High power forward prices at year-end 2010 cause mark-to-market valuation of electricity derivatives to decrease Fortum's Q4/2010 earnings per share - no impact on cash flow or comparable operating profit
Fortum Corporation, Press Release, 2011-01-18 07:30 CET (GLOBE
NEWSWIRE) -- According to preliminary information, Fortum's operating
profit for the fourth quarter 2010 is affected more than usually by the
IFRS accounting treatment (IAS 39) of derivatives used for hedging
Fortum's power production. The effect on the October-December 2010
earnings per share is EUR -0.18. The decrease is based on IFRS
requirements on mark-to-market accounting of Fortum’s hedging
portfolio. The effect does not have an impact on Fortum's cash flow or
comparable operating profit.
During the fourth quarter 2010, power forward price for the first
quarter of 2011 in Nord Pool increased from EUR 51 per megawatt-hour
(MWh) at the beginning of the quarter to EUR 84 per MWh at year-end.
Most of the increase, EUR 22 per MWh, took place during December. Also
the full-year 2011 forward price increased significantly during
December.
The effect has reversed to a large extent during the first weeks of
2011, driven by a rapid decline of especially 2011 Nord Pool forward
prices. During January, for example, the February 2011 forward price
has decreased to EUR 63 per MWh.
According to IFRS (IAS 39), some of the derivative positions Fortum
uses for hedging its electricity generation do not qualify for Hedge
Accounting. Hedge Accounting allows booking fair value changes
resulting from derivative position market value changes in equity in
the balance sheet. If the Hedge Accounting is not applied, the
mark-to-market value change has to be booked in the profit and loss
statement. In the fourth quarter 2010, the impact of this accounting
treatment was exceptionally high.
Fortum will publish its financial statements bulletin for 2010 on 2
February 2011 at 9 a.m. EET.
Fortum Corporation
Anne Brunila
Executive Vice President, Corporate Relations and Sustainability
Further information:
Fortum’s Investor Relations, tel. +358 10 453 6150 and +358 10 453
2552, investors@fortum.com
Mika Paloranta, Head of Asset Backed Trading, tel. +358 10 452 4138
Distribution:
NASDAQ OMX Helsinki
Key media www.fortum.com