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Research

Fortum: The prodigal son returns home with the new strategy

By Juha KinnunenAnalyst
Fortum
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The company's Q4 operating profit was well above our expectations thanks to the Generation segment. The outlook for the segment (hedging prices) was also slightly higher than we had anticipated, supporting a slight positive change in our estimates for the coming years. As expected, the new strategy marks a homecoming for Fortum as a Nordic electricity company, and the balance sheet is already largely in good shape, so the company's risk profile has dropped a notch. We think the valuation level is attractive (2023 adj. P/E 12 and EV/EBIT 7x) but being stuck in Russia weakens the company's investment profile.

Fortum is active in the energy sector. In addition to the provision of electricity, a number of technical solutions are offered in heat optimization as well as apps that are used to keep track of energy consumption. The company also provides charging stations for electric cars. The largest activity is found around the Nordic market. The company was founded in 1998 and is headquartered in Espoo.

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Key Estimate Figures03.03.2023

202223e24e
Revenue8,804.08,679.38,699.5
growth-%37.1 %-1.4 %0.2 %
EBIT (adj.)1,871.01,970.11,759.0
EBIT-% (adj.)21.3 %22.7 %20.2 %
EPS (adj.)-2.031.191.34
Dividend0.910.951.00
Dividend %5.9 %5.3 %5.6 %
P/E (adj.)neg.15.113.4
EV/EBITDA9.06.46.6

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