Fortum reports first quarter profits rise

26 April 2002 – Finnish energy group Fortum reported Thursday an increase of 7 per cent in operating profits to €327m ($292m) in its first quarter compared with last year.

The Helsinki-based group which the second largest in the Nordic region suffered from weak oil and electricity prices, which virtually eliminated international refining margins. Excluding a capital gain of €57m from the sale of a stake in Finnish utility Espoon Sahko the result came in below last year’s.

The company blamed an exceptionally mild winter for low electricity prices but predicted an annual 1-2 per cent rise in power consumption over the next two years.

“No general increase in the consumption of petroleum products in Fortum’s core markets is anticipated, (but) there is a marked rise in demand for low-sulphur and sulphur-free fuels,” it said in a statement.

“Fortum’s premium margin is expected to remain at the previous years’ levels,” it added.

Fortum’s power, heat and gas division again provided most of the group’s operating profit with the unit’s first-quarter operating profit falling to €148m from €163m.

But electricity distribution saw operating profits soar to €113m from 56m in the same period last year. Oil refining and marketing profits rose to €58m while the oil and gas upstream unit saw profits plunge to €18m.

Fortum has increased its share of the Swedish electricity market through the acquisition of Birka Energi, the electricity generating and distribution company that serves the Stockholm region. Fortum reiterated that it expected annual synergies of €100m by 2004 from the deal. Birka was brought onto the group’s books on March 1.

The company said that it would continue to focus on cash flow and debt reduction and would also continue to restructure its operations.

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