Interim Report January-March 2024
Fortum Corporation
30 April 2024
Markus Rauramo
President and CEO
Quarterly highlights Q1 2024
- Solid performance, good results and strong financial position
- Strong optimisation premium
- Credit rating upgrade by S&P to BBB+
- Arbitration proceedings against the Russian Federation
- SBTi due diligence process
Deliver reliable clean
energy
Pjelax wind farm
operational
Espoo CHP coal exit and
electric boilers
Transform and
develop
Efficiency
improvement
programme
Drive
decarbonisation of
industries
Development of industrial sites
3
Q1 2024
Operating profit
The Generation segment result declined, while Consumer Solutions and Other Operations segments improved.
Cash flow
Cash flow improved from last year supported by decreased working capital.
Leverage
Despite lower EBITDA, leverage improved due to lower financial net debt.
Solid financial performance and good results despite lower power prices in Nordics
Key financial indicators for continuing operations
Comp. OP | Comp. EPS | OCF | Leverage | ||||
0.54 | 0.48 | 474 | 538 | 2-2.5x | |||
698 | |||||||
530 | |||||||
0.3x | |||||||
Q1 2023 | Q1 2024 | Q1 2023 | Q1 2024 | Q1 2023 | Q1 2024 | Maximum | LTM |
level |
4
After a cold start of the year, Nordic power prices eased off
Source: NordPool, BloombergNEF
Daily market prices 25 April 2024; 2024 and 2025 future quotations
Volatile weather drove Nordic power in Q1
- Nordic spot prices overall developed sideways during Q1, whereas the futures market softened with a mild ending of the winter period.
- Power prices were elevated by very cold weather in January, with Finnish and Estonian areas peaking at 890 EUR/MWh as a daily price. Market conditions normalised quickly as a shift in the weather regime took place.
- European gas prices continued to decline in Q1 on low demand, stable supply and record high storage levels. However, resurfacing security of supply concerns in both gas and coal slowed down the price decline in the latter part of Q1.
5
Tiina Tuomela
CFO
Lower result but stronger cash flow
MEUR, continuing operations | I/2024 | I/2023 | LTM | 2023 |
Sales | 2,015 | 2,265 | 6,461 | 6,711 |
Comparable EBITDA | 622 | 781 | 1,744 | 1,903 |
Comparable operating profit | 530 | 698 | 1,376 | 1,544 |
Comparable net profit | 430 | 483 | 1,097 | 1,150 |
Comparable EPS | 0.48 | 0.54 | 1.22 | 1.28 |
1,774 | 1,710 | |||
Net cash from operating activities | 538 | 474 | ||
0.3 | 0.5 | |||
Financial net debt / Comp. EBITDA | ||||
Lower power prices reflected in the result (LTM)
- Comparable operating profit at EUR 1,376 m
- Comparable EPS at EUR 1.22
- Excellent credit metrics with Financial net debt-to-Comparable EBITDA ratio at 0.3 times
- Net cash from operating activities slightly improved to EUR 1,774 m
7
Q1/2024
Generation
Lower earnings down mainly due to lower spot and hedge power prices, somewhat offset by higher hydro generation and higher optimisation premium. Achieved power price of 63.9 €/MWh.
Consumer Solutions
Higher earnings mainly due to higher electricity sales margins
Other Operations
Improved earnings due to efficiency improvement measures, partly offset by lower results in Circular Solutions
Group results mainly impacted by lower achieved power price
Comparable operating profit
(EUR million)
€m | Q1/2024 | Q1/2023 |
Generation | 513 | 723 |
Consumer Solutions | 42 | 6 |
Other Operations | -25 | -31 |
Total | 530 | 698 |
Balanced maturity profile and strong liquidity position
942 | Financial net debt |
538 | |||
0 | 44 | 34 | 528 |
114 |
Financial net | CF from | Investments | Dividends | Change in | FX and other | Financial net | ||||||||
debt 31 Dec | operating | paid | paid | interest-bearing | debt 31 Mar | |||||||||
2023 | activities | receivables | 2024 | |||||||||||
1 500 | ||||||||||||||
Loan maturities as per 31 March 2024 | ||||||||||||||
Bonds | ||||||||||||||
Loans from financial institutions* | ||||||||||||||
Other long-term loans | ||||||||||||||
Commercial papers | ||||||||||||||
1 000 | Collateral liabilities | |||||||||||||
Other short-term loans | ||||||||||||||
500
0
9 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | 2034+ |
Solid credit metrics
'BBB+' long-term issuer credit rating, Stable outlook
'BBB' long-term issuer credit rating, Stable outlook
Fortum's objective:
Maintain solid investment grade rating of at least BBB to maintain financial strength, preserve financial flexibility and good access to capital.
As per 31 March 2024:
Total loans of € 5.7 bn excl. lease
- Average interest rate for Fortum Group loan portfolio incl. derivatives hedging financial net at 4.4%
- Liquidity reserves of € 8.2 bn
- Liquid funds of € 4.9 bn with average interest rate of 3.9%
- Undrawn credit facilities of € 3.3 billion
*Bilateral loan, EUR 500 million, maturing in 2025 includes 1 year extension option by Fortum.
Outlook
Generation's Nordic outright (47 TWh/a):
Hedges
-
For the rest of 2024: 70% hedged at 43 €/MWh
(previously reported: N/A) - For 2025: 50% hedged at 42 €/MWh
(previously reported: 40% at 43 €/MWh)
Optimisation premium
- Annual 6-8 €/MWh depending on market conditions
Tax guidance for 2024-2026:
Comparable effective income tax rate estimated to be 18-20%
Capital expenditure guidance:
2024: Capital expenditure, including maintenance capex, (excluding potential acquisitions) expected to be ~€ 550 million
Annual maintenance capital expenditure expected to be ~€ 300 million
2024-2026: Total capital expenditure can be up to € 1,700 million
Fixed cost reduction:
Fortum targets to gradually reduce its annual fixed costs by € 100 million until end of 2025 with full run rate from the beginning of 2026
Fortum expects to reduce its fixed cost base by more than EUR 50 million by the end of 2024
10
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
Fortum Oyj published this content on 30 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 April 2024 06:23:11 UTC.