Release Date: April 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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.
This article first appeared on GuruFocus.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.