Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on FORTUM OYJ. We currently have 9 research reports from 1 professional analysts.
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Low water levels and generation margins impact the group’s results
02 Feb 17
The group has published its FY results with revenues better than expected, reaching €3.63bn with a 5% yoy increase. The improvement mainly came from City Solutions and the performance in Russia. However, on the earnings side, the generation business bites as the divisional performance pushes the group’s results below expectations with an EBITDA decrease greater than expected at -7.9% yoy. Despite a lower effective tax rate (20%) and lower financial expenses (EPS was also behind consensus, reaching €0.56 which is 11% below expectations. Cash flow from operating activities was highly impacted as it decreased by 50.5% yoy to €607m, driven by lower earnings, higher taxes paid, lower FX gains, and a €131m increase in working capital. Due to this and the many acquisitions, net debt decreased more than expected as it had already burnt up its excess cash position. Despite the results, the dividend proposed is above expectations at €1.1/share. Concerning the outlook, the group still expects 0.5% growth in electricity demand and an operating profit in Russia of RUB18.2bn should be reached over the 2017-18 period.
Lower hydro levels and hedging weigh on earnings
25 Oct 16
For Q3 16, the group has released weak results. Even if sales increased 5.8% yoy to €732m due to the consolidation of two recent acquisitions (Ekokem and Duon), EBITDA contracted 7.4% yoy to €151m and is below consensus as a slight recovery was expected. Operating profit finished on the negative side at -€6m, mainly because a hedging position backfired (80% of its production) and the company has not been able to profit from the recent rebound in prices (-€57m effect on operating profit) added to Ekokem’s transaction costs. Comparable operating profit still decreased 26.6% yoy to €58m. EPS finished in negative territory at €-0.03/share, and adjusted EPS finished at €0.03/share, which is still below the €0.05/share expected by the market. Operating cash flows contracted 47.43% ytd and -33.1% yoy due to lower profits, higher taxes paid and lower FX gains. On top of this, higher capex and a repayment of outstanding debt pushed net debt to -€137m, a substantial reduction of its net cash position of -€1,936m a year ago.
Dark clouds are still present: weak power prices weigh on margins
20 Jul 16
Difficult second quarter for the group as the results were impacted by lower volumes, prices and a weaker rouble, with revenues and EBITDA falling to €768m and €209m respectively (-3% and -8% yoy) which was in line with forecasts, while reported operating profit fell 53% and adjusted operating profit was also down 15%, missing market expectations by 5%. The negative effect on operating profit was due to the impacted of derivatives for hedging positions and nuclear fund adjustments. EPS for the quarter fell by 54% yoy to €0.06, although on an adjusted basis it was down 15% yoy to €0.11, which is broadly in line with expectations. The group maintains its general guidance of annual electricity demand growth of 0.5% and an operating profit level of €12.8bn targeted for 2017-18. For 2016, the company expects an investment level of €650m (with capex at around €300-350m). An effective tax rate of 19-21% is expected for 2016 with no further outstanding bonds maturing in the year.
Strong EPS given the weak top-line performance
28 Apr 16
Fortum published weak top-line results slightly below expectations, with revenue decreasing 5% yoy to €989m as revenue decreased in all divisions, missing forecasts by 4%. Operating profit reached €369m (a 5.4% yoy increase) mainly due to the disposal of a CHP plant in Russia, although on an adjusted basis operating profit decreased 20% yoy to €275m, missing consensus by 4%. At the bottom-line, on the other hand, helped by lower financial expenses due to the net cash position of the group and a positive adjustment of the nuclear fund (€50m), net income reached €335m, translating into an EPS of €0.37, a 12% increase; although on an adjusted basis EPS was €0.29 (a 12% yoy decrease), which is within expectations. Operating cash flows were weak as they decreased by 27% yoy to €375m; nevertheless, the balance sheet remains strong and equity levels continue to improve. The financial objectives remain unchanged in the long term: ROCE of at least 10% with a net debt/EBITDA of 2.5x, although in the short term there is no guidance provided, only for the effective tax rate which is expected to be 19-21%.
Weak results, lower dividend, and Russian exposure.
03 Feb 16
Sales decreased by 15% yoy reaching €3.46bn and missing estimates by 2% driven by low power prices and flat demand. Reported profit finished in negative at -€150m territory due to impairments on nuclear and thermal assets, where +adjusted profit decreased by 25% yoy to €808m, 6% below expectations as all segments are below estimates+. Fourth quarter EPS missed estimates by 60% to 0.02, but the FY EPS are in line with consensus at 4.66. The *balance sheet remains strong* and 11% better than expected as the net cash position of the company has been increased to over €2bn. Equity levels are also above our estimates at €13.8bn. The *Dividend proposed is below expectations at €1.1ps* as there would be no exceptional dividend from the divestment of its Nordic distribution network. Dividend policy has been maintained at which it targets to pay a stable and over time increasing dividend, but now includes a 50-80% payout ratio. The group has adjusted downwards its long-term financial targets to 10% ROCE (previously at 12%), but maintains its net debt/EBITDA objective at 2.5x. Moreover, new cost cutting measures on the fixed cost base are expected to reach €100m by 2017 (which adds up from the previously taken measures of €150m pa).
A likely acquisition in Polish gas infrastructure
08 Jan 16
The group has made public a tender offer to purchase the Polish company Grupa Duon SA. Fortum will carry out the acquisition if it receives at least 51% of the shares by the end of the offer. Shareholders representing 44% of the company capital including board directors have committed to selling their shares to Fortum. The price offered per share is PLN3.85, representing a 19% premium to the current price. The company has a market cap of PLN393m (€90.1m), with a business based in gas distribution networks and LNG regasification units, and also a trading division (gas and electricity). The group is one of the largest privately-owned retail electricity and gas sale entities in Poland, has expected sales of PLN866m (€198m) in 2015, with an EBITDA of PLN45.4m (€10.5m) and PLN24.8m (€5.7m) in net profit.
N+1 Singer - Morning Song 21-03-2017
21 Mar 17
accesso Technology (ACSO LN) Full year results in line, but key trading months still ahead | Augean (AUG LN) Double digit growth in ’16, good start to ‘17 | Earthport (EPO LN) Interims show continued top line strength | Goals Soccer Centres (GOAL LN) Good momentum under new team. It’s now all about delivery | IQE (IQE LN) FY’16 results prompt further upgrades | Microsaic Systems (MSYS LN) Challenges in 2016, strategy remains in place | mporium Group (MPM LN) Funds raised to help execute strategy | RhythmOne (RTHM LN) Dawn of the independents | ScS Group (SCS LN) Strong progress on key growth initiatives albeit comps now toughen | Sinclair Pharma (SPH LN) FY results: EBITDA ahead, Instalift™ gaining pace | Vectura Group (VEC LN) FY (9-month) results
N+1 Singer - Augean - Double digit growth in ’16, good start to ‘17
21 Mar 17
Augean reported another year of double digit growth for 2016, with profits in line with our forecasts. Sales grew by 21% excluding landfill tax, while adjusted PBT grew by 18% to £7.1m before amortisation of acquired intangibles. DPS was increased by 54% to 1.0p, 25% ahead of our estimate. The business units made further strategic progress, with revenues from their top 20 customers increasing from 42% to 43% of the total, of which 88% was under contract or a framework agreement, increasing forward visibility. There has been an encouraging start to 2017 and management is confident of delivering another year of profits growth. The shares trade on undemanding single digit multiples, offering good value.