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August 2015 Investor Presentation – Fortum

Fortum · Aug 14, 2015 · 53 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. August 2015 Investor Presentation – Fortum – slide 1
    FORTUM Power and heat company in the Nordic area, Russia and the Baltics Investor / Analyst material August 2015
  2. August 2015 Investor Presentation – Fortum – slide 2
    Content Fortum today pages 4 16 European and Nordic power markets pages 17 24 Fortums nuclear fleet pages 25 28 Russia pages 29 31 Fortums investment programme page 31 Historical achieved prices page 32 Q1 2015 (some graphs…
  3. August 2015 Investor Presentation – Fortum – slide 3
    Appr. 121,000 shareholders Power and heat company in the Nordic countries, Russia, Poland and the Baltics Listed at the Helsinki Stock Exchange since 1998 Among the most traded shares on the Nasdaq Helsinki stock exchange Market cap…
  4. August 2015 Investor Presentation – Fortum – slide 4
    Capital returns: 2014 EUR 1.30 per share EUR 1.2 billion Fortums dividend policy is based on the following preconditions: The dividend policy ensures that shareholders receive a fair remuneration for their entrusted capital, supported…
  5. August 2015 Investor Presentation – Fortum – slide 5
    Our strategic route stfold Skandinaviska Birka Energi Stora Kraft Birka Energi Shares in TGC-1 Elverk 50% Fortum 50% 100% Hafslund established 50% Stockholm Shares in Gullspng merged Lenenergo Gullspng with Stockholm Energi…
  6. August 2015 Investor Presentation – Fortum – slide 6
    Fortums Mission and Strategy Mission Fortums purpose is to create energy that improves life for present and future generations. We provide sustainable solutions for society and deliver excellent value to our shareholders.…
  7. August 2015 Investor Presentation – Fortum – slide 7
    Fortums reporting segments and divisions Power and Technology Heat, Electricity Sales Russia and Solutions Hydro, nuclear and thermal Combined heat and power Power and heat generation power generation (CHP) production and sales in…
  8. August 2015 Investor Presentation – Fortum – slide 8
    Our current geographical presence Nordic countries Key figures 2014 Sales EUR 4.1 bn Power Comparable operating profit EUR 1.1 bn generation Power generation 48.0 TWh Balance sheet EUR 21 bn Personnel 8,200 Heat Heat sales 3.3…
  9. August 2015 Investor Presentation – Fortum – slide 9
    Fortum mid-sized European power generation player; major producer in global heat Power generation Heat production Customers Largest producers in Europe and Russia, 2013 Largest global producers, 2013 Electricity customers in EU,…
  10. August 2015 Investor Presentation – Fortum – slide 10
    11 50 0 100 150 200 250 300 350 400 450 500 550 600 TWh EDF Rosenergoatom Figures 2012 pro forma NNEGC Energoatom RusHydro Vattenfall E.ON Enel EuroSibEnergo GDF SUEZ Statkraft Fortum Iberdrola * incl.…
  11. August 2015 Investor Presentation – Fortum – slide 11
    Fortum in the Nordic electricity value chain Large customers Nordic wholesale market Retail customers Power generation Power exchange and bilateral agreements Private customers, small businesses 12
  12. August 2015 Investor Presentation – Fortum – slide 12
    Fortum's power and heat production by source Fortum's power generation Fortum's heat production in 2014 in 2014 Nuclear power Natural gas 33% Natural gas 77% 31% Biomass 1% Waste 1% Peat 1% Coal 5% Biomass 6% Hydro power…
  13. August 2015 Investor Presentation – Fortum – slide 13
    Fortum's European power and heat production Fortum's European Fortum's European power generation in 2014 heat production in 2014 Nuclear power Coal 38% 48% Natural gas Oil 1% 29% Biomass 2% Heat pumps, electricity 1% Natural…
  14. August 2015 Investor Presentation – Fortum – slide 14
    Fortum a forerunner in sustainability Emissions-free production is Fortums strategic choice We are highly committed to sustainability. Our purpose is to create energy that improves life for present and future generations. We provide…
  15. August 2015 Investor Presentation – Fortum – slide 15
    Fortum's carbon exposure among the lowest in Europe g CO2/kWh electricity, 2013 1 200 2014 1 000 64% of Fortum's total power generation CO2-free 94% of Fortums power generation in the EU CO2-free 800 Close to 100% of the ongoing…
  16. August 2015 Investor Presentation – Fortum – slide 16
    Carbon market gradually tightening Political decisions strengthening the EU Emissions Trading System Decision on the 2030 greenhouse gas reduction target Backloading decision, implementation started in 2014 Market Stability Reserve…
  17. August 2015 Investor Presentation – Fortum – slide 17
    Market coupling milestones - cross-border power flows optimised by power exchanges Market coupling between NL, BE and FR since 2006 Germany Nord Pool Spot coupling started 11/2009 Market coupling for Central Western Europe (DE, FR, NL,…
  18. August 2015 Investor Presentation – Fortum – slide 18
    Current transmission capacity from Nordic area is over 5,000 MW Countries Transmission capacity MW From Nordics To Nordics Denmark - Germany 2,225 2,100 Sweden - Germany 615 600 Sweden - Poland 600 600 Norway - Netherlands 700 700…
  19. August 2015 Investor Presentation – Fortum – slide 19
    Nordic, Baltic, Continental and UK markets are integrating interconnection capacity will double by 2021 The Northern Seas Offshore Grid and the Baltic New interconnections will Energy Market Integration Plan are included as double the…
  20. August 2015 Investor Presentation – Fortum – slide 20
    Nordic year forwards Year10 Year11 Year12 Year13 Year14 Year15 Year16 Year17 Year18 Year19 Year20 /MWh 10 August 2015 70 60 50 40 30 20 10 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4…
  21. August 2015 Investor Presentation – Fortum – slide 21
    Wholesale prices for electricity EUR/MWh Spot prices Forward prices 110 100 90 80 70 Dutch 60 German 50 40 Nordic 30 Russian* 20 10 7 August 2015 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 * Including weighted…
  22. August 2015 Investor Presentation – Fortum – slide 22
    Nordic power generation dominated by hydro, but fossil needed 160 Total Nordic generation 390 TWh in 2014 140 TWh % 120 Fossil fuels 39 10 100 TWh/a Nuclear 85 22 80 Biomass 23 6 60 Solar 1 0 40 Wind 28 7 20 Hydro * 214…
  23. August 2015 Investor Presentation – Fortum – slide 23
    Wholesale electricity price too low to attract investments EUR/MWh EUR/MWh 110 110 Average levelised costs of new electricity generation 100 100 90 90 80 80 70 70 60 60 50 Futures 50 7 August 2015 40 40 30 30 20 20 10 10 0 0…
  24. August 2015 Investor Presentation – Fortum – slide 24
    Overview of Fortums nuclear fleet LOVIISA OLKILUOTO OSKARSHAMN FORSMARK Unit 1: 1978 Unit 1: 1972 Unit 1: 1980 Commercial operation Unit 1: 1977 started Unit 2: 1980 Unit 2: 1974 Unit 2: 1981 Unit 2: 1981 Unit 3: (Under…
  25. August 2015 Investor Presentation – Fortum – slide 25
    Fortum's nuclear power in the Nordics Load factor (%) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Osakarshamn 1 80 51 63 85 68 77 72 1 13 74 Oskarshamn 2 90 78 76 86 75 90 77 81 33 0 Oskarshamn 3 85 95 88 70 17 31 75 69 77 75…
  26. August 2015 Investor Presentation – Fortum – slide 26
    Variety of technologies and ages Unit MWe (Net) Share (%) Share (MWe) Commercial Age Type/ Supplier operation Generation * Loviisa 1 496 100,0 496 1977-05-09 36 PWR / 1 AEE (Atomenergoexport) Loviisa 2 496 100,0 496 1981-01-05 33 PWR…
  27. August 2015 Investor Presentation – Fortum – slide 27
    Third party nuclear liability in case of severe accident In force since 1.1.2012. Law approved by Parliament in 2010, requires separate Unlimited decision from Government to company come into force. responsibility Convention 300…
  28. August 2015 Investor Presentation – Fortum – slide 28
    Fortum - a major player in Russia OAO Fortum (former TGC-10) Operates in the heart of Russias oil and gas producing region, fleet mainly gas-fired CHP capacity 23 TWh power generation, 26 TWh heat production in 2014 Investment…
  29. August 2015 Investor Presentation – Fortum – slide 29
    Day ahead wholesale market prices in Russia Key electricity, capacity and gas prices in the OAO Fortum area Day ahead power market prices for Urals 40 II/15 II/14 I-II/15 I-II/14 2014 LTM 35 30 Electricity spot price (market price),…
  30. August 2015 Investor Presentation – Fortum – slide 30
    85% increase in power generation capacity in Russia by 2015 through the investment programme Year Supply Power plant Fuel type Existing New Production type Total starts capacity investments capacity 2,785 MW 2,388 MW 5,173 MW < 2011…
  31. August 2015 Investor Presentation – Fortum – slide 31
    Hedging improves stability and predictability 2009 onwards thermal and import from Russia excluded 32
  32. August 2015 Investor Presentation – Fortum – slide 32
    Q2 2015 Results Key figures (MEUR) II/2015 II/2014 I-II/2015 I-II/2014 2014 LTM Sales, continuing operations 794 886 1,834 2,094 4,088 3,828 Comparable EBITDA, continuing operations 228 302 624 758 1,457 1,323 Operating profit:…
  33. August 2015 Investor Presentation – Fortum – slide 33
    Summary of the second quarter of 2015 Fortums results continued to be pressured by low electricity prices The second quarter was characterised by among the highest precipitation in recent history, which resulted in high and partly…
  34. August 2015 Investor Presentation – Fortum – slide 34
    Market conditions in the second quarter of 2015 Nordic countries Power consumption in the Nordic countries at the same level as in Q2 2014 The precipitation was among the highest recorded this century in Norway and Sweden. In addition,…
  35. August 2015 Investor Presentation – Fortum – slide 35
    Nordic water reservoirs 120 100 reservoir content (TWh) 80 60 40 20 2000 2003 2013 2014 2015 reference level 0 Q1 Q2 Q3 Q4 Source: Nord Pool Spot 36
  36. August 2015 Investor Presentation – Fortum – slide 36
    Wholesale price for electricity EUR/MWh Nord Pool Spot System Price Forwards 110 100 90 80 70 60 50 40 30 20 10 7 August 2015 0 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025…
  37. August 2015 Investor Presentation – Fortum – slide 37
    Fuel and CO2 allowance prices Crude oil price (ICE Brent) CO2 price (ICE ECX EUA) 150 35 120 28 EUR / tCO2 USD / bbl 90 21 60 14 30 7 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2007 2008 2009 2010 2011…
  38. August 2015 Investor Presentation – Fortum – slide 38
    Price development in the Nordic region and Russia -19% -10% -23% -14% Includes capacity income 39
  39. August 2015 Investor Presentation – Fortum – slide 39
    Q2: Low electricity prices continued to impact results negatively somewhat compensated by hydro volumes Comparable operating profit, EUR million 40
  40. August 2015 Investor Presentation – Fortum – slide 40
    January - June: Clearly lower achieved power price Comparable operating profit, EUR million 41
  41. August 2015 Investor Presentation – Fortum – slide 41
    Financials
  42. August 2015 Investor Presentation – Fortum – slide 42
    Comparable and reported operating profit Comparable Reported Comparable Reported MEUR operating profit operating profit operating profit operating profit II/2015 II/2014 II/2015 II/2014 I-II/2015 I-II/2014 I-II/2015 I-II/2014 Power…
  43. August 2015 Investor Presentation – Fortum – slide 43
    Power and Technology Q2 2015 H1 2015 Clearly higher precipitation had a positive Clearly lower achieved power price impact on the hydro volumes, but put First quarter was exceptionally mild pressure on the electricity spot price…
  44. August 2015 Investor Presentation – Fortum – slide 44
    Heat, Electricity Sales and Solutions Q2 2015 H1 2015 Comparable operating profit on same level as Comparable operating profit improved mainly in comparison period -The lower electricity due lower fuel costs and higher heat prices…
  45. August 2015 Investor Presentation – Fortum – slide 45
    Russia Q2 2015 H1 2015 Improved result partly offset by lower electricity Comparable operating profit improved due to prices, as well as bad debt provisions for heat positive effect from new units trade receivables Russian rouble…
  46. August 2015 Investor Presentation – Fortum – slide 46
    Discontinued operations (Distribution) Q2 and H1 2015 On 1 June 2015, Fortum completed the divestment of its Swedish electricity distribution business. Fortum booked a one-time sales gain of approximately EUR 4.3 billion,…
  47. August 2015 Investor Presentation – Fortum – slide 47
    Income statement MEUR II/2015 II/2014 I-II/2015 I-II/2014 2014 LTM Sales 794 886 1,834 2,094 4,088 3,828 Other income and expenses -651 -676 -1,348 -1,526 -3,003 2,825 Comparable operating profit 143 210 486 568 1,085 1,003 Items…
  48. August 2015 Investor Presentation – Fortum – slide 48
    Cash flow statement MEUR II/2015 II/2014 I-II/2015 I-II/2014 2014 LTM Cash from operating activities: Realised FX gains/losses 35 81 203 155 352 400 Other funds from operations (FFO) 158 176 472 547 1,096 1,021 Change in working…
  49. August 2015 Investor Presentation – Fortum – slide 49
    Key ratios MEUR LTM 2014 Comparable EBITDA, continuing operations 1,323 1,457 Comparable EBITDA, total Fortum 1,652 1,873 Interest-bearing net debt, total Fortum -1,846 4,217 Comparable net debt/EBITDA, total Fortum -1.1 2.3…
  50. August 2015 Investor Presentation – Fortum – slide 50
    Debt portfolio and average interest rate at the balance sheet date 30 June 2015 (31 December 2014) Total interest-bearing debt EUR Maturity profile 6,765 million 1500 Average interest 4.2% (3.7%) 1250 Portfolio mainly in EUR and 1000…
  51. August 2015 Investor Presentation – Fortum – slide 51
    Outlook
  52. August 2015 Investor Presentation – Fortum – slide 52
    Outlook Nordic markets Fortum continues to expect that the average annual electricity demand growth will be on average approximately 0.5% in the coming years Electricity is expected to continue to gain share of total energy…
  53. August 2015 Investor Presentation – Fortum – slide 53
    Outlook Annual capex estimate, excluding potential acquisitions 2015 approximately EUR 0.8 billion Hedging Rest of 2015 approx. 45% hedge ratio at approx. EUR 41/MWh 2016 approx. 25% hedge ratio at approx. EUR 35/MWh Taxation…

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