Finnish energy company Fortum announced on Tuesday a €1 billion provision for its Russian operations due to its controlled exit from the country. The financial devaluation is due to the increasingly complex operating environment and prolonged uncertainty regarding Fortum’s operations in Russia, the Finnish group said in a statement.
Fortum’s financial situation
Fortum’s German subsidiary, Uniper, was already fully nationalized by Berlin last year due to the end of Russian gas deliveries. The provision will be recorded in the fourth quarter accounts, published at the beginning of March.
Due to the energy crisis in Europe and the collapse of Uniper, Fortum suffered a cumulative net loss of 9.7 billion euros in the first three quarters, according to its latest published financial results. Tuesday’s write-down reduces the value of Fortum’s Russian assets to just €1.7 billion, down from €3.3 billion in May and much more before the war in Ukraine.
Fortum’s presence in Russia
Fortum had been present in Russia for more than 60 years and had 7,000 employees in the country at the beginning of the conflict. The Finnish group had 12 power and heat generation plants, mainly gas-fired. Fortum also held a significant stake in the Russian electricity group TGC-1.
After the invasion of Ukraine, Fortum, which is 50.7% owned by the Finnish state, announced a freeze on its investments in Russia, followed by a controlled exit with the sale of its assets. However, the group said Tuesday that completing the exit would likely take more time and that significant uncertainties remain, including approvals related to the ongoing sale process.
By 2021, Fortum had made a profit of 500 million euros in its Russian operations, or about 20% of its operating profit.
