Finland's biggest energy company, Fortum, will write off more than two billion euros in losses on its Russian operations in the first three months of this year.
According to the company, the losses are a result of the Russian invasion of Ukraine, geopolitical tensions, uncertainty and increased risks.
The majority state-owned utility said on Tuesday that it would book 2.1 billion euros in pre-tax impairments in its first-quarter results, indicating that the value of its assets in sanctions-hit Russia has plunged.
Nearly half of the write-off, one billion euros, stems from Fortum subsidiary Uniper's receivables from the Nord Stream 2 gas pipeline. Germany canned the project soon after the Russian invasion of Ukraine in February.
Most of the rest, 600 million euros, is related to Unipro, a Russian company owned by Uniper, along with 300 million euros from Fortum's own Russia business and 200 million from Fortum's stake in Russian power utility TGC-1 and in renewables joint ventures in the country.
Last week Fortum raised eyebrows by announcing that Uniper was preparing to use a new Kremlin-required purchase arrangement for fossil gas which has been criticised as circumventing EU sanctions.
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Fortum welcomes Fennovoima decision
According to Fortum, the impairments are recognised in the first quarter of the current year and have no effect on the company's cash flow, comparable operating profit or comparable net result.
Together with its subsidiary Uniper, Fortum has 12 power plants and approximately 7,000 employees in Russia.
Fortum also holds an indirect 6.6 percent stake in nuclear power company Fennovoima, which on Monday cancelled its construction deal with Russian state firm Rosatom. Fortum welcomed the move, calling it the first step towards a controlled shutdown of the long-delayed project.
In 2015, the majority state-owned Fortum rescued the venture by – apparently reluctantly – investing in it when it was on the verge of collapsing, as it had failed to attract the legally required level of domestic or EU/EEA ownership.
The company will publish its full January-March interim report on 12 May.
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