FORTUM Power and heat company in the Nordic area, Russia, Poland and the Baltics Investor / Analyst material (including Fortum Vrme) May 2014
Disclaimer This presentation does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any Fortum shares. Past performance is no guide to future performance, and persons needing advice should…
Content Fortum today, pages 4 18 European and Nordic power markets, pages 19 31 Data on Fortums nuclear fleet, pages 32 36 Russia, pages 37 42 Data on capacity payments, pages 40 41 Fortums investment programme, page 42…
Appr. 130,000 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 OMX Helsinki stock exchange Market…
Capital returns : 2013 EUR 1.10 per share EUR 1.0 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…
Fortum Executive Management as of 1st March 2014 Business Divisions President and CEO Corporate Staff Functions Tapio Kuula Finance Human Resources and IT Chief Financial Officer Senior Vice President Timo Karttinen Mikael Frisk…
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.…
Our geographical presence today Nr 3 Power Key figures 2013 generation Nordic countries Sales EUR 5.3 bn Nr 1 Power generation* 46.5 TWh Operating profit EUR 1.5 bn Heat Balance sheet EUR 23 bn Heat sales* 13.9 TWh Personnel 9,200…
Fortums reporting segments and divisions Power and Technology Heat, Electricity Sales Russia Distribution and Solutions Hydro, nuclear and Combined heat and Power and heat Electricity distribution thermal power generation power…
Fortum mid-sized European power generation player; major producer in global heat (incl. Fortum Vrme) Power generation Heat production Customers Largest producers in Europe and Russia, 2012 Largest global producers, 2012 Electricity…
Fortum a forerunner in sustainability Carbon Disclosure Nordic Leadership Index Fortum no. 1, scores 100/100 SAM Sustainability Yearbook STOXX Global ESG Leaders indices oekom OMX GES Sustainability Finland Index ECPI…
Fortum's carbon exposure among the lowest in Europe g CO2/kWh electricity, 2012 1200 2012 1000 68% of Fortum's total power generation CO2-free 93% of Fortums power generation in the EU CO2-free 800 Close to 100% of the ongoing…
Fortums strategic route Divestment Divestment Divestment of Lnsivoima Lnsivoima Elnova Separation of of electricity E.ON Finland of Fingrid non-strategic 45% 65% 100% 50% 100% oil businesses shares, 2011 heat business…
Fortum in the Nordic electricity value chain Competitive businesses Large customers Nordic wholesale market Power generation Retail customers Power exchange and bilateral agreements Private customers, small businesses…
Fortum's power and heat production by source (incl. Fortum Vrme) Fortum's power generation Fortum's heat production in 2013 in 2013 Nuclear power Natural gas 35% Natural gas 61% 29% Other 1% Oil 1% Biomass 2% Peat 1% Waste 5%…
Fortum's European power generation based on hydro and nuclear power wide flexibility in heat production (incl. Fortum Vrme) Fortum's European Fortum's European power generation in 2013 heat production in 2013 Nuclear power Biomass…
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 2/2014 Market coupling for Central Western Europe (DE,…
Current transmission capacity from Nordic area is over 5000 MW Countries Transmission capacity MW From Nordics To Nordics Denmark - Germany 2,365 2,100 Sweden - Germany 615 600 Sweden - Poland 600 600 Norway - Netherlands 700 700…
Nordic, Baltic and Continental markets are integrating interconnection capacity will double by 2020 The Northern Seas Offshore Grid and the Baltic New interconnections will Energy Market Integration Plan are included as double the…
Nordic water reservoirs 120 100 reservoir content (TWh) 80 60 40 20 2000 2003 2012 2013 2014 reference level 0 Q1 Q2 Q3 Q4 Source: Nord Pool Spot 22
Nordic year forwards Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 /MWh 28 April 2014 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 2008…
Wholesale price for electricity EUR/MWh Nord Pool Spot System Price Forwards 110 100 90 80 70 60 50 40 30 20 10 28 April 2014 0 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023…
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 28 April 2014 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 * Including weighted…
Nordic power generation dominated by hydro, but fossil needed 160 Total Nordic generation 383 TWh in 2013 140 TWh % 120 Fossil fuels 48 13 100 TWh/a Nuclear 86 23 80 Biomass 23 6 60 40 Wind 23 6 20 Hydro * 203 53 0…
Still a highly fragmented Nordic power market Power generation Electricity distribution Electricity retail 406 TWh 15 million customers 15 million customers 350 companies 500 companies 350 companies Vattenfall E.ON Vattenfall…
New power generation capacity needed for increasing demand and retiring capacity replacements 250% Growth, 2011-2035 221% Growing global energy demand Primary energy demand 200% will be increasingly fulfilled by Electricity…
New capacity will require over 60 EUR/MWh power price EUR/MWh EUR/MWh 110 110 CO2 cost 100 100 Other costs ( variation) 90 90 80 80 70 70 60 60 50 Futures 50 28 April 2014 40 40 30 30 20 20 10 10 0 0 1995 2014 2024 Coal…
Fortums investment programme Nordic region and Baltic countries Project Electricity, MW Commissioned Olkiluoto 3, Finland 400 Swedish nuclear upgrades 290 Refurbishing of hydro power 10 Annually Total 700 Additional…
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…
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…
Third party nuclear liability in case of severe accident Has been approved by the Parliament. In force 1.1.2012 onwards. Law approved by Parliament in 2010, requires separate decision Unlimited from Government to come into company…
Nuclear upgrades in Sweden Reactor Completion Increase Fortum's Additional Fortum's Fortum's 100% capacity generation capacity generation (MW) increase for Fortum after after (MW) (TWh/a) increase increase (MW) (TWh/a) OKG 1 - 0 -…
Russia is the Worlds 4th largest power market TWh 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Power generation in 2012 based on gross output. Source: BP Statistical Review of World Energy June 2013 37
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 20 TWh power generation, 24 TWh heat production in 2013; more than…
Day ahead wholesale market prices increase driven by recovering demand and gas price Key electricity, capacity and gas prices in the OAO Fortum area IV14 IV/13 2013 LTM Electricity spot price (market price), Urals hub, RUB/MWh…
Power market liberalisation two markets Capacity wholesale market Electricity wholesale market Capacity prices Electricity prices Competitive capacity selection (CCS) and free bilateral Day ahead (spot) market, financial market,…
Capacity prices for new capacity considerably higher than prices for old capacity prices Long term rules and price parameters approved Both old and new capacity can participate in capacity auctions Old capacity (pre 2007) and new…
85% increase in power generation capacity in Russia by 2015 through the investment programme 42
Income statement MEUR I/2014 I/2013 2013 LTM Sales 1,473 1,654 5,309 5,128 Other income and expenses 996 1,129 3,906 3,773 Comparable operating profit 477 524 1,403 1,356 Items affecting comparability 1,856 -47 106 2,009 Operating…
Comparable and reported operating profit Comparable Reported MEUR operating profit operating profit I/2014 I/2013 I/2014 I/2013 Power and Technology 251 303 262 263 Heat, Electricity Sales 48 57 45 51 and Solutions Russia 73 41 73…
Cash flow statement MEUR I/2014 I/2013 2013 LTM Operating profit before depreciations 2,483 617 2,129 3,995 Non-cash flow items and divesting activities -1,864 26 -262 -2,152 Financial items and fx gains/losses -24 -210 -188 -2…
Key ratios MEUR LTM 2013 EBITDA 3,995 2,129 Comparable EBITDA 1,938 1,975 Interest-bearing net debt 4,838 7,793 Comparable net debt/EBITDA 2.5 3.9 Return on capital employed, ROCE (%) 17.9 9.0 Return on shareholders equity, ROE…
Outlook Nordic markets Fortum continues to expect that the annual electricity demand growth will average 0.5% in the coming years Electricity is expected to continue to gain share of total energy consumption Russia Fortums goal is…
Outlook Annual capex estimate excluding potential acquisitions 2014 EUR 0.9 to 1.1 billion (incl. Finnish distribution Q1/2014, excluding Fortum Vrme) Hedging Rest of the year 2014 approx. 55% hedge ratio at approx. EUR 44/MWh 2015…
Hedging improves stability and predictability 2009 onwards thermal and import from Russia excluded 50
Fortum's efficiency programme 2013-2014 Efficiency programme proceeding according to plan Total annual cost savings visible in all divisions Improved working capital efficiency Divestments of non-core assets totalling approximately…
Facts of Distribution MEUR Fortums January 2013: Swedish Strategic assessment distribution commenced operations in 2013 December 2013: Operating profit 263 Assessment has been completed, divestment the Comparable operating profit…
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