Finnish Premier Signals Fortum Will Have to Exit Russia Soon
Finnish Premier Signals Fortum Will Have to Exit Russia Soon
(Bloomberg) --
Finland’s Prime Minister Sanna Marin on Saturday signaled that utility Fortum Oyj’s days in Russia are soon numbered.
The Finnish company that’s majority owned by the state, runs seven power plants in Russia, and its German subsidiary Uniper SE has another five units, with a book value of about 5.5 billion euros ($6 billion). Fortum also owns the nation’s largest wind and solar portfolio.
Asked why Fortum still continues to do business in Russia after the country on Feb. 24 launched an invasion of Ukraine, Marin said “Finnish companies should leave Russia very soon.”
Speaking in an interview on YLE TV1 on Saturday, Marin also said she is aware that’s not been easy for them from a legal standpoint.
Fortum in early March said it will end all new investment projects and cut the number of its power plants in Russia. While it stopped short of announcing a full exit, the move marks a significant retrenchment for a company that earns about a fifth of its operating income in the country.
Fortum was formed in 1998 from the merger of two state-owned power and oil companies in Finland. That year, it bought a stake in Russian utility OAO Lenenergo and further acquisitions since then have boosted the company’s market share. Fortum and Uniper now employ 7,000 people in Russia.
Another Finnish company, Nokian Renkaat Oyj, whose biggest owner is state asset manager Solidium Oy, makes the bulk of its passenger-car tires in Russia. The company said on Saturday it’s studying newly imposed European Union sanctions that prevent it from bringing tires from Russia into the bloc.
The tire maker continues to increase production capacity at factories in Nokia, Finland, and Dayton, Tennessee, but has said it’s concerned that pulling back from Russia could cause its large factory near St. Petersburg to fall “into the wrong hands,” Chief Executive Officer Jukka Moisio said March 21.
“I believe that Finnish companies, both state-owned and others, will leave Russia, and do that as soon as it is possible,” Marin said. “My message is that all western companies should leave Russia.”
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