Why invest in Fortum

Fortum’s balance sheet is currently strong with low leverage, providing a substantial buffer to accommodate for the potential uncertain and volatile market conditions and to have the preparedness for future growth. Fortum’s key objective is to maintain a credit rating of at least BBB. To ensure this, the Financial net debt-to-comparable EBITDA ratio can be a maximum of 2.0–2.5 times. At year-end 2023, the ratio was at a healthy level of 0.5 times. Fortum's robust risk management framework ensures a sufficient liquidity position to manage margining requirements in various price scenarios. 

Fortum is prudent and disciplined in its capital allocation to maximise value creation from flexibility, efficiency, and cash flows. 

Fortum's dividend policy is based on a payout ratio of 60–90% of comparable EPS . The upper end of the range of the pay-out ratio is applied in situations with a strong balance sheet and low investments, while the lower end of the range would be applied with high leverage and/or significant investments and high capital expenditure.

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Fortum’s position as a leading Nordic clean energy company is complemented by considerably enhanced environmental targets with the aim to be a leader in sustainability.

Fortum aims to reach carbon neutrality (Scopes 1, 2, 3) by 2030 and will exit all coal generation by the end of 2027. Fortum has also committed to set emission reduction targets based on the climate science, (SBTi 1.5 °C).

Fortum continues the work by further developing its transition plan and defining near- and long-term company-wide emission reduction paths and targets in line with and validated by SBTi. Fortum’s environmental targets will be revisited and aligned to correspond to the SBTi Net-Zero Standard during the target setting process. Fortum’s transition will include exit from coal and emission reduction in the company’s own operations as well as its electricity sales footprint.

Further, Fortum is also committed to an ambitious biodiversity target to have no net loss of biodiversity (excluding any aquatic impacts) from existing and new operations (Scopes 1, 2) from 2030 onwards.

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Fortum has a highly competitive Nordic power generation portfolio consisting of CO2-free hydro, nuclear and onshore wind generation. Our outright power generation portfolio with 47 TWh per year is among the largest in the Nordics. Building on our versatile assets and strong competence to optimise our power generation fleet, we continue to maintain and develop our best-in-class operations to constantly secure top efficiency and flexibility.

Fortum’s achieved power price consists of achieved hedge and spot prices and the results of optimisation premium. The optimisation premium consists of hydropower flexibility, including ancillary services, and environmental values, especially Guarantees of Origin. Fortum expects its annual optimisation premium to be in the range of EUR 6-8 per MWh, depending on the overall market conditions, level of volatility and electricity prices. 

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Fortum is well-positioned to capture opportunities in the energy transition. In the mid- to long-term, electricity is expected to continue to gain a significantly higher share of total energy consumption through decarbonisation, bringing decades of demand growth for the Nordics.

Fortum phases the implementation of its strategy to enable successful strategy execution and manage the market uncertainty and current weaker investment sentiment.

In the near term, a sharpened focus is put on the core business to optimise the existing best-in-class operations, especially the generation portfolio. Fortum continues to be disciplined in its capital allocation to maximise value creation from flexibility, efficiency, and cash flows. During this phase, Fortum prepares for future growth by developing a ready-to-build renewables pipeline and is investigating longer-term investments opportunities.

With these actions, Fortum will be prepared for growth longer term, which will be driven by decarbonisation through electrification of other sectors.

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Fortum is the third-largest power generator in the Nordics and one of Europe’s cleanest power generators. In 2023, roughly 98.5% of the Group’s EBITDA originated from the company’s Nordic 47 TWh outright power generation based on CO2-free hydro and nuclear power complemented by onshore wind and solar.

Fortum is the largest electricity retailer in the Nordics with 2.4 million customers representing a market share of 15%. Fortum also has an electricity and gas retail business in Poland.

Furthermore, Fortum has district heating and cooling businesses in Finland and Poland. In 2023, Fortum produced 4.3 TWh of heat mainly from energy-efficient combined heat and power (CHP) plants.

The company’s circular solutions businesses are currently under strategic review.

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