Interim reports | Fortum's operating profit clearly fell short of the forecast – it pays higher dividends than expected

Energy company Fortum's operating profit from the last quarter of last year is clearly worse than predicted. The company's comparable operating profit for the fourth quarter was 359 million euros.

Analysts' consensus forecast predicted a comparable operating profit of 461 million euros for Fortum.

The profit shrank clearly from October to December 2022. At that time, the company made profits of no less than 669 million euros.

Fortum's comparable earnings per share were EUR 0.35.

Turnover was clearly lower than the previous year, marked by high energy prices. Fortum's turnover in the last quarter of 2023 was 1,858 million euros, compared to 2,407 million euros in the same period a year earlier.

Interim report however, promises generous dividend income to Fortum's shareholders.

The energy company plans to pay a per-share dividend of 1.15 euros per share, which is more than the analysts' consensus forecast of 1.05 euros. The dividend is paid in two installments. Calculated at Tuesday's closing price, Fortum's dividend yield is 9.3 percent. It is by far the best dividend yield on the Helsinki Stock Exchange.

The dividend paid from the 2022 result was EUR 0.91 per share.

Inderes analyst Juha Kinnunen wrote before publishing the results in his analysis that, after a strong last year, Fortum's balance sheet is practically net debt-free, which also enables the payment of dividends.

“After exceptional years, Fortum's balance sheet is even overcapitalized,” Kinnunen wrote.

Fortum itself describes the entire year 2023 as “strong”. The company also states that the cold periods of winter improved the profitability of the last quarter of the year through increased electricity prices.

The interim report is entitled “A year of change and business stabilization – cold spells in the Nordic countries raised electricity prices and strengthened the quarter's result”.

Fortum is The largest energy company in the Nordic countries, and the Finnish state owns more than half of it. Its profit-making engine is the Generation unit, i.e. the production of electricity and heat.

Fortum owns the Loviisa nuclear power plants and about a quarter of the Olkiluoto nuclear power plants. It also has a significant amount of hydropower on Finland's large rivers, such as Oulujoki and Vuösi.

In addition, Fortum owns 64 percent of the Kemijoki company's hydropower shares, which means it also receives income from the numerous dams in the northern Suurjoki.

The comparison period for the result a year ago was very exceptional, because electricity was so expensive in 2022.

The normalization of energy prices has been reflected in Fortum's result.

In the previous earnings period, i.e. in the third quarter of 2023, Fortum made a bigger profit than expected.

At that time, the company also announced a savings program. The company plans to seek annual savings of 100 million euros by the end of 2025.

At the end of January, the company announced change negotiations involving more than a thousand people, with 130 jobs at risk.

Russian the major attack in Ukraine changed and shrunk Fortum as a company considerably and led to huge losses, when Fortum was forced to sell its majority ownership in the German energy company Uniper, which it had acquired a few years earlier, to the German state due to rising gas prices.

The deal took place in September 2022, when Uniper's gas business-related losses had risen to 8.5 billion euros.

As a result of the Russian attack and sanctions, Fortum also lost control over the operations of its Russian units, for which it wrote down 1.7 billion euros last year.

Since then, the company has sought a new direction.

Correction: 9.28: Fortum owns the Loviisa nuclear power plants and it also owns about a quarter of the Olkiluoto nuclear power plants. However, it does not own Olkiluoto completely, as the first version of the article implied.