Economic|Interim reports
For now, all businesses will continue as normal.
Energy company Fortum does not intend to withdraw from the Russian market but will suspend its new investments in the country.
“We have decided to suspend all new investments in Russia for the time being and will continue to reduce our fossil fuel-based operations,” Markus Rauramo says in a company release.
The decision hits Fortum’s solar and wind power investments in Russia. The company has 1.9 gigawatts of solar and wind power under development in Russia. 0.3 gigawatts of renewable production is already under construction.
Fortum’s decision is a reaction to Russia’s invasion of Ukraine. Rauramo says he is appalled and saddened by the attack.
“This is by no means acceptable. The situation has also shaken relations between Russia and Europe and damaged ties that have been built for decades. The consequences will be far-reaching. ”
Company says that for now, all of its businesses will continue as normal.
“However, the situation is to live on a daily – if not hour – basis – so it is very difficult to assess the extent of the impact on our operations in the future,” says Rauramo.
Western countries have imposed unprecedentedly severe economic sanctions on Russia. So far, however, sanctions have not hit the energy sector, but Western countries have said no sanctions have been ruled out.
“Naturally, we comply with the laws and regulations governing our operations, including sanctions, and prepare for different scenarios. Should the escalation of the situation prevent us from fulfilling our commitments to our customers in Europe, we will work with European authorities and governments to find a common solution. ”
Fortum has 12 power plants in Russia together with Uniper. There are about 7,000 employees in Russia.
“Many of our employees across Europe work with them, and the events of recent days have been distressing and challenging for all of us. In this situation, the most important thing for us is to ensure the well-being of our employees and the energy supplies of our customers in all our countries of operation, ”says Rauramo.
Fortum outlined the future of its operations in Russia in connection with the announcement of results. Last year’s result was burdened by accounting losses in the derivatives trade.
Comparable operating profit, excluding the decline in the fair value of derivatives, was the best in Fortum’s history at EUR 2.536 billion. Earnings grew nearly 90 percent from the previous year, exceeding forecasts by most analysts.
Instead, the operating profit was a loss of EUR 588 million.
This is mainly due to the fact that the market value of derivatives used to hedge non-electricity prices had to be reduced by a total of EUR 5.4 billion. Most of this effect came from Uniper’s derivatives business.
Read more: Uniper prepares for market fluctuations and cuts dividend to minimum – billions in derivatives losses
Rauramon according to him, last year was in many ways special in the energy sector.
“The combination of rare conditions led to unprecedented developments and strong volatility in the energy commodity markets.”
The company’s Board of Directors proposes that a dividend of EUR 1.14 per share be distributed to shareholders from last year’s result.
The news is being updated.
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