Fortum to write down Russian assets fully and deconsolidate Russia segment
Energy company Fortum Oyj announced a full write-down and deconsolidation of its Russian assets due to Russian authorities' actions. An estimated impairment of EUR 1.7 billion will be recorded in the second quarter.
Fortum Oyj announced on May 11, 2023, that it will fully write down and deconsolidate its Russian assets from its consolidated financial statements. This decision follows actions by Russian authorities, including a change in the CEO of Fortum's Russian subsidiary PAO Fortum and the seizure of its assets by presidential decree.
The company expects to record an impairment loss of approximately EUR 1.7 billion in its second-quarter 2023 financial results, equivalent to the remaining book value of its Russian assets. Additionally, cumulative translation differences of approximately EUR 1.9 billion will be reclassified from equity through the income statement. President and CEO Markus Rauramo stated that Russia's actions represent a "point of no return" and that the de facto loss of control triggers the full deconsolidation and impairments.
Fortum has been seeking to exit the Russian market since the spring of 2022, but attempts to sell its operations to both Russian and international buyers have been unsuccessful. The company views the Russian justification for seizing assets, citing energy security, as a pretext.
Fortum is also publishing restated comparative figures for 2022 and the first quarter of 2023 to reflect the deconsolidation of the Russia segment. The company's new strategy and financial targets, launched in March 2023, do not include its Russian operations.