FORTUM Power and heat company in the Nordic area, Russia, Poland and the Baltics Investor / Analyst material March 2015
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 17 European and Nordic power markets pages 18 29 Data on Fortums nuclear fleet pages 30 33 Russia pages 34 39 Data on capacity payments pages 37 38 Fortums investment programme page 39 Financials and…
Appr. 110,000 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…
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…
Fortum Executive Management as of 1st February 2015 Business divisions Interim President and CEO Corporate staff functions Timo Karttinen Finance Human Resources and IT Chief Financial Officer Senior Vice President Timo Karttinen…
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 current geographical presence Power Nordic countries Key figures 2014 generation Sales EUR 4.8 bn Power generation 48.0 TWh Comparable operating profit EUR 1.4 bn Heat Balance sheet EUR 21 bn Heat sales 3.3 TWh Personnel…
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 Power generation Heat production Customers Largest producers in Europe and Russia, 2013 Largest global producers, 2013 Electricity customers in EU,…
Fortum a forerunner in sustainability Nordic Climate Disclosure Leadership Index (CDLI) STOXX Global ESG Leaders indices oekom OMX GES Sustainability Finland Index ECPI Indices 12
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…
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…
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 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…
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…
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,…
Current transmission capacity from Nordic area is over 5000 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…
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 2013 2014 2015 reference level 0 Q1 Q2 Q3 Q4 Source: Nord Pool Spot 21
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…
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 2 March 2015 40 40 30 30 20 20 10 10 0 0…
Still a highly fragmented Nordic power market Power generation Electricity distribution Electricity retail 384 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% 225% Growing global energy demand will Growth, 2012-2040 Primary energy demand 200% be increasingly fulfilled by electricity…
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 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…
Russia is the Worlds 5th largest power market TWh 6,000 5,000 4,000 3,000 2,000 1,000 0 Power generation in 2013 based on gross output. Source: BP Statistical Review of World Energy June 2014 34
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…
Day ahead wholesale market prices increase driven by recovering demand and gas price Key electricity, capacity and gas prices in the OAO Fortum area Day ahead power market prices for Urals 40 35 IV/14 IV/13 2014 2013 30 Electricity…
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 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…
Income statement MEUR IV/2014 IV/2013 2014 2013 Sales 1,285 1,390 4,751 5,309 Other income and expenses 849 967 3,400 3,906 Comparable operating profit 436 423 1,351 1,403 Capital gains and other items affecting 213 83 2,077 106…
Comparable and reported operating profit Comparable Reported Comparable Reported MEUR operating profit operating profit operating profit operating profit IV/2014 IV/2013 IV/2014 IV/2013 2014 2013 2014 2013 Power and Technology 276…
Cash flow statement MEUR IV/2014 IV/2013 2014 2013 Operating profit before depreciations 769 668 3,954 2,129 Non-cash flow items and divesting activities -209 -158 -2,111 -262 Financial items and fx gains/losses 125 54 176 -188…
Key ratios MEUR 2014 2013 Comparable EBITDA 1,873 1,975 Interest-bearing net debt 4,217 7,793 Comparable net debt/EBITDA 2.3 3.9 excluding Vrme financing 2.0 3.4 Return on capital employed, ROCE (%) 19.5 9.0 Return on…
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…
Outlook Annual capex estimate, excluding potential acquisitions 2015 approximately EUR 0.9 billion Hedging 2015 approx. 50% hedge ratio at approx. EUR 40/MWh 2016 approx. 10% hedge ratio at approx. EUR 39/MWh Taxation Effective…
Hedging improves stability and predictability 2009 onwards thermal and import from Russia excluded 47
Fortum's efficiency programme 2013-2014 The efficiency programme successfully finalised during 2014 Total annual cost savings visible in all divisions Improved working capital efficiency Divestments of non-core assets totalling…
Facts of Fortums Distribution business MEUR Fortums January 2013: Swedish Strategic assessment distribution commenced operations in 2014 December 2013: Operating profit 236 Assessment has been completed, divestment the Comparable…
Annual General Meeting 2015 and dividend distribution proposal Fortums Annual General Meeting will be held at 14:00 on 31 March 2015, in Helsinki, Finland The Board of Directors dividend proposal EUR 1.10 per share, and in addition…
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