Fortum plans ‘controlled exit’ from Russia through sales

Bloomberg

Finland’s Fortum Oyj plans to leave Russia by selling assets as policy makers pushed for the state-owned utility to exit because of the war in Ukraine.
“We have decided to pursue a controlled exit from the Russian market,” Chief Executive Officer Markus Rauramo said in a statement. “As the preferred path, this decision includes a potential divestment of Fortum’s Russian operations.”
The announcement comes just weeks after a 2.1 billion-euro ($2.2 billion) writedown on the value of the firm’s and its German subsidiary Uniper SE’s Russian operations. In early April, Finnish Prime Minister Sanna Marin signalled that a withdrawal from the country should come as soon as possible.
The company didn’t offer any further substantial details on a call with analysts. Fortum and Uniper will keep the assets in “good shape” so that they are ready for a potential sale, Rauramo said. The utility has also decided to stop using the Fortum brand in Russia.
Other energy companies have also taken hits on their businesses in Russia. BP Plc earlier this month confirmed a $25.5 billion charge linked to its exit. TotalEnergies SE took a $4.1 billion writedown on a flagship gas project that looks likely to be hindered by European Union sanctions. Shell Plc said in its first-quarter results that its withdrawal will result in a $3.9 billion accounting charge.
Those examples show the difficulties facing companies trying to leave the country, with “few potential buyers and a costly exit option,” analysts at Credit Suisse wrote in a note. They didn’t rule out Fortum selling its Russian business given the Finnish government’s stance against ownership of such assets.
Fortum declined as much as 4.2% in Helsinki. The stock has lost about 40% this year as the company’s Russian assets discouraged investors.
Fortum runs seven power plants in Russia, as well as the nation’s largest wind and solar portfolio. Uniper has another five units. The value of their net assets in Russia after impairments totals 3.3 billion euros.