Finnish state-owned utility Fortum announced Thursday a massive 7.4-billion-euro ($7.4-billion) loss for the second quarter, as its German subsidiary Uniper struggled with shortfalls in Russian gas supply.
Russia’s war in Ukraine has caused turmoil in European energy markets, and EU states have accused Russia of choking supplies in retaliation for Western sanctions over the war.
To fulfil its contractual obligations, the German energy giant Uniper has had to source replacements for curtailed Russian gas at significantly higher prices, Fortum said.
“The supply shortfalls of Russian gas and surging gas prices caused dire financial difficulties for our subsidiary Uniper,” Fortum’s chief executive Markus Rauramo said in a statement.
The loss is a consequence of heavy provisions due to gas curtailments and cuts in value of long-term gas contracts regarding its German unit, the company said.
Uniper, which accepted a government rescue package last month, last week reported a net loss in the first six months of the year of 12.3 billion euros.
The German government agreed in late July to take an around 30-percent stake in Uniper, which was threatened with bankruptcy as a result of the energy crisis.
Until that deal, Fortum owned around 80 percent of its German subsidiary, but that share will go down to 56 percent.
Fortum said it expects the “high uncertainty” in its operating environment to continue, with Uniper’s losses “mainly affecting the third-quarter result”.
“The energy crisis with supply constraints and high prices in Europe is deep -– and will most likely intensify towards the winter,” Rauramo said.
In May, Fortum also recorded pre-tax impairments of around 2.1 billion euros due to the company’s significant assets in Russia.
The Finnish power group is currently “pursuing a controlled exit” of the Russian market, the company said.
