Fortum’s Q1 Profits Hurt by Lower Hydro Volumes

Finland’s utility Fortum reported its operating profit grew merely by 1 percent to EUR 408 million during the January-March quarter of 2019, on the back of positive effect of improved prices offset by lower hydro volumes.

The company has reported an operating profit of EUR 405 million during the same quarter last year.

Commenting on the company’s performance, Fortum, President and CEO, Pekka Lundmark said, “The first-quarter results were impacted by two main drivers: higher power prices and lower hydro production volumes.”

Pekka further elaborated that, “The generation segment’s Nordic hedge price for 2019 is clearly above last year’s level, and with the spot prices in the first quarter also above last year’s prices, the achieved power price for the generation segment increased by 14 percent. Unfortunately, the low reservoir levels at the beginning of the quarter negatively affected our hydro production, offsetting almost all of the positive effect of the higher power prices.”

During the quarter, its EBITDA (Earnings before Interest, Tax, Depreciation and Amortization), too, rose by 1 percent at EUR 545 million as compared to EUR 538 million last year.

Despite the fall of power generation in Nordic countries, it’s sales for the first quarter grew to EUR 1690 million, as against EUR 1585 million a year ago.

Recently in March, the Finnish utility has won the right from Solar Energy Corporation of India (SECI) to build a 250 MW solar power plant in Rajasthan, India.

The project is expected to be commissioned in the fourth quarter of 2020. This solar park will be entitled to a fixed tariff of Rs 2.48/kWh for 25 years.

The company said its discussion with Uniper for their further cooperation has proceeded well.

However, it added that it will still take some time before tangible results are produced.