Fortum’s profit beats forecasts after turbulent quarter

HELSINKI (Reuters) -Finnish energy company Fortum on Thursday posted a bigger-than-expected rise in third-quarter comparable operating profit after agreeing to let go of its struggling German subsidiary Uniper.

Following a turbulent quarter, the utility’s July to September comparable operating profit rose to 421 million euros ($422.4 million) from 243 million a year ago, beating the 384.5 million mean estimate in a company-provided poll of analysts.

“All segments of Fortum’s continuing operations improved their results in the third quarter,” Fortum’s Chief Executive Markus Rauramo said in a statement.

“Results of the Generation segment, in particular, were driven by a record-high achieved power price and physical optimisation, higher spot prices and a higher hedge price.”

The Finnish government, seeking to prevent an energy crisis, offered more than 12 billion euros in guarantees and loans to power companies, including Fortum, in the third quarter to help the industry stave off soaring collateral payments.

The third-quarter earnings were Fortum’s first since the German government in September agreed to nationalise the group’s Uniper subsidiary, which haemorrhaged cash following a spike in gas prices after Russia cut supplies to Europe.

“The outcome clearly is not what we wanted or worked for … we have assessed that (Fortum’s) equity remains at a sufficient level and does not require additional capital injections,” Rauramo said.

Fortum’s total loss from the Uniper investment will be slightly below 6 billion euros, while shedding the unit will strengthen its equity by around 5 billion euros, Rauramo said.

Fortum shares have recovered some ground after hitting 18-year lows in September, but are still down 45% year-to-date, underperforming a 14% drop in the Finnish benchmark stock index.

($1 = 0.9967 euros)

(Reporting by Essi Lehto and Anne Kauranen; Editing by Terje Solsvik and Jan Harvey)