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1. Company Snapshot

1.a. Company Description

Fortum Oyj, together with its subsidiaries, engages in the generation and sale of electricity and heat in the Nordic countries, Germany, the United Kingdom, Russia, the Netherlands, the Baltic Rim area, and internationally.The company's Generation segment generates power through nuclear, hydro, wind, and thermal resources; and provides power portfolio optimization, trading, and industrial intelligence, as well as nuclear services.Its City Solutions develops solutions in the areas of heating, cooling, waste-to-energy, biomass, and other circular economy solutions, as well as solar power production.


The company's Consumer Solutions segment engages in electricity and gas retail businesses, including the provision of invoicing and customer services; and electricity and related value-added products, as well as digital services.This segment serves approximately 2.4 million customers.Its Russia segment generates and sells power and heat.


The company's Uniper segment engages in the power generation business, as well as energy trading and optimization activities.Fortum Oyj was founded in 1998 and is headquartered in Espoo, Finland.

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1.b. Last Insights on FORTUM

Fortum Oyj's recent performance has been influenced by its strategic positioning in the renewable energy sector. The company's focus on sustainable energy solutions has garnered attention, particularly in the context of evolving business conditions. Although there were no major announcements driving the recent share price movement, investors have been monitoring the stock's steady gains. Additionally, the company's efforts to enhance its offerings and adapt to changing market dynamics have been noteworthy. Fortum's valuation appears attractive, prompting investors to reassess their stance.

1.c. Company Highlights

2. Fortum's Q3 Earnings: A Mixed Bag

Fortum's Q3 comparable operating profit was EUR 97 million, with comparable EPS at EUR 0.08, down from EUR 0.14 in Q3 2024, due to lower nuclear and hydro volumes. The actual EPS came out at EUR 0.08, significantly lower than the estimated EUR 0.22. The company's Generation segment comparable operating profit decreased by EUR 84 million to EUR 92 million. On the other hand, Consumer Solutions had a record high Q3 result with a comparable operating profit of EUR 23 million. The revenue growth for next year is estimated at 1.5%.

Publication Date: Oct -30

📋 Highlights
  • Profit Decline:: Q3 comparable operating profit at EUR 97 million, with EPS dropping to EUR 0.08 (from EUR 0.14 YoY) due to lower nuclear and hydro volumes.
  • Segment Performance:: Generation segment saw a EUR 84 million drop to EUR 92 million, while Consumer Solutions hit a record EUR 23 million profit.
  • Renewables Expansion:: Acquired a 4.4 GW wind project portfolio in Finland, boosting renewables pipeline.
  • Optimization Premium:: 2025 premium reduced to EUR 6–8/MWh from EUR 10/MWh in 2024 due to normalized nuclear output expectations.
  • Decarbonization Investment:: EUR 85 million allocated to decarbonize Poland’s Zabrze CHP plant, aligning with coal exit by 2027.

Segmental Performance

The Generation segment's decline was largely due to lower nuclear and hydro volumes, while Consumer Solutions' record result was a positive note. The company's supply business has had a great year, with an expected EBITDA of over EUR 200 million, driven by stable performance and synergies from acquisitions. Fortum's acquisition of a wind power project development portfolio in Finland added 4.4 gigawatts to its pipeline, indicating a strong push towards renewable energy.

Renewable Energy and Decarbonization

Fortum is making significant strides in decarbonization, with a EUR 85 million investment in the decarbonization of the Zabrze CHP plant in Poland, in line with its goal to exit coal by 2027. The company sees good signs of decarbonization and electrification, driven by growing demand for clean power. Fortum is also developing its renewables pipeline, pumped hydro, batteries, and new nuclear feasibility studies to meet this growing demand.

Valuation and Outlook

With a P/E Ratio of 17.26 and an EV/EBITDA of 11.21, Fortum's valuation appears reasonable. The company's leverage, defined as financial net debt to comparable EBITDA, remained at 1.0x at the end of September, indicating a stable financial position. The Dividend Yield of 7.45% is also attractive. However, the company's guidance on optimization premium for 2025, updated to approximately EUR 10 per megawatt hour, may impact its profitability. Overall, Fortum's strong push towards renewable energy and decarbonization, coupled with a stable financial position, makes it an attractive investment opportunity.

Data Center Demand and PPAs

Fortum is in negotiations with several data center operators and is discussing power purchase agreements (PPAs). The company sees demand for long-term PPAs with a premium to the current futures curve. While there are structural challenges, such as basis risk, Fortum is doing hundreds of bilateral contracts, including longer-term PPAs. The Finnish government's plan to raise the power tax on data centers, with a compensating support package, may also impact Fortum's business.

3. NewsRoom

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Fortum (HLSE:FORTUM): Evaluating Valuation After Strong 35% One-Year Shareholder Return

Dec -01

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ABO Energy sells 4.4GW projects in Finland to Fortum

Dec -01

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Europe Lithium Iron Phosphate (LFP) Battery Recycling Industry Research 2025-2035: Sustainability and ESG Commitments from Automakers and Energy Companies Driving Adoption

Nov -11

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Battery Recycling Global Markets Report 2025-2030 Featuring Major Players - ACE Green Recycling, Ecobat, Fortum, Redwood Materials, and Veolia

Sep -25

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Societe Generale: shares & voting rights as of 31 August 2025

Sep -09

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Vaisala Corporation: Share Repurchase 9.9.2025

Sep -09

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Assessing Acciona (BME:ANA)'s Valuation After Recent Subtle Moves

Sep -09

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Deutsche Bank (XTRA:DBK): Assessing Valuation After a Period of Quiet Share Price Momentum

Sep -09

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.87%)

6. Segments

Generation

Expected Growth: 4.65%

Fortum Oyj's 4.65% growth is driven by increasing demand for renewable energy, successful integration of Uniper's hydro and wind power assets, and strategic investments in solar and wind power projects. Additionally, favorable regulatory frameworks and declining technology costs support the growth momentum.

Consumer Solutions

Expected Growth: 10.27%

Fortum Oyj's Consumer Solutions segment growth of 10.27% is driven by increasing demand for clean energy, expansion into new markets, and strategic partnerships. Additionally, investments in digitalization and customer experience have improved sales and retention. The segment's focus on sustainable energy solutions, such as solar and wind power, has also contributed to its growth.

Reconciling Items

Expected Growth: 4.78%

Fortum Oyj's 4.78% growth is driven by increasing demand for renewable energy, successful integration of Uniper's assets, and cost savings from operational efficiencies. Additionally, the company's focus on sustainable energy solutions and expansion into emerging markets have contributed to its growth momentum.

Other

Expected Growth: 5.4%

Fortum Oyj's 5.4% growth is driven by increasing demand for renewable energy, successful integration of Uniper's assets, and strategic expansion into the Nordic and Baltic regions. Additionally, the company's focus on sustainable energy solutions, cost savings initiatives, and favorable regulatory environment contribute to its growth momentum.

7. Detailed Products

Heat

Fortum provides heat to households, industries, and businesses through its district heating networks, ensuring a reliable and efficient supply of heat.

Electricity

Fortum generates and sells electricity to households, industries, and businesses, offering a range of pricing plans and services.

Renewable Energy

Fortum develops and operates renewable energy sources such as wind, solar, and hydro power, providing clean energy solutions.

City Solutions

Fortum offers urban planning and infrastructure development services, creating sustainable and efficient city ecosystems.

Bioenergy

Fortum produces and sells bioenergy products, such as biofuels and biopower, from sustainable biomass sources.

Waste-to-Energy

Fortum operates waste-to-energy plants, converting waste into heat and electricity, reducing waste disposal costs.

8. Fortum Oyj's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Fortum Oyj is moderate due to the availability of alternative energy sources and the increasing adoption of renewable energy.

Bargaining Power Of Customers

The bargaining power of customers is low due to the lack of negotiating power and the fragmented nature of the customer base.

Bargaining Power Of Suppliers

The bargaining power of suppliers is moderate due to the presence of a few large suppliers and the dependence on them for raw materials.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry, including the need for significant capital investment and regulatory approvals.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established players and the ongoing competition for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 40.79%
Debt Cost 5.58%
Equity Weight 59.21%
Equity Cost 7.48%
WACC 6.70%
Leverage 68.88%

11. Quality Control: Fortum Oyj passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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BKW

A-Score: 5.9/10

Value: 3.9

Growth: 6.1

Quality: 5.4

Yield: 3.8

Momentum: 7.0

Volatility: 9.3

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ERG

A-Score: 5.3/10

Value: 4.0

Growth: 5.2

Quality: 4.8

Yield: 6.9

Momentum: 3.5

Volatility: 7.3

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Fortum

A-Score: 5.3/10

Value: 3.8

Growth: 2.8

Quality: 6.1

Yield: 5.0

Momentum: 7.0

Volatility: 7.0

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Acciona Energías Renovables

A-Score: 5.2/10

Value: 7.3

Growth: 4.8

Quality: 5.3

Yield: 1.2

Momentum: 7.0

Volatility: 5.7

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Atlantica Sustainable Infrastructure

A-Score: 4.7/10

Value: 3.5

Growth: 5.1

Quality: 3.9

Yield: 5.6

Momentum: 4.0

Volatility: 6.3

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Neoen

A-Score: 3.3/10

Value: 2.6

Growth: 3.8

Quality: 3.3

Yield: 0.0

Momentum: 4.0

Volatility: 6.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

17.5$

Current Price

17.5$

Potential

-0.00%

Expected Cash-Flows