Over EUR 2bn in impairments for Russian ops to weigh on Fortum’s Q1 results

Finnish state-owned energy company Fortum Oyj (HEL:FORTUM) expects to add to its first-quarter books around EUR 2.1 billion (USD 2.24bn) in pre-tax impairments related to its activities in Russia, it said today.

The Finnish utility in March halted all new investment projects in Russia, seeking to reduce its thermal power production exposure in the country in the wake of its ongoing conflict with Ukraine.

Fortum’s Russian subsidiary operates 4.7 GW of thermal power plants for district heating and electricity production and 1 GW of wind and solar parks, co-owned with partners. Meanwhile, Germany’s Uniper, in which Fortum owns 78%, has five thermal plants of 11.3 GW in total.

In an update, Fortum said it expects to record around EUR 300 million in impairments for fixed assets and goodwill from its Russian division, as well as EUR 600 million for fixed assets from Uniper’s Russian unit Unipro. Additionally, around EUR 200 million of impairments will be booked with respect to Fortum’s ownership in TGC-1 and renewable energy joint ventures, while EUR 1 billion will weigh on its books from the recognition of EUR 1 billion worth of outstanding receivables related to the Nord Stream 2 natural gas project.

The Finnish group estimates the value of its net assets in Russia after the impairments at EUR 3.3 billion.

Fortum is due to release its first-quarter financial report on May 12.

(EUR 1.0 = USD 1.068)

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