Uniper SE

XETRA:UN01

Earnings Call Transcript 2022-Q4

[Operator]

Dear ladies and gentlemen, welcome to the Uniper Analyst and Investor Conference Call Full-Year Results 2022. At our customer’s request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions.

May I now hand you over to Stefan Jost, who will start the meeting today. Please go ahead.

[Stefan Jost]

Good morning, dear analysts and investors. I would like to welcome you to this morning's conference call on Uniper’s 2022 results. Our CFO, Tiina Tuomela is here with me today to share the key events and financial numbers on an exceptional year, focusing on the financial stabilization of the company. I'm also pleased to welcome Sebastian Veit, as Uniper’s new Head of Investor Relations, succeeding our great colleague Adam Strzyz.

For a number of years, Sebastian successfully led Uniper’s Governmental Relations team and he is known as an exceptional leader with great communication skills. Please welcome Sebastian in his new role. There will be plenty of occasions in the future for a get to know. As usual, we will have a Q&A session at the end.

And I hand you over to Tiina, please.

[Tiina Tuomela, Chief Financial Officer]

Thank you, Stefan. A warm welcome from my side. Before I turn to the numbers, allow me a few personal remarks. This is my last analyst and investor call for Uniper before returning to Fortum in April. Dear analysts and investors, I would like to thank you all for your strong commitment to Uniper, but I also take the opportunity to especially thank the entire team at Uniper for their relentless work. Reported by the financial commitment of the German government, Uniper has the basis to take its future into its own hand with a new senior management. 2022 was a real watershed year for Uniper.

Now with major effort and the €1 billion stabilization package agreed between the German government, Uniper and Fortum, a successful turnaround has been initiated. At year-end 2022, the German government held a 99.12% stake in Uniper. In return that the state injected fresh equity totaling of €13.5 billion in December 2022 and moreover bought the Uniper shares from Fortum.

Let me guide you through the elements with stabilized Uniper’s financial base at the end of the year on the next slide in a moment. The primary headline result for 2022 financial year were already published in the ad-hoc release on February 1, 2023. The final figures now look slightly different as we had to conclude a loss of control over Unipro meanwhile. Hence, Russian power generation is no longer included within our continuing operation, but reported as discontinued operations. The profit or loss as well as cash flow and KPI figures for the previous year were restated as discontinued operations.

Adjusted group EBIT in fiscal 2022 totaled a loss of €10.9 billion compared with a positive result of €955 million in the prior year period. Adjusted net income also slipped sharply into negative territory. This result figures include about €13.2 billion of realized additional cost for procuring replacement gas volumes due to Russian curtailments.

Excluding this dominating effect, Uniper’s underlying business performance in this extraordinary market situation was strong overall. The total losses from gas replacement procurement recalculated in the annual financial statements 2022 now stand about €19.1 billion instead of about €40 billion as reported in our Q3 results driven by significantly lower market prices as compared to the end of September.

The 2023 financial year will be a transition year for Uniper. At the top of the agenda is to push ahead with financial stabilization and portfolio rotation. The latter is crucial to comply with the remedy measures of the EU commission. First steps are already underway as demonstrated by the shift sale of Uniper’s stake in the BBL gas pipeline and United Arab Emirates based crude oil processing and marine fuel trading business. What I like, Uniper retains the integrity and a well-balanced portfolio and significant financial fire power to invest into its transformation.

Let us now take a look at Uniper’s current situation and where we stand with our stabilization. The equity position shows a significant improvement since the end of Q3 and even return to positive territory at €4.4 billion at the year-end 2022. This turnaround has two main drivers. First, the cash capital injection of €8 billion by the German government and then an initial drawdown of €5.5 billion from the newly created authorized capital in December 2022 following approval by Uniper shareholders at an extraordinary shareholders meeting and following the state-aid approval by the EU commission.

Second, significant reversal of provisions were made in the balance sheet for the full-year 2022 in particular as a result of the remeasurement of provisions for the expected additional cost for procuring replacement cash volumes based on significantly lower market price at the end of December compared to end of September.

Please continue to the next slide. The agreement with the German government stipulates that additional cost for procuring replacement gas volumes for the period until 2024 will be absorbed through equity injections. Uniper will make an own contribution of 30% per year from its adjusted EBIT between 2022 and 2024. Additional losses from the gas replacements costs are excluded from these numbers. The realized additional cost for procuring replacement gas volumes in fiscal 2022 amounted to about €13.2 billion.

At the year-end 2022, the provisions for anticipated future additional cost for procuring replacement gas volumes was recalculated and reduced sharply to €5.9 billion. On this line, you can see dramatically how much the potential losses would swing with different gas prices on the market. Of the equity shield backed by the federal government up to €33 billion, €19.5 billion is still accessible. Against this background, the remaining amount of the newly created authorized capital is considered sufficient in most gas price scenarios.

On the next slide, you can see another process of how Uniper is in the process of improving its financial position. Cash margining requirements from forward sales via commodity exchanges or bilateral sales under margining agreements were significantly lower at the end of 2022 than in recent quarters. Lower commodity market prices were the main factor contributing to the sharp recent decline in liquidity requirements. However, Uniper also been actively working to reduce the margin on forward deals through a prudent hedging strategy. Not to forget the usual positive seasonality effect with more deliveries in winter. As a result, there are less liquidity reserve required to serve margining needs going forward.

The financing headroom at the end of 2022 is a consequence of the successful implementation of the stabilization, including the equity measures. The main purpose of the KfW facility is to provide a bridge financing for gas replacement costs until these costs get compensated by the state via equity injection under the newly created authorized capital. This protection against losses from Russian gas flows also provided a strong signal of governmental support for the banks supporting renegotiation of credit lines and help to normalize day-to-day operations in Uniper’s other businesses.

Moreover, the credit rating agencies Standard & Poor's Global had recently reaffirmed an investment credit rating for Uniper. Going forward, the issue of gas replacement costs will be overcome latest by the end of 2024, and therefore the extra ordinary financial support from the state via equity injection and also via KfW credit facilities to support liquidity needs will be facing out over time.

In a first step, the €18 billion KfW facility has been reduced to €16.5 billion for 2023 and will be gradually reduced further in the subsequent years. All-in-all financing stabilization has taken a huge step forward so far. Portfolio rotation with a specified disposal list required under the state-aid approval of the EU Commission is high on the management radar. The deadline to deliver on the commitment by 2026 gives Uniper sufficient leeway.

Overall, the future portfolio will be more focused on Uniper’s core markets in northwestern Europe, which keeps the potential for synergy effects. What are the most prominent candidates on the disposal list? To start with our Russian share holding, Unipro has been put up for sale internally since 2021 as communicated before. A transaction has been agreed with a Russian buyer in 2022, but the political approval for the transaction is still outstanding and highly uncertain.

Further Russian sanction legislation has further impaired Uniper’s ability to exercise control as a major shareholder. As a result, Unipro was deconsolidated at the significant loss at the end of fiscal 2022 and is now reported as discontinued operation in our annual report 2022. On the power generation side, the disposal list consists of Datteln 4 coal-fired power plant in North Rhine-Westphalia and gas-fired power activities in Hungary.

Also for sale, certain gas-fired plant interest, which are less of strategic relevance than in the past. Thereof, our 20% pipeline participation in the UK, Dutch gas pipeline BBL was already been sold. There are also market share limitation in the gas shale business in Germany. All-in-all, it is substantial list of remedy commitments, but at the same time, it allows Uniper to implement its strategy and transformation path.

Now on to the figures from 2022 financial statement. Let's start with the overview of Uniper’s main operating indicators. Physical gas storage levels at the year-end 2022 in Europe were unusually high driven by revised regulatory framework, strong LNG imports and coupled with demand reductions and thanks to mild temperatures. This certainly took a lot of the cheaters out of the market.

Gas storages in the EU were nearly 85% full at the end of December 2022. Uniper’s storage level as of the reporting date was even a tick higher than Germany's overall fill level of 90%. Power production in our European generation segment recorded a decrease in power generation of 7%, but only a small decline adjusted for disposal effects.

Uniper’s outright fleet with its hydro and nuclear power generation recorded a slightly lower output overall. While the hydro power plants in Northern Europe delivered more electricity, the German power plant suffered from a serious drought last summer. Higher volumes and nuclear were held back by extended outages at our Oskarshamn 3 power plant and at the Ringhals 4 power plant participation.

Output at our fossil power plants was satisfactory against the background of weak overall demand for electricity in Europe. Overall, we recorded a slight drop, which was far more than offset by higher spreads. The output of our coal-fired power portfolio was supported by a temporary return of the 875 megawatt Heyden 4 power plant to improve security of supply in Germany, which has been scheduled for closer.

Another positive factor, we were allowed to fully run Dutch power plant Maasvlakte 3 after the cancellation of the output cap as a consequence of Dutch security of supply method. Output from our gas-fired power plants in 2022 was slightly down. The UK remains the far most important market for gas-fired power generation for Uniper. Carbon emissions of Europe generation and global commodities decreased by 7% particularly because no more lignite has been burnt since October 2021, following the disposal of our one lignite plant. European generation’s carbon intensity fell slightly below the rate of 400 grams per kilowatt hour.

Let's now move on to our key financials for the 2022 financial year. And as said before, the comparison numbers for 2021 were adjusted for discontinued operations of our Russian power business. The operating results mark the bottom and are a turning point for Uniper. Uniper’s key financials have been significantly impacted by the additional cost for procuring replacement cash volumes also in the fourth quarter of the 2022 financial year. This mask a very solid underlying result.

Looking at adjusted EBIT and adjusted EBITDA for the 2022 financial year, the figures are highly positive, if the realized additional costs for procuring replacement gas volumes of about €13.2 billion are isolated. I'll get to the key result drivers on the very next slide. The operating cash flow clearly reflects the high realized additional cost for procuring replacement gas volumes. In addition, there was a considerable increase in working capital as a result of the sharp year-on-year rise in commodity prices paid with higher gas injections and a raised coal stock.

With regards to adjusted net income, the realized loss was partly offset by corresponding positive tax effect. Group net income and economic net debt were weaker than prior year, but significantly better than in the last nine months report. The group published net income for 2022 of minus €19 billion was materially up versus Q3 2022 with a reported net loss of €40.3 billion. The difference between adjusted net income and published net income is mainly driven by non-operating accounting effects relating to the Russian business as well as the result from discontinued operation.

First, a provision of €5.9 billion in our segment global commodities for the anticipated additional cost for procuring replacement gas volumes. Second, asset and goodwill impairments totaling €3.1 billion, including a Nord Stream 2 loan impairment of €1 billion. Third, another major impact stems from the deconsolidation of Unipro leading to a deconsolidation loss of €4.4 billion. Economic net debt at the end of the year showed a significant recovery compared to Q3 numbers as a result of the cash equity injection of the German government in December 2022.

On the next slide, I would like to dive into the key drivers of adjusted EBIT. This slide clearly shows how the additional cost for procuring replacement gas volumes completely dominate Uniper’s performance in the 2022 financial year. In contrast for other activities have been able to contribute positively to the company's earnings development. In general, it shows that Uniper is capable of generating additional earnings in a volatile market environment.

In the global commodity segment, the earnings contribution of the commodity gas activities remain healthy as a result of successful optimization business, including the optimization of our storage capacities. The global commodity subsequent international reported an EBIT loss in the mid-three-digit million euro range. The result [indiscernible] by a loss of deliveries of contractually secured LNG cargos due to a fire at the U.S. LNG liquidation terminal Freeport. Missing volumes had to be procured alternatively on the market at the higher cost.

The commodity power business with optimization and power trading made an unexpectedly strong year and growth and delivered its highest contribution to date to the earnings of the global commodity segment. The European generation business achieved a substantially improved operating result overall in the 2022 financial year. The fossil portfolio converted elevated spread into higher margins. This effect was particularly evident in Q4 2022. Adjusted EBIT was additionally driven by the reversal of the intra-year carbon phasing in Q4.

Earnings drivers at fossil power portfolio where hard coal for power plants in all European markets we operate in. Rising spread had a increasingly positive margining impact here over the course of the year, and were only partly burdened by higher cost from the diversification of coal procurement contracts away from Russian sources. The gas-fired power plants repeated a good prior year performance in 2022. Our UK gas-fired power plants particularly contributed to the business success, thanks to high spreads.

Earnings at Outright were significantly lower than a year earlier. Earnings of our Swedish nuclear activities slipped more sharply than planned into the red zone. Swedish nuclear was mainly impacted by inflation-related higher addition to the provision for decommissioning and dismantling application and unplanned unavailability. By contrast, hydros earnings were slightly higher year-on-year, thanks to an excellent final quarter in fiscal 2022.

In view of improved availability in Q4, additional spot volumes were sold at high prices, especially in the Nordic markets. This also compensated the supply restriction resulting from the low water levels in Germany last summer and deteriorating EPAD, i.e., electricity price area differentials in Sweden. We remained cautious in hedging our outright position given the margin requirements involved.

A positive trend in hedge prices was visible in the year and number compared the lock-in prices back in September. The operating result as well as the deconsolidation loss of Russian power generation, namely Unipro, is now reported within the line item income and loss from discontinued operations in our profit and loss.

Following a roundup of the key operating earnings drivers, I would now like to turn to operating cash flow, which was also the focus of our recent ad-hoc announcement. Coming to the operating cash flow, which came in at minus €15.6 billion. Besides of the recorded operating loss, the main driver here was the sharp increase in working capital requirements. Significant increases in commodity purchase prices contributed to this.

At the same time, we increased gas inventories in our storages and coal supplies at our power plant site due to political requirements and on improved market environment and all at higher purchase cost. In addition, there was a base effect resulting from liquidity optimization measures in 2021 with OCF being shifted at the expense of the year 2022.

Now to the latest figures on Uniper’s net debt. At the year-end 2022, economic net debt stood at €3 billion, which is €2.7 billion higher compared to the end of 2021. At the end of the third quarter of fiscal 2022, economic net debt still amounted to €11 billion as a result of the realized additional cost for procuring replacement gas volumes to the Russian curtailments. Although the continued accumulation of losses further deteriorated operating cash flow through to the end of the year, the equity injections of €13.5 billion by the German government in December, mark a significant turnaround in Uniper’s net financial position.

At €0.6 billion capital expenditure at the lower end of the plant. Here we had to put the brakes on our growth plan, particularly to the uncertain development. In 2022, growth investment amounted to just under €0.2 billion. Lower pension provisions were supportive for Uniper’s net debt reflecting higher interest rate. The discount rate for German pensions rose to 3.7% for the UK even to 5%. This was offset by higher provisions for asset retirement application, mainly as a result of higher allocations to the Swedish nuclear provisions.

I would like to conclude my presentation with an outlook of the key earnings drivers for fiscal 2023. The financial impact caused by the replacement of Russian gas supplies will remain the decisive swing factor for Uniper’s group earnings development in 2023. This means that Uniper is unlikely to have sufficient control over earnings development in 2023 due to commodity price fluctuation that continues to be difficult predict.

Today, we can provide an outlook for 2023 with a qualitative direction compared to 2022 actuals. Based on the current commodity spot and forward market prices forecast for 2023, the adjusted EBIT and adjusted net income for the group would turn out above prior year level. It should be a good year for the European Generation segment. The generation portfolio should benefit from a fundamentally higher average price level.

We also expect few negative one-off effects i.e. from the absence of the switch in our coal procurers mix last year. Moreover, such high allocation to provision with respect to nuclear power generation should not repeat again. For the global commodity segments, lower burdens from the replacement procurement of Russian gas could likewise result in a earnings improvement.

Finally, a few closing remarks. Uniper has a strong operational core base which has to be further developed for the future and a changing energy market. The first step stabilization to the strong financial commitment of the German federal government has been successfully put us back on track. The group's net debt and return to positive equity at the year end 2022 are clear evidence of the turnaround achieved. A new management board team will set the new target in close consultation with the new supervisory report. From here, Uniper can once again look to the future with more confidence.

This brings me to the end of our presentation today. The floor is back to you, Stefan.

[Stefan Jost]

Thank you, Tiina. And dear listeners, we can begin our Q&A session now. As always, please try to stick to two questions only. Operator, handing it over to you.

[Operator]

Thank you very much, Mr. Jost. Now we will begin our question-and-answer session. [Operator Instructions] And the first question comes from James Brand from Deutsche Bank. Please go ahead.

[James Brand, Deutsche Bank]

Hi, good morning. Thanks for the presentation. So I'll ask – I've got three questions, but maybe I'll come back to the third in the queue. So firstly, there's some comments earlier from Tiina that the business now had very significant firepower to invest in the business. And you also showed in the sensitivity slide on gas losses that basically there aren’t going to be any or – aren't going to be many losses, given where the gas prices at the moment. So should we take that as a sign that you don't need any more equity injections in the German state? It’s question number one.

And then secondly, on the tax losses. So I see that your deferred tax assets have only gone up about kind of €800 million also to €2.8 billion. I was wondering whether you could just talk through a bit the kind of thinking there, why you felt like you couldn't access most of the tax losses that could have been crystallized this year and whether there are any other ways that you can access those losses. Thanks.

[Tiina Tuomela, Chief Financial Officer]

Thank you, James for your questions. So the first one relates to the future of the gas losses and potential need for equity injection. So as stated, so there is quite big volatility what comes to the gas prices and therefore, I think it is very uncertain to say exactly what are the numbers and need for the additional equity injection. I think with the current prices, clearly significant improvement if we compare to September prices, so clearly positive trend, but I think we are cautious and therefore we look at quarter-by-quarter and see that how the situation developed. So therefore, we are pleased that we have the authorized capital of €25 billion where we have already used €5.5 billion to secure in case there are in a way further curtailment costs.

Then your second questions related to tax losses. So the taxes really developed quite interestingly this year. First of all, if we look at the tax rate on our adjusted and net income, so that increased to 32%, and this is due to the high losses in Germany and namely these replacement gas losses. However, what we did in a way impact and did recognized them in our net income statements. The reason being that because the gas replacement costs were so high, we saw that it's not certain if we can use those in the coming years and therefore, we only partly recognize this under IFRS.

[James Brand, Deutsche Bank]

What would the gross tax losses be, please?

[Tiina Tuomela, Chief Financial Officer]

Thank you.

[Stefan Jost]

Sorry, James, the question again? We didn't get that.

[James Brand, Deutsche Bank]

Yes. Sorry, I was just asking, what would the gross tax losses be, please?

[Stefan Jost]

Sorry. Still it didn't come through.

[James Brand, Deutsche Bank]

Okay. I'll follow-up with IR.

[Stefan Jost]

Yes. Makes sense.

[Operator]

We are now going over to our next question. Our next question comes from Sam Arie from UBS. Please go ahead.

[Sam Arie, UBS]

Hello. It's Sam from UBS. Good morning, everybody. Two questions. I think, Tiina, you said something interesting about the Russia disposal, that you have a transaction set and a buyer and so on, but you're just waiting for the political approval. If I understood that right, can you confirm for us what's the valuation on the assets that you are seeking approval for? I think that'd be very helpful information.

And then my second question was just maybe into a bit of detail, but obviously there was a negative in the nuclear that you've reported this morning, and – sorry, you said that was due to outages and additional provisions, and I just wondered if you could just clarify for us, how much those negatives are related to Ringhals versus Oskarshamn? My assumption is it's probably mainly a Ringhals effect and Oskarshamn was okay, but can you walk us through that? Thank you.

[Tiina Tuomela, Chief Financial Officer]

Hello. Good morning, Sam. So starting with the Russian disposal, so I stated, we started the sale process internally already in 2021, and then last year, we made the agreement with the Russian buyer. Naturally, unfortunately, the valuation is confidential for the transaction. However, we see that we need to seek the approval from this presidential approval and currently as stated, we see that very uncertain.

Then the question about the nuclear, so the result was negative and I would say that half of the change was coming from the unplanned outages. And then, as you said, we had the outages in Oskarshamn 3, but I think the bigger impact came from the Ringhals 4, where we have the participation. So we are not operating the plant, but of course, get the power and then the outage has taking longer time and actually still continuing. So that will impact us that we have less power and partly we have hedge, so we need to buy the power from the market.

Then the other part of the reduced nuclear profitability came from the asset retirement obligation. And this was the year when we updated the plan for the local authorities and with the current inflation environment. So the costs for the decommissioning and nuclear waste costs increased and therefore, when discounted to the today's value so the provision increased and that had a negative impact to our profitability. But this year this impact should not occur again. So it is the kind of the one-time impact and also what comes to the production volume. So we expect more normal operations once the Ringhals repair has been finalized.

[Sam Arie, UBS]

Okay. Thank you. That's really helpful. On the nuclear, I think that's clear. Just a quick follow-up. If forgive me on Russia, I understand you're not going to disclose evaluation, but just help us out, broadly speaking, should we think of it as a fair value that you've negotiated and you're waiting for approval on? Or should we think of it as a sort of rock bottom knockdown price in order to just get out of the Russian exposure hopefully at some positive numbers?

[Tiina Tuomela, Chief Financial Officer]

Thank you, Sam. I fully understand the interest for the number, but unfortunately, I'm not able to disclose any number. That would be a few in a way speculation at this moment. So clearly, I think positive thing, agreement in place, very uncertain in the political environment.

[Sam Arie, UBS]

Okay. Excellent. Thank you very much. Thanks for your presentation. And good luck also to you Tiina.

[Tiina Tuomela, Chief Financial Officer]

Thank you very much, Sam. That’s very kind of you.

[Sam Arie, UBS]

Thank you.

[Operator]

And we are now going over to the next question. Our next question comes from Louis Boujard of ODDO BHF. Please go ahead, sir.

[Louis Boujard, ODDO BHF]

Yes. Good morning. Thank you for taking my question. Two on my side, may the first one coming back on the tax loss. I understand that part of it can – might not be recovered in the future. But maybe, knowing that most of it came from Germany, could you let us know how long are you going to be able to recover the tax loss in Germany in the future? And then at what time it'll not be possible anymore to recover this slot and they will be loss for you.

And the second question would be regarding the graph that you provided to us on the slide, page 5. We understand, of course, that close to €50 per megawatt hour, there is no more loss to be expected on your portfolio. However, the question would be the following, what happens if the gas prices had to drop below this level? Does that mean that you will be able to capture the better margins and to keep it, or will you have to pass it for your customers? And if we have a stable price to gas, let's say for instance at €75 per megawatt hour in the next two years, does that mean that we should recognize two-third of the loss in 2023 and one-third in 2024, considering that the volumes straight away going forward? That would be my question on this slide. Thank you very much.

[Tiina Tuomela, Chief Financial Officer]

Thank you, Louis, for your questions. So basically, what comes to the tax losses, so as far as I know there is no restrictions how to use it. So basically, it is for the future. It's more – we took the very prudent view to the how much we recognize and therefore, we embed part of the deferred tax asset. But what is left, so no limitations. Then your second questions was about the gas requirement cost and what happens if the – in a way – prices get in a way lower than what we have sold to the market. So then, of course, we would benefit from the situation. I think how the stabilization package first of all has been in away plant, we get the additional equity only for the incurred costs.

And then our own share to participate to this replacement cost is 30% of our EBIT, which exclude the cash curtailment cost. And this is done in a way just on the yearly level and in case, there is in a way lower needs. So we will distribute in a way – in one way or other, the kind of the benefit back to the German government. But this is clearly something of course, what we need to work with the German government, how the formula works. But the plan is that we only get the compensation for the realized losses, including then our own contribution from the EBIT, excluding the curtailment costs.

[Louis Boujard, ODDO BHF]

Thank you. And with regards to the assumptions in terms of volume impact, is it correct to consider on the stable gas price environment that more or less two-third of the expected loss would be recognized this year and one-third in 2024, or it has have?

[Tiina Tuomela, Chief Financial Officer]

All right. Yes. So basically, if I give a very rough estimate, so I would say that most maybe even 85% is coming 2023 and then remaining 15% in 2024, so mostly this year.

[Louis Boujard, ODDO BHF]

Okay. Thank you very much.

[Tiina Tuomela, Chief Financial Officer]

Thank you.

[Operator]

We are now going over to our next question. Our next question comes from Anna Webb from UBS. Please go ahead.

[Anna Webb, UBS]

Hi. Thank you very much for the presentation and for taking my question. Two for me. Firstly, you mentioned the [indiscernible] your stake in the BBL pipeline, but I saw the Enagas announced that they're canceling that transaction after the current shareholders exercise [indiscernible]. So I guess now you have to look for a new bias about, but do you have any insight into why the existing shareholders have exercised that right? And what I understand, Enagas didn't see that as likely. So do you foresee difficulty in completing this transaction and is there a risk you have similar difficulties with the other divestment that you are required to complete? That's the first question.

And then if I could clarify on the equity injection, I think from what I can see, the state has put in €13.5 billion and the resulting share count is about €8.3 billion. And if commodity prices stay at the current level, then you likely don't need more equity, but if gas prices do spike again, you could access something around €20 billion more equity, which could be injected in the future. Is that correct to understand there? Yes, just to get a bit more clarification on that, that'd be great. Thank you very much.

[Tiina Tuomela, Chief Financial Officer]

Thank you, Anna, for the questions. So to your first question, the BBL, in a way, sale, first of all, we are very pleased that we very simply could execute the deal, what comes to the inside and the right – first right of review. So we don't have any inside. This is up to the parties and normal behavior of the transaction that there is this kind of rights. And the other party have now exercised. For us, of course, the important thing is that the sale is signed and proceeding.

Then what comes to the equity injections. So yes, I think you described it very correctly. So currently, we have got the €13.5 billion equity injection. If more equity needed is roughly, €19.5 billion still available, that fully depends on the gas price development. So if needed, we'll get the equity if the prices remain the low, so not likely additional need.

[Anna Webb, UBS]

Okay. Great. Thank you very much.

[Operator]

We are now going over to our next question. Our next question comes from Piotr Dzieciolowski from Citi. Please go ahead, sir.

[Piotr Dzieciolowski, Citigroup]

Hi. Good morning, everybody. Two questions for me, please? So the first one, I wanted to ask you if you know what is the more like a long-term strategic view of the German government, what to do with the company and specifically will the Nordic assets come for sale given the preemptive price for Fortum to buy these assets? And secondly, I wanted to ask you on the gas business beyond the 2024, have you changed the way you conduct the business by hedging the volumes to your clients? And you passed on some risk, so you would avoid a certain kind of situation that if you don't get volumes and you have to go back to the market, has this business changed or this is business that in the past and you assume that the other counterparties are reliable? Thank you.

[Tiina Tuomela, Chief Financial Officer]

Hello, Piotr, and thanks for your questions. So what comes to the German government and the future strategic views, so currently, we are working with the strategy, making good progress and also new management – coming to the duties. So basically, I think this is confirmed once finalized. So we need to still wait for. At the moment what comes to the Nordic. So Nordic is not part of the obligation from the stabilization packet, so no indication there.

And I think your second question related how to conduct the business after 2024. So basically, clearly what comes to our, in general, our hedging strategy, so we have adjusted already, reacted to the situation how do we hedge in the future. What comes to the gas particularly? Clearly, we are also there looking the alternative supply sources, also alternative sales in away channels. And we are synchronizing these two items to balance. Clearly, I think this current situation, we have taken our lessons learned, and that will be reflected in the future hedging and the way we run the business.

[Piotr Dzieciolowski, Citigroup]

Okay. Thank you very much.

[Operator]

And we are going over to our next question. Our next question comes from James Brand from Deutsche Bank. Please go ahead, sir.

[James Brand, Deutsche Bank]

Hello, again. Just start following up with my third question, if that's okay. And that's the countries that you highlighted as being core and non-core. And Sweden is one of them that's highlighted as being a core. And there's sometimes quite a lot of speculation as to whether or not you could sell your Swedish assets to support them, which obviously, I'm not expecting you to comment specifically on that. But just in terms of your categorization of Sweden as a core market, should we take that as a sign that would not be a country in which you would be looking to make disposals? Thank you very much.

[Tiina Tuomela, Chief Financial Officer]

Thank you, James. I think Sweden is our core market and contributing significant earnings particularly in the longer term when the hedge position will change. Currently, Sweden is not on the requirement to dispose from the German state, so I would not like to speculate. So currently, we take very good care of our Swedish asset and see it as a main part of our business.

[James Brand, Deutsche Bank]

Okay. Thank you very much and good luck for the future back at Fortum.

[Tiina Tuomela, Chief Financial Officer]

Thank you very much, James.

[Operator]

We have no further questions. I would like to hand the call back to our speakers.

[Unidentified Company Representative]

Okay. Thank you, Stefan. Thank you, all. And then many thanks I think to Tiina today and for serving Uniper and all of our stakeholders through this difficult times. And thank you all dear listeners, we see you soon. I will be the new CFO, latest Q1. Thank you, all. Bye for now.

[Operator]

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may now disconnect.