Fortum second-quarter operating profit drops 11%, Russia weighs

HELSINKI Finland’s biggest utility Fortum reported an 11% fall in its underlying second-quarter operating profit on Wednesday, dented by low power prices and the impact of the new coronavirus on its Russian business.

Fortum, in which the Finnish state owns a 50.8% stake, said its second-quarter operating profit fell from a year ago to 207 million euros ($247 million), missing the 301 million euros expected by analysts in a Refinitiv poll.

Fortum said Nordic spot power prices dropped 84% from a year ago because of high reservoir water levels in Scandinavia, although hedging reduced the hit.

Fortum said it has hedged 85% of its Nordic power generation at 34 euros per megawatt-hour for 2020 and approximately 65% at 33 euros/MWh for 2021.

The impact of the coronavirus was limited in Nordics, but the situation was different in Russia, Fortum said.

“In Russia, power consumption declined notably as a result of COVID-19 and lower demand from the oil and gas industries, pushing down the electricity market price,” Fortum Chief Executive Markus Rauramo said in a statement.

The second-quarter results were the first to incorporate Fortum’s holdings in German utility Uniper, of which it now owns 75%.

“My number one short-term priority will be to have a joint strategy for the consolidated group by the end of the year,” said Rauramo, who officially took over as Fortum CEO on July 1.

Shares in Fortum fell 3.8% in morning trading.