Fortum is best viewed as a utility / power and gas issuer with substantial infrastructure-like characteristics, but 2022 was an exceptional stress year dominated by the Uniper/discontinued operations crisis. This makes the hybrid-bond suitability mixed rather than clearly strong.

Key positives for hybrid suitability:

- Sector fit is favorable. Fortum is an energy utility/power company headquartered in Finland, with continuing operations that include large-scale power generation and utility-like cash flows. Such issuers are natural candidates for hybrids because rating agencies may grant partial equity credit.
- Continuing operations remained profitable and cash generative:
  - 2022 revenue rose to EUR 8.8bn from EUR 6.4bn.
  - Comparable operating profit increased to EUR 1.87bn from EUR 1.43bn.
  - Comparable EBITDA increased to EUR 2.44bn from EUR 2.02bn.
  - Continuing operating cash flow improved to EUR 2.10bn from EUR 1.12bn.
- Balance-sheet leverage after the group restructuring appears moderate:
  - Year-end 2022 equity was EUR 7.7bn versus total assets of EUR 23.6bn, an equity ratio of about 33%.
  - Interest-bearing financial liabilities appear around EUR 7.8bn, while cash was EUR 3.9bn, implying meaningful liquidity and a manageable net debt position.
  - Interest expense of EUR 179m is well covered by comparable EBITDA.
- Fortum demonstrated capital-market and bank-market access through significant borrowings and repayments during 2022, and it also maintained dividends, supporting financial-policy credibility.
- A hybrid could be useful as rating-supportive capital, especially given the sharp fall in equity from EUR 13.7bn to EUR 7.7bn and the need to restore balance-sheet resilience after the Uniper exit.

Key constraints:

- 2022 headline results were very weak due to discontinued operations:
  - Total net loss was EUR 10.3bn.
  - Comprehensive loss was EUR 10.8bn.
  - Operating cash flow including discontinued operations was negative EUR 8.8bn.
  These figures signal severe event risk and would likely make hybrid investors and rating agencies cautious.
- Fortum is not a pure low-risk regulated utility. It has significant exposure to unregulated power markets, commodity prices, hedging, nuclear/hydro generation, and market volatility. Under the S&P sector frameworks, this points more toward unregulated power and gas / partially regulated utility risk than a fully regulated low-volatility profile.
- The company’s financial profile was undergoing major restructuring in 2022. Although continuing operations look much healthier than consolidated headline numbers, the recent volatility reduces the case for “Strongly Suitable.”
- A hybrid issued immediately after such a loss year could be viewed partly as balance-sheet repair capital and may face pricing sensitivity, especially with 2022 rates and corporate bond yields much higher than in 2020–2021.

Overall assessment:

Fortum has the right sector profile and scale for hybrid issuance, and a hybrid could provide meaningful equity-credit and rating-headroom benefits after a major balance-sheet shock. However, the severe 2022 losses, discontinued-operations stress, cash flow volatility, and exposure to unregulated power markets prevent a “Strongly Suitable” assessment. It is not “Not Suitable” because the continuing utility business remains profitable, cash generative, liquid, and institutionally financeable.

<answer>Marginally Suitable</answer>