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Fortum surprised the market with a new cost reduction plan and a 33% reduction in its growth capex program through to 2025 from €1.5bn to €1bn. This programme has been welcomed by the market and is certainly in line with what investors have been hoping for in recent quarters for the sector, moving away from growth stocks with high capex, which are now at the bottom of the list in terms of performance.
Companies: Fortum Oyj
AlphaValue
A good first half for the group, which benefited from a positive price effect with an average price 50% higher than last year thanks to hedged contracts at high prices. The deconsolidation of the Russian assets has been well absorbed despite a €1.9bn impairment while the group intends to take legal action by 2024.
Fortum reported a good start to the year with EBITDA up by 69% to €891m (cons €722m) and €781m excluding Russia. The group confirmed the future deconsolidation of its Russian assets in the Q2 with an expected impairment charge of €1.9bn after FX effects.
2022 could have proven to be the death warrant for Fortum amidst the costly losses relating to Uniped leading to its deconsolidation but also, to a lesser extent, its exposure to Russia and the related impairments. However, Fortum managed to get back onto its feet and deliver more-than-acceptable results versus the market expectations, driven by both higher commodity prices and power generation, and managed to pay a dividend this year.
Fortum reported robust growth in the third quarter, amidst the deconsolidation of Uniper and the full exit from the Russian market. The fears concerning volatile energy markets and margin call requirements didn’t prevent the group from recording a strong performance, with a 14.5% increase in EBITDA to €1.54bn. Caution is however required for the coming months given the prevailing volatility in the commodities markets.
While Fortum’s results are severely affected by Uniper’s headwinds, leading to a massive loss of €11.6bn at the operating profit level, the latter must not mask the solid resilience of Fortum stand-alone. We note a particularly good performance of Generation and Russia vs the first quarter. However, the Q3 is at risk given current energy prices and the recognition of further Uniper losses from the gas curtailment. The worst might be yet to come.
Fortum reported a complex set of Q1 22 results which were littered with a plethora of one-off and extraordinary events, preventing us from drawing clear conclusions as to the health of the underlying business. No matter; in the current environment, the really big news was the announcement of a ‘controlled’ exit from Russia – although it remains to be seen what ‘controlled’ means…
Unfortunately for Fortum, a beat on the FY21 results now takes a back seat to Russian-led uncertainty. In particular, the group confirmed a €5.5bn book value of Russian assets, and a 185TWh/year of Russian long-term gas contracts (50% of Uniper’s contracted volumes), but uncertainty remains on the risks related to financial commitments, potentiality and timing of impairments, margin call risks, as well as the one which will bear the costs in the case of gas shortages.
Fortum missed our expectations and consensus estimates for the 9M 21 results, while the yoy figures remained very strong: comparable EBITDA is up by 102% and comparable EBIT multiplied by 3.5x to €1.47bn. The company particularly struggled to manage a very volatile gas market environment and surging power prices, impacting its funding requirements. However, the full-year outlook was reaffirmed and the dividend policy is intact. Cautious view confirmed.
What if the best solution for the energy transition were … nuclear power? Nuke is back at the heart of political debates in the context of the current energy crisis and massive but insufficient investments in renewables. This short review provides an overview of nuclear power in Europe and speculates on options. This ‘nuke optionality’, hinging on a favourable green taxonomy, is a game-changer for EDF, Centrica, Fortum but also Engie, Iberdrola, Enel and EDP.
Fortum has reported a good set of first half 2021 figures, slightly better than expectations and benefiting, in particular, from higher achieved power prices and volumes. Moreover, as a quarter of FY21 production remained unhedged (but only 10% for Uniper), we are confident on the H2 outlook. Closing of the Exergi sale expected before 2022. In our view, these elements are already priced in. Neutral recommendation confirmed.
Fortum has announced the sale of its 50% ownership in Stockholm Exergi for €2.9bn to an investor consortium led by APG, a Dutch pension fund. With a significant premium compared to our valuation, the deal will allow the group to deleverage and make its carbon footprint greener, as these two metrics worsened after the consolidation of Uniper. Is this enough to accelerate the asset rotation and a total squeeze-out of Uniper ?
Fortum released a solid set of Q1 21 figures. The strong performance of Uniper combined with positive price effects in the Nordics were the main drivers. As a result, net profit soared to €837m and beat expectations by 8%.
The group remained highly impacted by the low level of prices over Q4 20, resulting in a c.30% drop in the full-year operating profit (excluding Uniper). However, on the back of the particularly cold seasonal temperatures, prices are back to normal levels in the first months of the year. We confirm our negative recommendation.
EBITDA came in at €512m and operating profit at €207m, both below expectations. This is mainly due to the particularly low electricity prices in Q2 20, due to weather conditions – but the group was partly protected by its hedging strategy. This confirms that keeping its financial strength (with a minimum BBB rate) is the first short-term target. A FY20 guidance has still not been mentioned (due to the consolidation of Uniper and the COVID-19-related uncertainties).
Research Tree provides access to ongoing research coverage, media content and regulatory news on Fortum Oyj. We currently have 92 research reports from 2 professional analysts.
Strix has reported FY23 results to 31 December 2023 with adjusted PAT of £20.1m, in line with our updated forecast and company guidance provided in January. Revenue grew 35.2% to £144.6m, benefitting from the full year inclusion of the Billi acquisition, albeit slightly below our forecast of £151.0m. Its core Kettle Controls division also performed robustly, growing 2.7%, ahead of the broader market and indicating market share gain. Recent acquisitions have noticeably improved the Group’s growth
Companies: Strix Group PLC
Zeus Capital
Companies: Yu Group PLC
Liberum
Companies: FOG PEB KBT EMR TIME GETB JNEO
Cavendish
Cohort announces that its subsidiary SEA (Systems Engineering and Assessment Ltd.) has been awarded a major contract by the UK’s Ministry of Defence to provide Electronic Warfare Counter Measures (Increment 1a) (EWCM 1a) to the Royal Navy with a total value of at least £135m. This includes provision and support of SEA’s Trainable Decoy Launcher System, Ancilia. At the FY 24 interim results Cohort had commented on an overall “increased tempo” of order intake. The Group reported a closing order b
Companies: Cohort plc
Equity Development
Positives emerged, particularly in H2, as the recovery commenced within the kettle controls market. Billi was the architect of the revenue improvement, with LAICA also delivering a double-digit increase in the top line. Margins improved, notwithstanding a change in the mix. Encouragingly, investor concerns on debt were allayed with the careful management of cash, and latterly as bankers raised the net debt/EBITDA covenant to 2.75x. With further emphasis on costs and cash conservation and a lik
Companies: Luceco PLC
The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no
Companies: AEIT ROOF DGI9 INPP GSF SEIT USFP HICL ORIT BSIF TRIG NESF SEQI HEIT GRP GCP FSFL 3IN AERI PINT RNEW BBGI GSEO DORE TENT GRID CORD HGEN AEET
Hardman & Co
Companies: FOG TND BVXP ACC HDD
Quadrise continues to advance towards commercial revenues for its innovative fuel and biofuel technologies, with each of its projects approaching key milestones in 2024. Preparatory steps for the MSC Shipmanagement (MSC) fuel trials are now complete and fuel supply agreements are nearing finalisation. Quadrise will achieve its first licensing revenues on the successful completion of Valkor’s project financing (timing uncertain). Quadrise also successfully concluded its Morocco trial, paving the
Companies: Quadrise PLC
Edison
Judges Scientific is a group involved in the buy and build of scientific instrumentation businesses. Testament to the strength of its highly engineered offer and global diversified customer base, total revenue increased an impressive 20.2% to £136.1m (organic +15%), with adj. PBT +7.5% to £31.7m (FY2022: £28.3m), 3.1% ahead of our estimate of £30.5m. Fully diluted (FD) adjusted EPS increased a more muted 2.6% (impacted by anticipated tax headwinds) to 368.5p (basic adj EPS 374.5p), 3.4% ahead of
Companies: Judges Scientific plc
WHIreland
Companies: Flowtech Fluidpower plc
Companies: Michelmersh Brick Holdings PLC
Canaccord Genuity
Companies: BILN IGP RBN SBTX
Gelion has reported in line H1 FY24 results that demonstrate continued strong cash management and steady progress in its pursuit of next generation lithium-sulphur battery technologies. Encouraging early test results justify last year’s IP acquisitions and validate Gelion’s Li-S battery technology plan, with additional progress expected to be reported in H2 alongside its pursuit of a strategic partner for its planned Advanced Commercial Prototyping Centre (ACPC) facility in Australia. There is a
Companies: Gelion PLC
Forterra’s FY23 (to 31 December) earnings were slightly higher than guidance, which was raised in January, with resilient pricing partly offsetting a steep fall in demand among its main end users, large housebuilders. Our estimates are broadly unchanged, other than reflecting a more conservative stance on the final dividend. Despite a cautious tone in the outlook statement, we believe the largest housebuilders may now rebound more strongly than smaller peers.
Companies: Forterra Plc
Progressive Equity Research
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