Uniper hit by $12.6 billion net loss on Russian gas curbs

Russian gas curbs and related impacts led to a net loss of Eur12.4 billion ($12.6 billion) for Uniper in the first half of 2022, the company majority-owned by Finland's Fortum said Aug. 17.

Some Eur6.5 billion are directly related to Russian gas curbs and its anticipated future impact under IFRS rules with the remainder also reflecting impairments of Eur2.7 billion to Nord Stream 2 loans and goodwills of the Global Commodities and Russian Power Generation segments, the company that was bailed out by the German government July 22 said.

"Our top priority now is to swiftly implement the stabilization package," CEO Klaus-Dieter Maubach said.

CFO Tiina Tuomela expects an earnings improvement in 2023 and aims to leave the loss zone in 2024.

The current volatile price environment doesn't permit an earnings forecast within an adequate range for the current financial year, she added.

Dutch TTF gas for year-ahead delivery was assessed by Platts Aug. 16 at a record Eur206.83/MWh, almost tripling over the past two month alone, pricing data by S&P Global Commodity Insights showed.

➡The war in #Ukraine & subsequent sanctions on #Moscow have led to concerns over European #gas shortages this winter. Watch the video for insights on #price trends & the outlook for the year ahead. #ONGT#Russia#EU#Europe#naturalgas#LNG#NordStream#LPG@stuartelliott50pic.twitter.com/r7n72dg47C

— Commodity Insights Gas (@SPGCIGas) August 17, 2022

Uniper has to bear losses from procuring gas at current record-highs to replace its Russian gas portfolio and existing fixed contracts in Germany until the new gas levy comes into place Oct. 1 which allows it to reclaim up to 90% of that loss until March 2024.

Unfavorable proxy hedge

European Generation earnings were also lower partly attributable to an increase in the fair value of provisions for carbon allowances, which are offset by hedges that will not be settled until the fourth quarter, it said.

The Nordic hydro unit also recorded significantly lower earnings owing to price discrepancies between so-called system prices and delivery prices in the relevant price bidding zones.

While prices in South Sweden rose sharply towards Continental European levels averaging Eur137.63/MWh in the second quarter, those in the two Northern bidding zones remained very low.

In addition, due to reactor closures and limited liquidity in Nordic forward markets, Uniper hedged a significant part of the exposure with German Power several years ago, effectively transferring a Nordic outright long position into a spread position (long Nordic, short German Power), it said.

This spread position has developed unfavorably from low double-digits to around minus Eur250/MWh, it added.

Lower income from the UK capacity market and higher delivery and procurement costs for coal likewise adversely affected earnings.

Earnings at the Russian Power Generation segment however were significantly above the prior-year level following recommissioning of Beryozovskaya 3 and higher sales volume and prices in the Siberian price zone, it added.

UNIPER POWER GENERATION (TWH)

Source: Uniper