July 19, 2019 / 6:19 AM / 4 months ago

Fortum profit tops forecasts, Uniper talks continue

FILE PHOTO: Finnish energy company Fortum sign is seen at their headquarters in Espoo, Finland July 17, 2018. REUTERS/Ints Kalnins/File Photo

(Reuters) - Finnish utility Fortum (FORTUM.HE) beat second-quarter profit expectations on Friday, boosted by higher power prices and a rise in electricity generation volumes, and said it was continuing talks with bid target Uniper’s (UN01.DE) management.

Fortum’s core operating profit rose 32 percent to 372 million euros ($419 million), beating the 315 million euros expected by analysts in a Refinitiv poll.

“The higher achieved power price and the higher hydro and nuclear volumes were the main drivers for the clear result improvement in the Generation segment,” Fortum CEO Pekka Lundmark said in a statement.

Lundmark said state-controlled Fortum had agreed to continue talks with the management of Germany’s Uniper, in which the Finnish firm owns 49.9 percent after a hostile takeover attempt. Late in May, Uniper chairman Bernhard Reutersberg said talks with Fortum to resolve their dispute were on hold after two of the German utility’s board members resigned. [nL8N2320C9]

“Following the controversy around the Uniper annual general meeting in May, we have met with Uniper employee representatives, the new members of the Management Board and the Supervisory Board. I am pleased that we have now agreed that discussions will continue,” Lundmark said.

Fortum and Uniper have been at loggerheads since Fortum tried to acquire a majority in the German group in 2017, a deal that Uniper’s management opposed due to concerns it might get broken up.

Fortum, which cannot raise its stake in Uniper further due to the German firm’s Russian water license which must not be owned by a foreign state-owned entity, has claimed that Uniper’s board actively tried to block its bid. Uniper denies this.

“We remain convinced that Fortum and Uniper together can take a leading role in the European energy transition,” Lundmark said.

“Working in close alignment, we would be stronger and better positioned to address the key challenges of the future energy landscape: affordability, sustainability, and security of supply. The talks we held with Uniper during the spring only strengthened our conviction.”

Reporting by Tarmo Virki; Editing by Jason Neely and Mark Potter

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