S&P stabilizes Fortum outlook

S&P said it revised its outlook for Fortum Oyj to stable from negative and affirmed its BBB ratings.

Fortum’s newly unveiled 2023-2025 strategy plan entails focused investment in its core Nordic area, a commitment to net zero by 2030, and a financial policy of net debt to EBITDA below 2.5x. The agency said it believes these points support the BBB rating.

S&P said it forecasts EBITDA of €2 billion-€2.4 billion annually over 2023-2025, supported by continued high power prices where Fortum operates, compared with €2 billion in 2022 (all data excluding Russian operations and Uniper). It sees plenty of balance-sheet headroom, at least in the near term.

“The stable outlook reflects our assumption that cash flow from Fortum's generation segment will remain significant, albeit very volatile, throughout 2023 and 2024, with electricity prices well above historical levels. We anticipate new investment of close to €2.4 billion over 2023 and 2025. Thanks to increasing electricity prices and the company's relatively low debt levels, we expect ample headroom, with FFO to debt well above the 30%-45% that is commensurate with the rating,” S&P said in a press release.

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