Based on the provided financial data for Fortum Oyj, here is the reasoning for determining the extent to which the company’s capital structure should rely on hybrid bonds.

**1. Assessment of Profitability and Stability**
*   **Net Income Volatility:** The company reported a massive net loss of EUR -10,290 million in 2022, compared to a smaller loss of EUR -114 million in 2021. This extreme volatility is driven by discontinued operations, which lost EUR -11,302 million in 2022. Even from continuing operations, profit dropped significantly from EUR 4,008 million in 2021 to EUR 1,011 million in 2022.
*   **Operating Cash Flow:** Cash flow from operations (continuing) is positive but declined slightly (EUR 2,104 million in 2022 vs EUR 1,119 million in 2021). However, cash flow from total operations is deeply negative at EUR -8,767 million, dragged down by EUR -10,870 million in cash used in discontinued operations.
*   **Comparable Performance:** The "Comparable EBITDA" and "Comparable Operating Profit" metrics strip out major one-off items (like the EUR -593 million in "Items Affecting Comparability") to show a more stable underlying business. Comparable EBITDA was EUR 2,436 million in 2022, up from EUR 2,016 million in 2021. This suggests the core business has significant and growing earning power.

**2. Assessment of Leverage and Solvency**
*   **Balance Sheet Contraction:** Total assets shrank dramatically from EUR 149,661 million at the start of 2022 to EUR 23,642 million at the end. This was mainly due to the reduction of massive derivative positions (from EUR 82,488 million to EUR 1,829 million) and the classification/disposal of operations.
*   **Existing Equity Base:** Equity attributable to owners of the parent is EUR 7,670 million. With total liabilities of EUR 15,905 million, the debt-to-equity ratio is high, indicating existing financial leverage. Retained earnings took a massive hit, falling from EUR 10,062 million to EUR 6,467 million, largely due to the EUR -2,416 million loss attributable to the parent.
*   **Financing Cash Flows:** Cash flows from financing activities show significant changes. The company issued EUR 2,421 million in new non-current borrowings but repaid EUR 5,888 million, resulting in a net cash outflow from financing of EUR -4,686 million for the year. This indicates aggressive deleveraging.

**3. Analysis of Market Conditions for Hybrid Bonds**
*   **Interest Rate Environment:** The provided swap curve data shows a sharp rise in interest rates across all maturities (5Y, 7Y, 10Y) from 2020/2021 average levels (negative or near zero) to 2022 averages (1.7% - 1.9%). This makes new debt issuance, including hybrids, significantly more expensive in terms of coupon payments.
*   **Credit Spreads:** The iShares Core Euro Corp Bond yield and the subordinated spread have also increased notably from 2021 to 2022. The sub-sen delta (spread over IG) average was 1.298% in 2021 and rose to 2.295% in 2022. This means the market is demanding a much higher risk premium for corporate and subordinated debt, reflecting increased risk aversion and funding costs.

**Synthesis and Conclusion**
Fortum’s core underlying business generates healthy and growing comparable profits. However, the company is navigating a period of extreme balance sheet restructuring and volatility, posting enormous total net losses and negative total comprehensive income. The dramatic reduction in total assets and the net repayment of debt (financing cash outflow) signal a strategic priority to deleverage and de-risk the balance sheet.

Simultaneously, the market environment in 2022 was hostile to new debt issuance. Base rates (swap curve) and credit spreads for investment-grade and subordinated debt (sub-sen delta) have spiked. Issuing a new hybrid bond, which is deeply subordinated and carries a significant risk premium, would be exceptionally costly in this environment. Adding an instrument that ranks near equity but carries a high fixed-charge burden would damage cash flow flexibility at a time when the company is clearly prioritizing financial stability and managing through a crisis stemming from its discontinued operations.

Given the company’s focus on repairing the balance sheet, paying down debt, and preserving cash, alongside a market environment that severely punishes new subordinated issuers, there is no strategic justification for introducing or increasing reliance on hybrid bonds at this time. The most prudent capital structure would minimize additional fixed financial commitments.

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