Fortum Oyj (OTC) ((FOJCY)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Fortum Oyj’s recent earnings call painted a mixed picture of the company’s current standing, highlighting both achievements and challenges. The sentiment expressed during the call was balanced, with positive strategic moves such as maintaining a stable achieved power price and successful acquisitions, countered by operational difficulties including decreased profitability and geopolitical uncertainties.
Stable Achieved Power Price
Fortum managed to maintain a stable achieved power price of EUR 48.1 per megawatt hour for Q2 2025, nearly matching the previous year’s figure. This stability was achieved despite lower market power prices, thanks to a high hedge ratio and effective physical optimization.
Successful Acquisition in Consumer Solutions
A significant highlight from the call was Fortum’s completion of the acquisition of Orange Energia, which doubled the number of retail customers in Poland. This move secures a sales distribution network through Orange Polska until the end of 2028, marking a strategic expansion in the consumer solutions sector.
Efficiency Improvement Program on Track
Fortum’s efficiency improvement program is progressing well, aiming to reduce annual fixed costs by EUR 100 million by the end of 2025. The company plans to establish a new fixed cost base of approximately EUR 850 million, excluding increased taxes.
Strong Financial Position
The company’s financial health remains robust, with a financial net debt of EUR 1.3 billion and a leverage ratio of 0.9x EBITDA. Fortum maintains a strong liquidity position with ample reserves, reflecting its solid financial foundation.
Expansion in Renewable Energy Portfolio
Fortum is expanding its renewable energy portfolio, having acquired a project development portfolio for wind power in Finland. This acquisition strengthens its development pipeline for renewables, with a total of 8 gigawatts in the permitting phase.
Record Low Generation Volumes
Fortum reported record low generation volumes for Q2 2025 at 8.8 terawatt hours, a decrease of 2.2 terawatt hours from the previous year. This decline was attributed to low hydro inflow and unavailabilities in the nuclear generation fleet.
Decrease in Comparable Operating Profit
The company’s comparable operating profit for Q2 2025 was EUR 115 million, reflecting a decrease due to lower generation volumes and reduced power prices.
Ongoing Geopolitical and Regulatory Uncertainties
Geopolitical conflicts and U.S. tariff plans continue to pose challenges for major industrial investments in the Nordics. Fortum emphasized the need for a reliable regulatory framework to navigate these uncertainties.
Hydro Generation Challenges
Hydro generation volumes for the last 12 months were 18.3 terawatt hours, below the normal range. Fortum faces risks of continued low volumes for the full year, impacting overall generation capacity.
Nuclear Outages
Unavailabilities in Fortum’s nuclear fleet are expected to result in 2.9 terawatt hours lower output for the full year 2025, further impacting generation volumes.
Forward-Looking Guidance
Fortum’s guidance highlighted a comparable operating profit of EUR 115 million for Q2 2025, with an EPS of EUR 0.09. The company aims for an annual fixed-cost reduction of EUR 100 million by the end of 2025 and projects power demand growth to 550 terawatt hours per annum in the Nordics by 2030. However, ongoing geopolitical and regulatory uncertainties pose potential challenges.
In summary, Fortum Oyj’s earnings call reflected a balanced sentiment of strategic achievements and operational challenges. While the company has made significant strides in acquisitions and maintaining financial stability, it faces hurdles in generation volumes and geopolitical uncertainties. Investors will be keenly watching how Fortum navigates these challenges in the coming quarters.