Good morning, everyone. A warm welcome to Fortum's Joint Webcast and News Conference For the Investor Community And Media On Our First Quarter 2023 results. My name is Ingela Ulfves, and I'm Head of Investor Relations at Fortum. This event is being recorded and a replay will be provided on our website later today. With me here in the studio are our CEO Markus Rauramo, and for the first time in this role, our new CFO Tiina Tuomela, who has returned to Fortum after two years at Uniper. Markus and Tiina will present Fortum's first quarter 23 figures and the group's performance. Before moving into the results, Markus will comment on the Russian situation and walk you through the impacts from the seizure of our Russian subsidiary.
After the presentations, we will then open up for questions, and we have reserved ONE and a half hours for the entire webcast event, including the Q&As, and want to reserve some time in the end also for the Finnish media to be able to ask their questions in Finnish. When we're ready with the Q&A here for the international audience, we will then switch to Finnish with the Finnish media. Okay, I now hand over to Markus to start.
Thank you very much, Ingela. A warm welcome to our investor call also from my side. As said, I will start with Russia and provide you some insights on that. I will then talk a bit about our new strategy and how we are proceeding with the execution. I will then present the underlying first quarter earnings and performance of our continuing operations excluding Russia. Tiina will walk you through the numbers in more details and also elaborate on the impact of the Russian impairments and deconsolidation. First, I'll shortly comment my remote work. As we already communicated before our or after our AGM that I had some preplanned medical operation that was already in the plans and had to be done. That operation went really well.
I had no sick leave and was intensively, actually, more intensively than I probably thought, working remotely. The only visible impact and only impact that I had was the obvious loss of hair, which you can see here. Now I'm back in the office. It feels really, really good to be again with our team, with the whole Fortum team, all of our employees, and with full speed and full energy implementing our great strategy that we announced earlier this year. Let me start the presentation by commenting on the Russian situation. April 25th marked another point of escalation in the war that Russia is waging in Ukraine and against Europe through energy.
The new presidential decree provides a guise under which the Russian authorities have caused the change of our subsidiary PAO Fortum's CEO and seized control of our assets in Russia. I very purposefully say guise because there is absolutely no legitimate reason for Russia's actions. Our power plants in Russia are the most modern and efficient in the market. They have been maintained to high industry standards and operated normally, producing heat and electricity to their customers. We have also consistently sought an exit from Russia. Based on extensive interest by multiple buyer candidates, we have applied for permission to sell the operations to both Russian and international buyers. However, we have not received the approval. You see that the argument that the presidential decree was necessary to protect energy security in Russia simply does not hold.
We consider Russia's actions to be a crude violation of international law and a violation of Fortum's rights as a foreign investor. We are preparing to defend our rights. This being said, Russia's actions mark a point of no return for us. We have no control over the assets or their operation anymore. The de facto loss of control of PAO Fortum triggers a full deconsolidation of our Russian assets. All of our Russian assets, including our shareholding in TGC-1 and our shares in the joint ventures, will be classified as discontinued operations in the second quarter of this year, in line with the timing of the triggering event. All of our Russian assets will be also fully written down in Q2. There are two financial effects to be recorded in Q2. First, we record impairments of the full book value of EUR 1.7 billion.
Secondly, we have ruble-related negative translation effects of EUR 1.9 billion from exchange rate changes over the years. Tiina will walk you through the impact on our financials in more detail shortly, but I want to comment on the equity and debt already now. When it comes to group equity, the impairments do have an impact, while the translation effects do not. In our financials, you can see that the group equity at end of first quarter was at EUR 9.8 billion, and the parent company equity stood at EUR 12.2 billion at the end of December. We can conclude that both will remain sufficient also after the impairments. Further, the impairments and the discontinuation have no impact on Fortum's financial net debt, excluding Russia. As we already earlier have presented the net debt. The internal financing, i.e.
the shareholder loan, has no impact on our leverage and financial position. To conclude, our overall financial position remains strong with financial net debt excluding Russia at EUR 900 million and the ratio for financial net debt to comparable EBITDA excluding Russia at 0.4x at the end of Q1. Our total investments in Russia amount to approximately EUR 6 billion. Over the years, some EUR 4 billion have been invested in the Russian operations. However, this has to a large part been financed through cash flow generated in Russia. Since 2008, the Russian segment has generated more than EUR 4 billion of EBITDA. Consequently, the net cash flows comprising the investment to acquire the Russian operations, receive dividends, and net financing totals some EUR 2 billion. Our chapter in the East has now ended.
Russia is not part of our future, nor does our exit in any way jeopardize the successful execution of our new strategy. In the second quarter, we will close our books on the operations in Russia permanently. A few words to recap our new strategy that we announced in March. Renewed Fortum is built on strong earnings power, clean power generation at scale, and very low specific emissions. Our first priority is to deliver reliable clean energy. We create value with our best-in-class operations. We have a strong track record of optimizing our portfolio successfully, both in low and high price scenarios. These are our core competencies. We also have the expertise and the ability to further develop our portfolio and to ensure sustainable earnings. Our second priority is to drive the decarbonization of industries. We will extract value from growth opportunities in the energy transition.
This will not only require our expertise, but also investment discipline. We continue to have a solid financial position that we will preserve and therefore have to be prudent in our capital allocation and be selective with growth projects. Thus, we want to grow but be selective. We will build a project pipeline for the future and will execute on our ongoing investment projects. This enables us to manage in the current prevailing uncertainty as it is difficult to predict how the market will develop in the next couple of years. Our third priority is to transform and develop. To secure the successful execution of our strategy, we as Fortum will develop the way we work and improve our efficiency according to our new operating model.
We have to carefully manage the current volatile and uncertain operating environment, have to manage and reduce our risks while simultaneously take advantage of prevailing good power market conditions. What are the concrete actions that we have taken so far? First, in the first quarter, we were granted a new operating license for our Loviisa Nuclear Power Plant until the end of 2050. The Loviisa lifetime extension until 2050 offers up to 170 TWh of additional CO2-free power with CapEx of approximately EUR 1 billion over some 25 years. This is a concrete example of ensuring productivity in the long run alongside our ongoing rebuild of the dam at Forshuvud hydropower plant in Sweden, as well as the wind projects that we are now constructing in Finland.
I'm also very pleased that the TVO's long-awaited third Olkiluoto Nuclear Power Plant unit in Finland started regular power generation in April and commercial operation in May, which strongly supports the Nordic security of supply. Second, in the first quarter, we announced partnerships with the Finnish steel company Outokumpu and U.K.-based Rolls-Royce SMR related to a two-year nuclear feasibility study covering both small modular reactors, SMRs, and conventional nuclear. These collaborations are additions to the earlier announced collaboration with Helen in Finland, EDF in France, and Sandfjället Next AB in Sweden. We also launched a pre-feasibility study with Metsä Group to examine the technological and business potential of further processing of wood-derived carbon dioxide. Finally, a few words on the ongoing internal changes. Now that we have our new leadership team in place, we are adapting the rest of the organization to the new business structure.
This enables us to take a more customer-centric approach. We will create value by increasing our efficiency. Improving our efficiency and risk management starts with the way we work, how we recalibrate our cost base, and how we improve our cost competitiveness. Although Nordic power system is largely based on clean power, it is still affected by the volatility of commodity prices, mainly driven by the continental gas-fired generation. As you recall, during spring and summer last year, we saw gas prices climb to unprecedented levels as Europe pushed to refill gas storages in preparation for winter under extreme uncertainty over supplies. In the fall, prices started to ease with higher filling levels in Europe, higher LNG supplies and curb demand as a result of already high prices, fuel switching, and savings measures.
Through Q4 2022 and Q1 2023, lower gas prices, and consequently lower power prices, were supported by the mild winter. At the end of Q1 this year, gas storage levels were approximately 55% full. With gas storages consistently at good levels, the market is now much calmer about Europe's security of supply going forward, and this is reflected in lower gas forward prices. The Nordic System Price, both spot and futures, declined steeply in lockstep with the continental European and U.K. power prices. Products for the rest of the year 2023 are currently trading at around EUR 60 per MWh , and for 2024 around EUR 70 per MWh . Although we are talking about much lower levels than in the autumn, forward prices are elevated compared to the historical price range. I'll move over to the first quarter financial KPIs.
What you see here are the comparable headline KPIs for Fortum Group's first quarter continuing operations, so these exclude Uniper for the year 2022. We also present all relevant KPIs excluding Russia in the same way as we did in March with our full year result. The year 2022 figures are fully comparative. This morning, we published restated figures to reflect the discontinuation of our Russia segment as of the second quarter 2023. The first quarter of this year was again another volatile quarter characterized by extraordinary market fundamentals. Overall, our group performance across the headline KPIs was very strong. Starting from the comparable operating profit for continuing operations, it more than doubled to EUR 784 million, and was EUR 698 million excluding Russia.
Comparable EPS for continuing operations was EUR 0.58 per share, and when excluding Russia, it was EUR 0.54 per share, almost double compared to Q1 2022 restated figures. Cash flow also improved significantly and amounted to EUR 583 million, and this is including Russia. Finally, the balance sheet, and most importantly, our leverage. Defined as financial net debt to Comparable EBITDA, it was at 0.3x for the group's continuing operations and at 0.4x excluding the Russian operations. The main reason for the improvement is the strong result and good cash flow. The low leverage provides a good starting point to continue to develop Fortum. Going forward, we will calibrate the balance between dividend, growth CapEx, and balance sheet strength, which has the highest priority for us.
To sum it up, I'm satisfied with the strong group performance in a volatile commodity market. With this, I conclude my part in this first section and hand over to you, Tiina.
Thank you, Markus. Good morning, everyone. Also on my behalf, it feels good to be back at Fortum again. I'm happy to have been given the opportunity to take on the role as CFO. I'm looking forward to meet all of you in a due course. I will now go through our financial in more detail, and will start with the development during the first quarter. At the end of my presentation, I will also provide some more details on the financial effects of the Russian deconsolidation, including impairments in the second quarter. With this, let's move to our key financials for our continuing operations. As you have noted, we have today published restated quarterly figures for 2022 and the first quarter on 2023. Starting from the second quarter, Russia will be deconsolidated, classified as discontinued operation, and reported as one liner.
What you can see here is the key financial overview summarizing key comparable indicators of the consolidated Fortum Group continuing operation. This reporting is in line with the full year reporting as we still in the first quarter consolidated Russia, and therefore provide the figures here excluding Russia. These are not to be mixed with today's restatement of our Russian segment. Going forward, you should focus on the restated figures published today. Let me now comment on some of the comparable KPIs excluding the impact from the Russian operation. Comparable operating profit excluding Russia more than doubled from EUR 326 million and was EUR 698 million for the first quarter. This is almost entirely driven by the generation segment and the high hedge and market prices.
Items affecting comparability totaled EUR 71 million, of which EUR 62 million was changes in fair values of non-hedge accounted derivatives. This also shows that the effect of the market volatility has declined. Comparable net profit excluding Russia improved from EUR 228 million- EUR 483 million. EPS excluding Russia for the first quarter consequently increased and was EUR 0.54 per share. The increase is not as pronounced as the increase in the comparable operating profit, as we had higher financing costs. EPS for the last 12 months has increased to EUR 1.49. Cash flow. In the first quarter 2023, net cash from operating activities including Russia increased by EUR 218 million- EUR 583 million, mainly due to the improved Comparable EBITDA.
The increase was dampened by the small negative change in working capital and higher paid income taxes compared to the same period in 2022. It is also good to note that there is no impact of the dividend in Q1, at the first installment of EUR 0.46 was paid only in April, i.e., impacting the second quarter. The second installment of EUR 0.45 will be paid in October in the fourth quarter. The dividend of EUR 0.91 was based on the 2022 EPS of EUR 1.21 for continuing operation excluding Russia. As the final remark of our key financial, we note that our leverage is very low, with the financial net debt to Comparable EBITDA ratio of 0.4x excluding Russia. Now over to the segment overview.
This clearly shows that the strong result improvement is entirely subject to our generation segment, which reported a comparable operating profit of EUR 723 million. The significantly higher achieved power price, supported by high hedge price in Q1, strengthened the result. The Q1 2023 system product market prices have been about EUR 100 per MWh since the beginning of second quarter last year, and peaked approximately EUR 550 per MWh at the end of August 2022. The slightly lower volumes were caused by lower inflows that left the hydro reservoir level slightly below average during quarter. Currently, hydro volumes are somewhat below the average. The operational performance and production volumes for nuclear generation were solid and at a good level.
The achieved power price in the generation segment increased by EUR 41.1 per MWh or 93% to EUR 85.2 per megawatt hour, driven mainly by higher hedge prices. Our hedge price in Q1 2023 was more than our area price's blended spot price. Physical optimization enabled by the power price volatility continued to be good and contributed the good result. This is strong performance. Consumer solution result fell by EUR 29 million, close to a zero result, mainly due to the losses resulting from customer outflow from certain hedge contract portfolios in a very volatile and high price market conditions. This means that we had some contracts from which customers were able to switch out of and resulted in related overhead position that created losses.
Consumer solution Comparable operating profit was also negatively impacted by the Polish price cap implemented for end users in 2023 as regulated by the Polish government. Finally, one word about the other operating segment. Comparable operating profit decreased by EUR 50 million and totaled - EUR 31 million, mainly due to the structural changes in the circular solution business in the comparison period and unexpected outage at the Danish facility in Nyborg. Now, we move to the balance sheet. I will first go through our balance sheet at the end of Q1 2023, which also includes the Russian assets. Starting from the top, our group equity strengthened due to the positive hedging effects and was EUR 9.8 billion. Our gross debt came down as we repaid some debt.
At the end of Q1, net margin receivable amounted to EUR 1.1 billion, which already is much closer to the historical levels compared to the levels we saw last year. We also continue to have sufficient liquid funds, EUR 3.7 billion. All in all, we can summarize that we have a relatively clear balance sheet. I will come back to the balance sheet on my last slide to present the effects of the recent impairments and deconsolidation as published today. First, a few comments on our net debt and debt portfolio. The credit rating still continues to be a key objective for us. We are satisfied that both rating agencies changed our outlook to stable with BBB rating.
Let's go through the reconciliation of our financial net debt during the quarter, which has further improved and strengthened and shows that our leverage situation is very good. When looking our financial net debt in the opening balance sheet at the beginning of the year, we had financial net debt of EUR 1.1 billion. Operating cash flow was very strong, of EUR 583 million, supported our efforts to further bring down our gross debt. The positive effect on the strong cash flow was slightly offset by investment of EUR 144 million and slightly higher receivables of EUR 71 million from the Nuclear Waste Fund in Sweden. The FX effect of EUR 81 million is mainly related both Ruble and Swedish Krona.
At the end of the March, our financial net debt has further declined and was at EUR 0.8 billion, including Russia, and at EUR 0.9 million excluding Russia. Looking at our debt portfolio and the maturity profile, I want to highlight a few things. First, we repaid a EUR 1 billion bond in February and also repaid and canceled the Solidium bridge financing loan of EUR 2.35 billion in mid-March. Second, we continued to have quite some financial flexibility on our debt maturities as we have option to extend EUR 1 billion of our loans with one year into 2024. Although at the first glance our contractual maturity profile looks very much front-loaded, the financial positions is rather good. Our liquidity position continues to be strong, and we have sufficient liquidity reserve totaling EUR 3.4 billion, excluding Russia.
Finally, a few words of our financing costs. As the interest rate have gone up, the interest rate for our debt portfolio is consequently also up somewhat. Going forward, the cost of our EUR 5.9 billion loan portfolio is 3.9%. It is good to remember that we also are getting some interest income for our liquid funds. With this, over to the outlook section. The outlook section comprises, in essence, four elements: guidance of hedging, CapEx for 2023, updated tax rates, and Russia impact. Over the years, Fortum's successful hedging of the outright generation has created predictability and visibility. The hedge prices for generation segment for this year came down from EUR 58 per MWh to EUR 50 per megawatt hour, and the hedge ratio was 70% at the end of March.
The reason for the decreasing hedge price is that we had a very high hedge price in Q1 2023. The hedge price for 2024 increased by EUR 1 per MWh to EUR 43, the respective hedge ratio remained at 45% at the end of March. Our CapEx guidance for 2023 for continuing operation is unchanged. We expect to spend a total EUR 700 million, and this includes maintenance CapEx, but excludes potential acquisitions. Maintenance CapEx will be approximately EUR 300 million, which continues to be below our depreciation level. Due to the upcoming deconsolidation effects of the Russian impairments, we are slightly lowering our tax guidance for this year.
Taking into consideration also the temporary windfall tax, the group's comparable effective income tax rate, excluding items affecting comparability, is estimated to be in the range of 20%-23% for this year. Excluding the windfall tax, the comparable income tax excluding items affecting comparability is estimated to be in the range of 19%-21%. For 2024, the comparable effective income tax rate excluding items affecting comparability is estimated to be in the range of 19%-21%. Just as a reminder, the Finnish windfall tax applies to the fiscal year 2023. The actual outcome of it naturally depends on the power price and result development. Finally, on the deconsolidation of Russia, the Russian operation will be reported as discontinued operation in the second quarter, 2023.
In the second quarter, we will also record impairments of EUR 1.7 billion and translation differences of EUR 1.9 billion. Let's take a more detailed look at the effects of these on the next slide. Here we try to illustrate the effects of the Russian exit by bridging between the balance sheet as the end of March and the balance sheet after the deconsolidation and impairments. In addition to overall asset value, the other relevant components affected are liquid funds, equity, and interest-bearing debt. Liquid funds and interest-bearing debt will increase as they are deducted from group financials. After the deconsolidation, the group financial net debt will increase from EUR 0.8 at the end of March to EUR 0.9 billion based on the illustrative balance sheet where Russia is deconsolidated.
The intragroup loan to Russia does not have any impact on financial net debt. Financial net debt to comparable EBITDA would be at 0.4x . The impairment of asset of EUR 1.7 billion will have a negative effect on group equity. The FX translation difference, a negative effect approximately EUR 1.9 billion, will only move within equity from translation effect to retained earnings through the income statement but does not have total equity at all. This means that the group's total equity decreases from EUR 9.8 billion to approximately EUR 8 billion in the illustrative balance sheet. At the end of last year, the parent company equity was at EUR 12.2 billion. These recordings do not have any effect on cash flow.
To conclude, after these bookings, group equity and parent company equity continue to be at healthy levels, and Fortum's financial position remained solid. Distributable funds are sufficient for future dividend payments. At the end of last year, distributable funds amounted to EUR 6.3 billion. Considering the dividends of EUR 0.91 paid for 2022, it was already based on the EPS excluding Russia. With this, I conclude my presentation. Now over to you, Ingela.
Thank you, Tiina, and thank you, Markus. We are now ready to take your questions. Please state your name and your company before you ask the question. We also ask you to limit yourself to two questions each. Let's begin the Q&A session. Moderator, please start.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Harry Wyburd from Exane. Please go ahead.
Hi. Morning, everyone. Thanks for taking my question. I'll stick to the two. Firstly, on Russia, can I just understand a little bit more about what the Russian government action means? Can you still sell the assets even if you don't control them at the moment? Is there any long-term legal redress if the government management team basically damages the assets in some way that's prejudicial to Fortum? That's the first one. The second one, I just wanted to ask on the hedging for 2024. I think forward prices are about EUR 70 as of now for 2024 for Nord Pool. Is there any reason why the hedging progress was quite limited in this quarter with a limited change in the achieved price?
Just interested why that hasn't moved up? Many thanks.
Okay, thank you for the question. I can start with Russia, and then Tiina can maybe take the hedging question. Yes. First of all, we strongly object what the Russian government has done with the takeover. We don't see any grounds for what they have done. We have a well-maintained asset that has been producing energy. The argument that this secures Russian energy security, we do not think is valid at all. Can we sell? We are the title holder. So in theory, we can sell, but of course this, that the management has been taken over by the Russian government, that will complicate things there.
The bottom line is that we will now pursue our legal rights, both in Russia and internationally, for example, under the International Investment Protection Treaty and others. We will pursue our legal rights through these processes. For the hedging, Tiina.
Okay. Thank you. Yes, the hedging for 2024, the hedge percent is 45, and the hedge price EUR 43 per MWh . If we look at the development from the end of the year, the hedge percent is roughly the same, but the price has increased. Typically, what we do the hedging, we start to hedge roughly three to two years beforehand. Of course, the current hedge price, in a way, is the accumulation of the hedges done earlier. We can see also this, in a way, higher price reflected to the current situation. I would say that this is quite typical level what we have at this time of the year. Of course, there's time to end of 2023 when it goes to the delivery.
Of course it will depend at the end of the prices during this year.
Okay. Thank you.
The next question comes from Iiris Theman from Carnegie. Please go ahead.
Hi, this is Iiris Theman from Carnegie. Firstly, can you share what kind of discussions, you have had with, credit rating agencies? Are they going to update your credit rating profile in the short term now that you will deconsolidate Russia?
Okay. Do you wanna go ahead with, if you had more questions, we can take them in one go?
Oh, okay. Yeah.
Yeah.
I can-.
Thanks.
Yeah, I can go ahead with my second question. On optimization premium, can you comment your Q1 level compared to Q4? Given that the power prices volatility has increased, is it fair to assume that your optimization premium will be higher in the coming years than EUR 2-3 in the past? Thanks.
Okay. On a general level, we have continuous dialogue, of course, with the rating agencies. When we have a bigger news like Russia impairment and so on, we communicate with the rating agencies. We understand that from a credit point of view, the initial comments from the markets are that Russian deconsolidation is a mild positive. We'll see whether this has an impact on the ratings in the long run. Of course, from a country risk point of view, this reduces our overall country risk exposure. Now we are very focused on the Nordics, which enjoy very, very high ratings across the board. On the optimization premium, maybe if you wanna, Tiina, comment that part.
Yeah. Very good. Yes. Of course, the market volatility gives us an opportunity to really optimize our production against the market. As the volatility has been higher, maybe even too high in the last year, so that has enabled us to get the good, in a way, margins. I think in the future, I think that there's coming more in the market, wind in the market and the volatility will prevail and therefore it is good for the optimization. What is the exact level? This is not what we have disclosed, but let's say that possibilities for good earnings are still there.
Okay. Thank you.
Yeah. If I add to that, it is exactly this, that the electricity demand is expected to grow massively. In the short and medium term, it is really the intermittent renewables that will then be the biggest addition to the market. Logically, there would be more volatility than what is the range of the volatility. It depends on the absolute price levels. Our portfolio, production portfolio, is really well suited to support the energy system and of course for us then, to be able to optimize our portfolio which is very flexible against that volatility. We are in a very good position to both, get financial returns and support the whole energy system in the future.
The next question comes from Pujarini Ghosh from Bernstein. Please go ahead.
Hi. Thank you for taking our questions. One question on your, you know, on the OLK plant, which was recently, ramped up.
In the first few weeks or months of operations, how is the plant progressing? What observations do you have, and what do you think this plant means for the future of the Nord Pool system, in terms of the EPADs and then the demand supply situation? My second question is on your PPAs. You said in the past that you're seeing interest for PPAs, both for your existing as well as new assets. Can you tell us a little bit about your hydro portfolio? Are you getting interest for PPAs from your existing hydro assets as well? And any color on that would be very helpful. Thank you.
I can start with the PPAs and comment generally Olkiluoto and then Tiina of course is in a great position to give deeper insight on that. For the PPAs, yes, definitely there is now interest as the liquidity in Nasdaq has dried up and then both electricity producers and consumers want to hedge longer term, , 10, even more years because of the big investments that have to be done for decarbonization and electrification of the processes. Over the years, how the PPA thinking has seemed to develop is that if you go a few years back, companies were seeking for additional renewable powers, additional wind and solar.
Of course, at some point you realize that it is intermittent as it is, and you can't get steady 24/7 from renewables unless you then massively overbuy and thus get a profile. You'd have to buy a huge portfolio. Ultimately, where we stand today is that the customer demands are more like 24/7 CO₂ free. It's not specific that it necessarily has to be wind or solar or hydro or nuclear, as long as it's CO₂ free and reliable and affordable. This is where we stand today. Under the PPAs that we are discussing, it seems that customers are interested in a combination of renewable and wind and hydro.
This is the way we think it is going forward because the electrification and decarbonization needs are so massive. I'll comment on Olkiluoto 3 and its impact on the EPADs and the market. I assume that we see the impact already. If you go back just a year and then several years before that, there was a big difference between Finnish and Swedish area prices. Now these have converged, so the Helsinki EPAD has come down significantly compared to where it was before Olkiluoto 3 started. My assumption is that the markets have taken Olkiluoto 3 production into account already.
Then on the ramp-up of the plant and all the test sequences, then Tiina is in a good position to comment, although of course it's not our fully owned plant.
Exactly. Olkiluoto 3 finally is in commercial operation from first of May. Of course, the production plans could be seen in TVO sites. Basically, nuclear usually runs the base load, stabilize the in a way the market. Of course, outage is coming as planned and also informed the market. I concur what Markus says, though, that the market most probably have already reflected that in the prices. The one thing maybe to add on is that of course the interconnections, if the interconnections in a way are strengthened, then of course the differences between the different area prices would stabilize in the future as well.
Overall, of course, very good message and that also allows the renewables come to the market when we have the good base load on the market.
Thank you.
The next question comes from Wanda Serwinowska from Credit Suisse. Please go ahead.
Hi, good morning. Wanda Serwinowska, Credit Suisse. Two questions from me. The first one is Tiina to you on the hedging on 2024. You said it's in line with the usual levels. When I check the hedging two years in advance, basically over the last five years you had around 55% hedging, you are 10 percentage points below the five year average. My question is, why are you still at 45? Is it the liquidity or you believe that 70 EUR MWh is not attractive enough? The second question is on the consumer solutions. I know that you guys, you don't provide any financial guidance unfortunately, anything on the development of consumer solutions this year? Q1 was clearly weak. It was a single digit EUR million amount, EBIT performance.
Anything, for this year, or should we expect a reversal of the losses that you incurred in Poland? Thank you very much.
Hi, Wanda. Thank you very much for the question. If I start with the development of consumer solutions and co-comment shortly the hedging team, Tiina can add on that. This first quarter was extraordinary in the sense that it was partly Poland, but bigger part was actually that our customers on the retail and SME side had possibilities to change their contracts. Unfortunately we were not completely able, and we are not completely able to match with the hedging such abrupt moves that were caused by this volatility and high prices in the markets. I would regard this as an extraordinary quarter, and 2022, in my view, is more reflective of what is the consumer solutions normal performance.
There can be volatility between years, but that represents a more normal year. Before that, we had a year and a half ago, we had the difficult December, with high prices and consumers not being so alert to their consumption. We had the peaks, especially in Finland on Independence Day and Christmas, which also caused us then problems with the hedging. These, these I regard as situational and extraordinary. On the hedging, it is indeed so also there that our, we have some flexibility in our hedging ratios, and that is then reflective of our, of the organization's views on the market and liquidity and so on.
no changes in our hedging policy or approach or principles as such. I don't know, Tiina, if there's anything you want to.
No, no. Exactly. So definitely, as if look at the numbers, so it is lower than at the same time previous year. On the other hand, the price is now much, much higher and it's good to remember that last year's hedging ratio is, was developed also during the COVID years and the uncertainty what we had in the market. I think it is a combination of our views and the liquidity and the overall market situation. I would say that this is around the normal band, the hedging ratio what we currently have.
Thank you very much. Markus, if I can just follow up. On the consumer solutions, is it fair to assume that Q1 was a one-off or should we expect the full year to be weaker to some extent?
Yeah. Let's say that the coming quarters unless there's something similar happening which I don't foresee at the moment then I would more look at last year in the remaining quarters. That we would catch up what we lost in Q1 that I don't see happening. As of course we are obviously not guiding the result, but last year was more representative of what consumer solution in normal conditions would do.
Thank you very much.
As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Thank you, moderator, and thank you for your questions. It seems that the quarter was rather straightforward as there were not too many questions on the result as such. It actually also seems that despite this Russian situation, that also seems to be pretty clear. Of course, if there's any further questions, the IR team is more than happy to help on answering those. This means now that for those of you now participating here in English, we thank you. We still have some opportunities to take questions in Finnish. For the international audience, thank you so much and have a nice rest of the day.