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Fortum boosts profits, launches takeover talks with Uniper

Fortum says that its emissions are low compared to other European electricity producers.

Fortumin pääkonttori Espoossa.
Fortum's headquarters in Espoo. Image: Heikki Saukkomaa / Lehtikuva

Finland’s biggest power company, the majority state-owned Fortum, says its profits late last year were 57 percent higher than a year earlier.

Comparable operating profit in the fourth quarter was 295 million euros. The firm said on Friday that the improvement was due to higher electricity prices, good hydropower volumes and recent acquisitions. Overall for the year, profits were up by more than a quarter.

Fortum’s board proposes a dividend of 1.10 euro per share, the same as last year – but considerably higher than forecast by analysts surveyed by Reuters.

Fortum says it aims to pay “a stable, sustainable and over time increasing dividend now and in the future, and given the prevailing market conditions, our goal is to avoid a temporary dividend cut”. Inderes Equity Research analyst Petri Gostowski told Reuters that dividend prospects have been a concern and the company’s message would “please the market”.

Uniper opposes 'hostile' takeover

CEO Pekka Lundmark said that Fortum has begun takeover negotiations with the large, coal-heavy power company Uniper.

The German utility opposes the eight-billion-euro takeover bid, calling it hostile and insufficient. So far shareholders have only offered Fortum 46.93 percent of shares. The offer expires next Wednesday.

“We aim to take an active role in driving [the] European energy transition,” Lundmark said in a statement. “We see plenty of opportunities for co-operation with Uniper to add value for all stakeholders, and we have entered into talks with Uniper to formalise the relationship between our companies after the transaction is finalised. We truly see our investment as a win-win for all involved,” he added.

Emissions down slightly

Fortum says that its CO2 emissions decreased “slightly” last year and “continue to be at a low level compared to other European power producers”. It notes that the market price of carbon under the European Union Allowance (EUA) trading system rose from 6.50 euros per ton at the start of last year to 8.20 at the end of December.

The company predicts that demand for electricity in the Nordic region will continue to grow by about half a percentage point annually. Most of Fortum’s business is focused in the Nordic and Baltic states as well as Poland, Russia and India.

Fortum shares were up on Friday following the Q4 report.

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