Fortum’s Profit Figures Decline as Hefty Dividend Looms

Fortum’s Profit Figures Decline as Hefty Dividend Looms

Fortum has released its financial report for the duration of October to December, including the details of its strategic plan.

Fortum’s comparable EBITDA for its ongoing operations was 459 million euros in the last quarter, a drop from the 774 million euros reported in the same period the previous year. The anticipated figure, according to Vara Research’s analysts’ consensus, was 587 million euros.

The comparable operating profit from continuing operations stood at 359 million euros, compared to 669 million euros a year ago, with analysts predicting 461 million euros. The reported operating profit was 376 million euros.

Earnings per share for October-December were 0.45 euros, down from 0.48 euros a year ago. However, this surpassed analysts’ forecast of 0.42 euros. The annual earnings per share amounted to 1.68 euros.

Fortum’s board proposes a dividend of 1.15 euros per share, exceeding analysts’ expectations of 1.05 euros per share. Based on Tuesday’s closing price, the proposed dividend represents a yield of 9.3 percent.

The company’s net sales from ongoing transactions decreased to 1.858 million euros, down from the adjusted 2.407 million euros reported for the same period last year.

Fortum’s condensed consolidated income statement and cash flow statement include the Russia segment as discontinued operations for Q1 2023 and 2022, and the Uniper segment as discontinued operations for 2022. The comparative data for Q1 2023 and 2022 were adjusted due to the classification of the Russia segment as discontinued operations in Q2 2023.

Investments for the current year are approximately 550 million euros

Fortum has not provided profit guidance. The company has however, indicated protections for the Generation segment for Nordic wholesale electricity production: for 2024 about 70% at a price of 47 euros/MWh and for 2025 about 40% at a price of 43 euros/MWh.

Fortum expects that investments excluding acquisitions will be around 550 million euros in 2024. This projection includes annual maintenance investments, estimated to be 300 million euros. For the period of 2024–2026, Fortum’s investments are anticipated to be around 1.7 billion euros excluding acquisitions. This includes an estimated 800 million euros for growth investments and 300 million euros for annual maintenance investments.

Recovery of Electricity spot prices in the fall

“During 2023, there was a decline in gas and electricity prices across Europe. The Nordic region experienced milder weather than usual in the fall, however, the last quarter of the year turned cold and dry. These conditions led to a quick depletion of water reserves, resulting in a recovery of Nordic spot prices from the previous quarter’s lower levels,” said Managing Director Markus Rauramo.

According to Rauramo, the strong performance of the Generation segment was the main factor contributing to the financial results in 2023. The segment benefited from high electricity prices in the Nordic countries and good physical optimization, supported by large fluctuations in prices. The segment’s comparable operating profit reached a record 1,679 million euros, with the achieved electricity price being 63.1 euros/MWh for the year.

In the fourth quarter, the Generation segment’s comparable operating profit decreased due to lower electricity prices, reduced condensing power production, weakened performance of the Renewables and Decarbonisation business and increased costs related to partially owned electricity generation companies. These factors were partially offset by increased electricity production volumes and lower depreciation at the Loviisa nuclear power plant.