Fortum To Record Additional Pre-Tax Impairments Of Approximately EUR990 Million Related To Its Russia Segment
Due to the increasingly complex operating environment and prolonged uncertainty regarding Fortum’s Russian operations, Fortum will record additional pre-tax impairments of approximately EUR 990 million related to its Russia segment in its fourth quarter 2022 results, the company said Tuesday. The impairments will have no effect on the Group’s cash flow, comparable operating profit or comparable net profit.
The impairments include approximately EUR 550 million related to fixed assets for Fortum’s Russia segment. These will be recorded as ‘items affecting comparability’. Further, impairments of approximately EUR 250 million related to Fortum’s ownership in TGC-1 and joint ventures will be recorded in the ‘share of profits from associated companies and joint ventures’. The impairments include also approximately EUR 190 million write downs in ‘other financial items – net’ mainly related to wind assets. Aforementioned impairments include the effect of the change in the Russian rouble exchange rate also related to earlier impairments since previous quarter.
The value of the Russian net assets after the impairments totals approximately EUR 1.7 billion. The value is based on external valuations deducted with a management risk adjustment to reflect prevailing market restrictions.
Already in its first-quarter 2022 results, Fortum recorded pre-tax impairments related to the Russia segment. Total Russian impairments for the year 2022 amount to approximately EUR 1.7 billion, comprising approximately EUR 930 million in ‘items affecting comparability’, approximately EUR 480 million in ‘share of profits from associated companies and joint ventures’ and approximately EUR 290 million in ‘other financial items – net’.
Following Russia’s attack war on Ukraine, Fortum decided to pursue a controlled exit from the Russian market with potential divestments of its Russian operations as the preferred path. Completing the exit is likely to take further time and there still are significant uncertainties – including regulatory approvals – related to the ongoing divestment process.
Fortum publishes its Financial Statements Bulletin 2022 on 2 March 2023.