleviates the impact of the sharp decline in power prices.

Fortum’s results for the first quarter improved in most segments. In the Generation segment, the positive effect of the higher hydro volumes more than compensated for the decline in the achieved power price. Thanks to our loyal customers and the continuous development of our offering and operational efficiency, Consumer Solutions’ results improved for the tenth consecutive quarter. The results of the Russia segment were on last year’s level, while City Solutions was clearly behind. The decline in City Solutions’ results was partially due to structural changes, mainly the divestment of the Joensuu district heating business, but the segment also suffered heavily from the record warm winter and the low power prices. As Fortum’s share of Uniper’s profits was close to half a billion euros, the earnings per share for the first quarter increased by 176% to EUR 1.05, of which EUR 0.53 related to Uniper. This includes our share of Uniper’s fourth-quarter 2019 and first-quarter 2020 results, and is an excellent start of the year.

In 2019, we initiated a strategic review of our district heating business in Estonia and in Joensuu, Finland. This resulted in the divestment of the Joensuu district heating business in January, recording a capital gain of EUR 431 million. In February 2020, we extended the strategic review to include the district heating businesses in all Baltic countries, in Poland, and in Järvenpää, Finland. This review is ongoing and proceeding as planned.

During the beginning of the year, our investment in Uniper took several positive steps forward. Firstly, we received all necessary regulatory approvals, which enabled us to close the share transactions with Elliott and Knight Vinke and increase our ownership to 73.4%, making Uniper a subsidiary and a valuable part of the Fortum Group. Following the completion of the transactions, Fortum’s financial position remains solid, which was recognised by the rating agencies as Standard & Poor’s, Fitch, and Moody’s affirmed Fortum’s BBB long-term credit rating with Negative Outlook. Secondly, in March, Uniper published its updated strategy, including a coal-exit plan and a target for carbon-neutrality by 2035 for its European power generation. We welcome the updated strategy as a clear step in the right direction, underlining the strategic rationale for our investment in Uniper. Finally, following the confirmation of our increased ownership, five shareholder representatives resigned from the Uniper Supervisory Board, and new board members were appointed in April, in line with Fortum’s ambition.

Starting from the end of the first quarter, Fortum is now consolidating Uniper’s balance sheet. This means that in our first-quarter results, Uniper’s contribution is still accounted for in the share of profits from associates and joint ventures. The contribution was substantial, totalling EUR 469 million. As of the second-quarter results, also Uniper’s income statement will be consolidated and will consequently contribute to Fortum’s comparable operating profit.

We will continue to ensure that we strengthen our balance sheet, optimise cash flow, and secure a solid investment grade rating of at least BBB. Our focus is on maximising our profitability, prioritising our capital expenditure, and continue the portfolio optimisation. The targets for return on capital employed and comparable net debt-to-EBITDA were successfully achieved in 2019. As a next step forward, our goal is to develop a joint vision and seek strategic alignment for the combined entity. As one outcome of the joint strategy work, Fortum plans to set new applicable long-term financial targets for the group and ambitious decarbonisation targets covering the combined operations by the end of the year at the latest.

I would like to note that while the CO2 emissions from European power generation are steadily decreasing, by 15% last year, the overall reduction pace should increase in order to better support the EU’s ambition to be carbon neutral in 2050. The most efficient policy instrument to speed up the development is the EU emission trading system (ETS) that covers all energy production and industrial facilities, and sets the European-wide emission reduction schedule for the ETS sectors. The total amount of emissions is determined by the ETS system, not by how individual facilities are operated. This also applies to the much debated Datteln 4 power plant. As the supply of emission rights is reduced every year, the system gradually pushes the least efficient facilities out from the market. Fortum is strongly of the opinion that the ETS should be further tightened as it is a proven way to really reduce emissions in a market-based manner.

Together, Fortum and Uniper are Europe’s third largest producer of CO2-free electricity, and we have a significant role in the energy transition. Both companies’ decarbonisation efforts are proceeding well. For the year 2020, we tightened Fortum’s stand-alone ambition level further and set a target for specific CO2 emissions: maximum 180 g/kWh from total energy production. Uniper’s CO2 emissions declined by 21% in 2019 and are set to continue to decline as Uniper decommissions all of its old hard coal-fired generation capacity in Germany and the UK by 2025 and in the Netherlands by 2030 at the latest."

Changes in reporting

Uniper consolidation

As the majority owner with 73.4% of shares in Uniper, Fortum consolidates Uniper as a subsidiary as of 31 March 2020. This entails changes in Fortum’s reporting structure, accounting policies, as well as definitions of certain key figures, among others. Changes will be implemented in phases over the financial year 2020 starting from this first-quarter interim report. Fortum consolidated Uniper into Fortum’s balance sheet as of 31 March 2020 and, from the second quarter, Fortum will consolidate Uniper’s results into its income statement.

Uniper will be reported as a separate reportable segment. As of the year 2020, Fortum’s reportable segments and reporting order are the following: Generation, Russia, City Solutions, Consumer Solutions, and Uniper.

In the first quarter, Fortum’s share of Uniper’s profits totals EUR 469 million, and is reported in Fortum’s ‘share of profits of associates and joint ventures’ in ‘Other operations’. This comprises EUR 162 million from Uniper’s fourth-quarter 2019 profits (previously estimated to be EUR 90 million) and EUR 307 million from Uniper’s first-quarter 2020 profits. The reason for the change in Fortum’s share of Uniper’s fourth-quarter profits, compared to the previously communicated, is related to a change of the estimated tax impact on impairments made by Uniper. Fortum’s share of Uniper’s first quarter-results includes a reversal of EUR 61 million after tax related to the negative impact of impairments recorded by Uniper in its first-quarter 2020 results.

The change of accounting status of Uniper, i.e. from being an associated company to becoming a subsidiary, requires a reclassification inside equity of Fortum’s share of Uniper’s items of ‘Other comprehensive income’ recognised during the period during which Uniper was consolidated as an associated company. The effect of this is mainly related to foreign exchange differences from translation of foreign operations recorded by Uniper according to IFRS accounting standards. This resulted in a EUR 222 million negative one-time non-cash effect that was recorded in ‘items affecting comparability’ in Fortum’s first-quarter 2020 results, without any impact on Fortum’s equity.

Following the consolidation of Uniper, Fortum has changed its definition of net debt. New definitions of financial net debt and adjusted net debt are used in Fortum’s financial reporting. At the end of the first quarter, financial net debt amounted to EUR 6,983 million and adjusted net debt to EUR 9,104 million. These numbers include Fortum’s consolidated net debt of Uniper. Net debt according to Fortum’s previous definition amounted to EUR 5,260 million at the end of 2019.

Uniper prepares its financials in accordance with IFRS accounting standards. Following the acquisition of Uniper, Fortum has commenced the review of Uniper’s accounting policies to identify any significant differences to Fortum accounting policies to identify any significant differences to Fortum accounting policies. However, due to the short time frame between the acquisition day and the announcement of the first-quarter results, Fortum is still evaluating the potential impact on the consolidated financial statements.

The preparation of the purchase price allocation (PPA) for the Uniper acquisition has been initiated. However, due to the short time frame between the acquisition day and the announcement of the first-quarter 2020 results, determining of the fair values of the assets acquired and liabilities assumed has not been finalised. The purchase price allocation will be completed within the one-year window from the acquisition date according to IFRS.

For further details on consolidation of Uniper, see Note 1.

Espoo, 14 May 2020

Fortum Corporation
Board of Directors

Live webcast/teleconference

A combined live webcast and teleconference for media, investors, and analysts will be arranged online on 15 May 2020 at 11.00 EEST. For the webcast, use the link on

To participate in the teleconference and Q&A, please dial in using the numbers below:

FI +358 9 8171 0310
UK +44 333 300 0804
US +1 631 913 1422

Passcode: 58593354#

A recording of the webcast as well as the transcript will be published at after the event.

Further information:

Investor Relations and Financial Communications: Ingela Ulfves, tel. +358 40 515 1531, Måns Holmberg, tel. +358 44 518 1518, Rauno Tiihonen, tel. +358 10 453 6150, Pirjo Lifländer, tel. +358 40 643 3317, and investors [at] fortum [dot] com (investors[at]fortum[dot]com)

Media: Pauliina Vuosio, tel. +358 50 453 2383

Financial calendars in 2020:

  • January-June Half-year Financial Report on 19 August 2020 at approximately 9:00 EEST

  • January-September Interim Report on 17 November 2020 at approximately 9:00 EET

Fortum’s Capital Markets Day 2020 is planned for 3 December 2020.

Uniper publishes its financial calendar on the website Uniper will publish its interim reports in 2020 on the following dates:

  • Financial Results January-June 2020 on 11 August 2020

  • Financial Results January-September 2020 on 10 November 2020


Nasdaq Helsinki
Key media

More information, including detailed quarterly information, is available on Fortum’s website at