Finnish Fortum will write off Russian assets for 1.7 billion euros

The Finnish energy corporation Fortum will deconsolidate the Russian segment of the business and write off local assets in the amount of about 1.7 billion euros. This should from a company message.

“Following the loss of control, the Russian segment will be deconsolidated and Russian assets will be written off in full in Fortum’s Q2 2023 financial statements. Fortum will record an estimated impairment of approximately EUR 1.7 billion, equal to the net book value, which will negatively impact the Group’s equity. The impairment loss will be partially deductible from the taxable base,” the corporation said in a statement.

The company clarified that investments in the Russian business amounted to about 6 billion euros, taking into account the purchase of shares. EBITDA of the regional segment since 2008 has been fixed at over 4 billion euros. According to Fortum’s calculations, the net cash loss from investments in Russia, acquisitions of enterprises and dividends reached 2 billion euros.

Markus Rauramo, president and CEO of the company, said that despite the termination of operations in Russia and the impairment, the financial position of the entire group “remains sound”. “Russia has not been a part of our future since the spring of 2022, and our departure in no way jeopardizes the successful implementation of our new strategy,” Rauramo said.

April 25 Russian President Vladimir Putin signed Decree on the mechanism for introducing temporary management of foreign assets in Russia. According to the document, the external management of the Federal Property Management Agency was introduced in relation to the Russian subsidiaries of the large energy companies Fortum (Finland) and Unipro (Germany). Fortum disagreed with this decision and stated its intention to take “necessary measures to protect its rights within the framework of relevant international law.”

Press Secretary of the President of Russia Dmitry Peskov, commenting on the company’s statement, said on May 5 that all actions are carried out in accordance with Russian law and “are necessary to protect our own interests against the backdrop of the steps taken by countries unfriendly to us.” After the transition under the control of the Federal Property Management Agency in the company changed CEO. They became Vyacheslav Kozhevnikov.