• Achieved Power Price: EUR60.1 per megawatt hour.
• Optimization Premium: Updated to EUR7 to EUR9 per megawatt hour for 2025.
• Comparable Operating Profit: EUR462 million for Q1 2025.
• Comparable EPS: EUR0.42 per share for Q1 2025.
• Operating Cash Flow: EUR453 million for Q1 2025.
• Financial Net Debt: Practically 0 at the end of Q1 2025.
• Leverage Ratio: 0.0x financial net debt to comparable EBITDA.
• Comparable Net Profit: EUR374 million for Q1 2025.
• Fixed Costs: EUR200 million for Q1 2025.
• Gross Debt: EUR4.6 billion excluding leases.
• Liquidity Reserves: EUR8.4 billion.
• Hedge Price: EUR40 for the rest of 2025, EUR41 for 2026.
• Hedge Ratio: 75% for 2025, 50% for 2026.
• Capital Expenditure: Expected to be EUR1.4 billion for 2025-2027.
• Annual Maintenance CapEx: Approximately EUR250 million.
• Growth CapEx: EUR150 million to EUR300 million per year.

• Warning! GuruFocus has detected 4 Warning Sign with FOJCF.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Fortum Oyj (FOJCF) achieved a strong power price of EUR60.1 per megawatt hour despite lower Nordic spot prices.
• The company reported a robust optimization premium, which was higher than the previous year's level.
• Fortum Oyj (FOJCF) maintained a very strong financial position with a leverage ratio of 0.0 times.
• The acquisition of Orange Energia doubled the customer base of Fortum's Consumer Solutions business in Poland.
• Fortum Oyj (FOJCF) continues to develop its renewables pipeline, including a feasibility study for flexible pump storage hydropower in Sweden.

Negative Points

• Hydro generation was below the long-term historical average, and nuclear volumes were negatively affected by outages.
• The company's comparable operating profit declined due to lower power prices and volumes.
• Fortum Oyj (FOJCF) expects a decrease in nuclear volumes by approximately 1.4 terawatt hours for the remainder of the year.
• The operating cash flow decreased to EUR453 million in the first quarter.
• Uncertainty in the operating environment has increased due to geopolitical conflicts and US tariff plans.

Q & A Highlights

Q: What are Fortum's criteria for potential acquisitions, particularly regarding Uniper's assets? A: Markus Rauramo, CEO, explained that Fortum evaluates potential acquisitions based on their balance sheet capacity and return targets. They apply a weighted cost of EBITDA plus 150 to 400 basis points for both acquisitions and greenfield or brownfield investments. Fortum is interested in nuclear, hydro, and renewable assets, but any acquisition must fit within their financial framework and meet their criteria.

Q: Can you provide more details on the optimization premium for this quarter? A: Tiina Tuomela, CFO, stated that the optimization premium was strong in Q1, primarily due to physical optimization tied to market volatility and the sale of environmental values. The volatility in the market increased, which benefited Fortum's optimization premium. The guidance for the year is EUR7 to EUR9 per megawatt hour, reflecting current forecasts, while the longer-term guidance remains at EUR6 to EUR8.

Q: How are geopolitical risks affecting industrial investments and power demand growth? A: Markus Rauramo noted that geopolitical uncertainties, such as tariffs, could impact decision-making. However, the Nordics remain attractive due to low power prices, clean production portfolios, and good infrastructure. Fortum sees strong fundamentals and commitment from companies to their clean targets, indicating confidence in power demand growth.

Q: What is Fortum's hedging strategy for environmental values, and how does it compare to power hedging? A: Tiina Tuomela explained that Fortum's hedging policy for environmental values is similar to their power hedging strategy, typically starting two to three years in advance. The hedging depends on market prices and liquidity, and they hedge against their own price view.

Q: What is Fortum's stance on potential grid investments given their balance sheet flexibility? A: Markus Rauramo clarified that grid investments do not feature in Fortum's core, growth, or explore areas. Their focus remains on core businesses, growth in renewables, and exploring hydrogen and innovation ventures. Fortum is not considering grid investments as part of their strategy.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.