Fortum in 3 minutes Fortum is a power and heat company which operates in the Nordic countries, Russia, Poland and the Baltics. Fortum’s reporting structure consists of five segments: Power and Technology, Heat, Electricity Sales and Solutions, Russia, and Distribution. Power and Technology segment incorporates two business divisions; Hydro Power and Technology, and Nuclear and Thermal Power. Fortum is listed in the Nasdaq Helsinki Stock Exchange since 1998. Fortum’s financial targets RETURN ON CAPITAL EMPLOYED % 20 15 12% 10 5 Key facts 2014: Sales Capex EUR 4,751 million Exchange: EUR 843 million Employees: Nasdaq Helsinki Comparable operating profit 8,500 EUR 1,351 million 0 ISIN: 10 FI0009007132 Industry: Ticker: Electric Utilities 11 12 13 14 RETURN ON SHAREHOLDER’S EQUITY % 30 FUM1V 20 15 14% 10 Fortum’s Mission and Strategy 5 Mission 0 Fortum’s 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. 10 11 12 13 14 COMPARABLE NET DEBT/EBITDA 3 Strategy Build on the strong Nordic core Create solid earnings growth in Russia Build a platform for future growth 1 Strong competence in CO2-free hydro and nuclear, efficient CHP production and energy markets Fortum’s reporting structure Power and Technology (2014 figures) 3.0 2 0 10 Heat, Electricity Sales and Solutions 11 Russia 12 13 14 Distribution Business description Fortum’s power generation, physical operation and trading as well as expert services for power producers. Combined heat and power generation, district heating and cooling activities, b-to-b heating solutions and electricity sales. Power and heat generation and sales in Russia. Fortum’s distribution activities in Sweden. Finnish and Norwegian businesses divested in 2014. Comparable operating profit, % of Group op EUR 877 million, 64% of total EUR 104 million, 7% of total EUR 161 million, 11% of total EUR 266 million, 19% of total Net assets EUR 6,001 million EUR 2,112 million EUR 2,597 million EUR 2,615 million Volume (TWh) Nordic generation 48.6TWh CHP sales 2.8TWh, heat sales 7.9TWh, electricity sales 13.8TWh Power gen. 26.5TWh Heat sales 26.0TWh 17.6TWh Drivers Nordic power price, generation volumes Fuel mix, heat and power price, electricity sales margin New capacity and capacity price, electricity and heat price Distribution regulation Power and Technology business drivers: •Generation sold at power exchange Nord Pool - also hedged with financial contracts •Wholesale price of electricity impacted by nuclear availability - timing of outages, hydro water reservoirs level, CO - Demand, allowans prices and fuels Sensitivity: achieved price 1 EUR/MWh = EUR ~45 million in annual comparable operating •profit •Currency exchange rate fluctuations 2 2014 64% of Fortum’s total power generation CO2-free 94% of Fortum’s power generation in the EU CO2-free Close to 100% of the ongoing investment programme in the EU CO2-free of RUB 18.2 billion •Two markets: 1) capacity (old “CCS” and new “CSA”) and 2) energy •New Capacity “CSA” prices are a major part of future income •Gas price (major fuel) •Seasonality •Currency (Russian rouble) exchange rate fluctuations g CO2/kWh electricity, 2013 1000 800 600 400 Average 328 g/kWh 200 200 0 64 SS E CE Z Va E.O tt N en fa ll ED P Ed Ene ip l Ga o sN w er at ur En al BW Fe GD no s D FS a on U g E Fo En Z rt er um gy t Ib ota er l dr ol a PV O Ve EDF Fo rbu rt nd um St EU at kr af t Fortum’s carbon exposure is among the lowest in Europe. •4th largest power market completing the ongoing investment programme by mid 2015 •After (add. 85% capacity), Fortum’s goal is to achieve an annual operating profit level (EBIT) 1200 D EI RW E DR AX We are a forerunner in sustainability Russia segment business drivers: FORTUM’S POWER GENERATION IN 2014 IN TOTAL 73.4 TWh FORTUM POWER GENERATION BY SOURCE TWh Hydro and wind power Nuclear power Thermal power Total in EU and Norway Thermal power in Russia Total Biomass 1% Coal 5% Hydro power 30% Natural gas 31% Nuclear power 33% 2014 2013 22.4 23.8 3.9 50.1 18.1 23.7 5.7 47.4 23.3 73.4 20 67.4 Nordic and continental markets are integrating - interconnection capacity will double by 2020 TGC-1 Nordic Power generation totalled 378 TWh in 2014 OAO FORTUM Nyagan Olkiluoto Loviisa Forsmark Stockholm Helsinki St. Petersburg Tobolsk Tyumen Oskarshamn Moscow Chelyabinsk FORTUM’S HEAT PRODUCTION IN 2014 IN TOTAL 34.6 TWh Natural gas 77% Waste 1% Peat 1% Biomass 6% Coal 15% Fortum’s nuclear fleet DEBT MATURITY PROFILE AS OF 31 DECEMBER 2014 Fortum’s CHP’s in Russia Strong financial position OWNERSHIP STRUCTURE AS OF 31 DECEMBER 2014 Good liquidity – committed credit lines total EUR 2.2 billion Approx. 110,000 shareholders 1,500 Fortum’s combined cycle gas turbine (CCGT) Long-term credit rating 1,250 Households 8.1% Finnish State 50.8% 1,000 Financial and insurance institutions 1.6% 750 Other Finnish investors 7.1% 500 Foreign investors 32.4% 250 0 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025+ Bonds Year 2015 2016 2017 2018 Financial institutions MEUR 1,103 860 530 614 Other long-term debt Year 2019 2020 2021 2022 CPs MEUR 820 75 548 1,076 Other short-term debt Year 2023 2024 2025+ TOTAL per 31 Dec 2014 Average interest rate Average interest rate (incl. swaps and forwards) Portion of floating / fixed debt MEUR 109 3 1,245 6,983 DIVIDEND PER SHARE (EUR) 1.30* 1.00 1.00 1.00 2010 68% 2011 50% 2012 63% 1.10 0.20** 1.10 2013 81% 2014 37% per 31 Dec 2013 3.7% 2.4% 3.7% 3.6% 46/54% 51/49% *Board’s proposal to the AGM. **An extra dividend. • Hedging of the Power and Technology’s estimated Nordic power sales volume at end of 2014 2015: ~50% at ~EUR 40/MWh 2016: ~10% at ~EUR 39/MWh • Hedges are disclosed quarterly • Hedge ratios may vary significantly DIVIDEND POLICY Fortum’s target is to pay a stable, sustainable and over time increasing dividend of 50-80% of earnings per share excluding one-off items. • The dividend policy ensures that shareholders receive a fair remuneration for their entrusted capital, supported by the company’s long-term strategy that aims at increasing earnings per share and thereby the dividend. • When proposing the dividend, the Board of Directors looks at a range of factors, including the macro environment, balance sheet strength as well as future investment plans. A- (negative) A- (negative) Fortum’s financial calendar 4 Feb 2015 Financial Statement 2014 week 10, 2015 Operating and financial review for 2014 31 Mar 2015 Annual General Meeting 1 April 2015* Ex-dividend date 2 April 2015* Record date for dividend payment 14 April 2015* Dividend payment date 29 Apr 2015 Interim Report Q1 2015 17 Jul 2015 Interim Report Q2 2015 22 Oct 2015 Interim Report Q3 2015 *Possible dividend related dates. GUIDANCE & HEDGING • Fortum continue to expect that the annual electricity demand growth in the Nordics will average approx 0,5% in the coming years • Electricity continues to gain share of total energy consumption • Annual capex (excl. potential acquisitions) in 2015 EUR approximately 0.9 billion • Corporate tax rate: 19–21% Standard & Poor’s Fitch Investor relations Sophie Jolly VP, Investor Relations Tel. +358 10 45 32552 [email protected] auno Tiihonen R Manager, Investor Relations Tel. +358 10 45 36150 [email protected] Marja Mäkinen Manager, Investor Relations (SRI) Tel. +358 10 45 23338 [email protected] Meeting request: Arja-Tuula Tiainen Executive Assistant Tel. +358 10 453 4487 [email protected]
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