The ratings on Finland-based energy company Fortum Oyj reflect the group's position as one of the two largest Nordic electricity utilities, controlling competitive generation assets and utility monopoly operations. Negative rating factors include exposure to volatile and competitive electricity operations, and increasing regulatory risk in the monopoly distribution operation. Given Fortum's deleveraging over the past couple of years and strong operating performance, the financial position is strong and the rating includes some headroom. In April 2005, Fortum demerged its oil business, Neste Oil Oy, through a share dividend and the sale of shares. The demerger of the higher-risk oil business has reduced Fortum's business risk. The deconsolidation of about 15%-20% of its forecast future cash flows (30% cash flow contribution
