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Through challenging times in 2020 Fortum produced good performance and increased its operating profit by 43%

Fortum is a European energy company with activities in more than 40 countries. Fortum provides customers with electricity, gas, heating and cooling solutions, as well as waste-to-energy and circular economy solutions. Together with its subsidiary Uniper, Fortum is the third largest producer of CO2-free electricity in Europe, the largest electricity retailer in the Nordic countries, and one of the leading heat producers globally. Fortum’s organisation consists of four business divisions: Generation, Russia, City Solutions, and Consumer Solutions, and additionally Uniper as a segment. Fortum employs a diverse team of almost 20,000 energy-sector professionals.

During 2020 Fortum increased its ownership in Uniper from 49.99% to approximately 76%, and consolidated Uniper as a subsidiary into financials as a separate reporting segment. As part of the Company´s strategy execution in 2020, Fortum continued to optimize its portfolio and decided to divest its district heating businesses in Joensuu and Järvenpää in Finland after a strategic review. The sales gains for these assets totalled EUR 722 million. The strategic reviews of district heating assets in the Baltics, Poland and Sweden, as well as the Consumer Solutions business, are ongoing.

According to the Financial Statements Bulletin 2020, operational profit for the Generation segment declined by 9%, effected by the low power prices and low nuclear volumes, especially in the fourth quarter. In the City Solutions segment, the result declined on warm weather and low power prices, while results from Consumer Solutions continued to improve. Despite the impact of the pandemic in the first half of 2020 and the lower power margins, the Russia segment performed well operationally, and the result, a decline of 21%, was to a large extent due to the change in the Russian rouble exchange rate. The strong hedging and optimization in the power and gas business, the fourth-quarter 2020 results and an increase in the operational profit by 545% in the Uniper segment contributed significantly to Fortum’s operating profit.

Total sales turnover of the company increased 10 times in 2020 from EUR 5,477 million in 2019 to EUR 49,015 million in 2020 due to the consolidation of Uniper in March 2020.

Comparable operating profit for 2020 increased by 13% from EUR 1.19 billion in 2019 to EUR 1.34 billion in 2019, mainly driven by a clear result improvement in the Generation segment and due to the purchase price allocation of a Uniper transaction of EUR 57 million in the Uniper segment, partly offset by the weaker results in the heating and cooling business, and the negative effect of the change in the Russian rouble exchange rate.

Comparable EBITDA increased by 38 % and amounted to EUR 2,434 million in 2020 compared to EUR 1,766 million in 2019 and EUR 1,523 million in 2018. In 2020 Comparable EBITDA includes a contribution from Uniper for the period of 1 April to 31 December 2020 since Uniper was consolidated as a subsidiary from 31 March 2020.

Operating profit increased by 43% and amounted to EUR 1,599 million compared to EUR 1,118 million in 2019 and EUR 1,138 million in 2018.

Share of profits from associated companies and joint ventures decreased to EUR 656 million from EUR 750 million in 2019 compared to EUR 38 million in 2018, mainly related to Fortum’s share of Uniper’s profit reported as an associated company until 31 March 2020.

Earnings per share were EUR 2.05 in 2020 compared to EUR 1.67 in 2019 and EUR 0.95 in 2019, of which EUR 0.38 are related to items affecting comparability.

In 2020, net cash from operating activities increased by EUR 980 million from EUR 1,575 million in 2019 to EUR 2,555 million in 2020. Adverse effects of Covid-19 are mainly reported in the Group’s Russian operations.

Net cash used in investing activities was EUR 2,140 million in 2020 compared to EUR -118 million in 2019.

Capital expenditure increased by EUR 406 million from EUR 695 million in 2019 to EUR 1,101 million in 2020. Acquisition of shares, net of liquid funds, amounted to EUR 1,801 million, mainly from acquiring shares in Uniper. Divestment of shares, mainly from the divestments of the Joensuu and Järvenpää district heating operations, amounted to EUR 1,244 million. Capital expenditure, including maintenance but excluding acquisitions, is expected to be approximately EUR 1,400 million in 2021.

In 2020, Fortum’s R&D expenditure was EUR 56 million or 0.1% of sales compared to EUR 67 million or 1.2% of sales in 2019. In 2018, Fortum’s R&D expenditure was EUR 56 million and EUR53 million in 2017.

For the year 2021, the focus will be on strategy execution, further deepening the cooperation with Uniper. Fortum will continue to target a strong financial position and maintain solid investment-grade rating.