Fortum Oyj (OTC) ((FOJCY)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Fortum Oyj (OTC) presented a balanced sentiment, highlighting both positive developments and notable challenges. The company reported an increase in power prices and a successful efficiency improvement program, alongside strong performance in the Consumer Solutions segment. However, these achievements were tempered by decreased generation volumes, particularly in the nuclear and hydro sectors, which impacted the financial results. Overall, the sentiment reflected significant achievements but also underscored the challenges faced by the company.
Increased Power Prices
Fortum achieved a power price of EUR 46.1 per megawatt hour for Q3, surpassing last year’s EUR 44.1. This increase was supported by higher spot prices and strong physical optimization, marking a positive development in the company’s financial performance.
Efficiency Improvement Program
The company is on track with its efficiency improvement program, which aims to reduce annual fixed costs by EUR 100 million by the end of 2025. The full run rate of these savings is expected to be effective from 2026, demonstrating Fortum’s commitment to cost efficiency.
Acquisition of Wind Power Portfolio
Fortum has strengthened its renewables pipeline by acquiring a 4.4 gigawatt wind power project development portfolio in Finland. This acquisition boosts its renewables capacity to approximately 8 gigawatts, aligning with its strategic focus on sustainable energy.
Consumer Solutions Business Performance
The Consumer Solutions segment delivered a record high third-quarter result, driven by improved electricity margins in the Nordics and enhanced gas margins in Poland. This performance highlights the segment’s robust contribution to Fortum’s overall results.
Updated Optimization Premium
Fortum increased its estimated optimization premium for 2025 to EUR 10 per megawatt hour, up from a previous forecast of EUR 7 to EUR 9. This adjustment is attributed to higher power price volatility, reflecting the company’s proactive market strategies.
Decreased Generation Volumes
The company faced challenges with decreased generation volumes, particularly in the nuclear and hydro sectors. This decline impacted the financial performance, with a notable decrease in comparable operating profit in the Generation segment.
Lower Comparable Operating Profit
Fortum’s Q3 comparable operating profit totaled EUR 97 million, marking a decrease compared to previous periods. This decline reflects the impact of lower generation volumes on the company’s financial outcomes.
Hydro Volume Challenges
Hydro volumes for the last 12 months were recorded at 17.8 terawatt hours, below the normal output range of 20 to 20.5 terawatt hours. These challenges were primarily due to unfavorable hydrological conditions.
Nuclear Outages Impact
Unplanned nuclear outages, particularly in Oskarshamn 3, reduced annual nuclear volumes by approximately 3.6 terawatt hours for 2025. This reduction underscores the operational challenges faced by Fortum in maintaining consistent nuclear output.
Forward-Looking Guidance
Looking ahead, Fortum’s leadership highlighted several key metrics during the fiscal year 2025 third-quarter webcast. The company expects to continue benefiting from higher power prices and strong optimization, despite challenges in generation volumes. The efficiency improvement program is anticipated to yield significant cost savings by 2025, and the updated optimization premium guidance reflects a strategic response to market volatility. Fortum’s balance sheet remains stable, with a leverage ratio of 1.0x financial net debt to comparable EBITDA, positioning the company for future growth.
In conclusion, Fortum’s earnings call presented a mixed sentiment, with significant achievements in power pricing and cost efficiency, alongside challenges in generation volumes. The company’s strategic initiatives, such as the wind power portfolio acquisition and efficiency improvements, highlight its commitment to sustainable growth. However, operational challenges in the nuclear and hydro sectors remain a concern. Overall, Fortum’s proactive strategies and stable financial position provide a solid foundation for navigating future market dynamics.