Fortum Oyj · OMXHEX:FORTUM
Fortum Oyj — Q2 2011 Earnings Presentation
32 slides from Fortum Oyj's earnings presentation, Jul 19, 2011
Slide 1: Fortum Corporation Interim Report January-June 2011
Fortum Corporation Interim Report January-June 2011 19 July 2011 1
Slide 2: Disclaimer
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 consult an independent financial adviser. 2
Slide 3: Highlights in Q2
Highlights in Q2 • Good result development continued • Timing of planned nuclear outages weakened Power results compared to Q2/2010 • Overall Swedish nuclear availability back at 80-85% • Nuclear stress tests ready in Finland • In Russia, efficiency improvement of EUR 100 million achieved • Fortum's
Slide 4: Increased uncertainty in macro environment
Increased uncertainty in macro environment Germany GLOBAL - Announced plans to abandon - Increased global economic nuclear energy by 2022 uncertainty - Total reversal of previous policy - Europe’s sovereign-debt - To be replaced by renewable crisis energy - Incident in Fukushima in Japan Finland - N
Slide 5: Q2: Market conditions
Q2: Market conditions • Nordic water reservoirs reached normal levels by the end of Q2 • CO2 prices decreased at the end of the quarter • Nordic forward prices decreased • In the First price zone (European and Urals part of Russia) power consumption was up by 4% from Q2 2010 5
Slide 6: Nordic water reservoirs
Nordic water reservoirs 120 100 reservoir content (TWh) 80 60 40 20 2003 2008 2009 2010 2011 reference level 0 Q1 Q2 Q3 Q4 Source: Nord Pool Spot 6
Slide 7: Price development in the Nordic region and Russia
Price development in the Nordic region and Russia Spot price for pow er in NordPool pow er exchange Spot price for pow er (m arket price), Urals hub eur/MWh RUB/MWh 72 +17% 66,2 1 200 +24% 62,1 950 954 1 000 935 60 52,3 817 45,9 770 44,8 800 48 36 600 24 400 12 200 0 0 Q2/2010 Q3/2010 Q4/2010 Q1/201
Slide 8: Q2: Good development continued
Q2: Good development continued • Comparable operating profit, EUR 348 (339) million • Earnings per share EUR 0.53 (0.30) • Net cash from operating activities 410 (422) million • Strong financial position 8
Slide 9: Q2: Comparable profit at last year's level
Q2: Comparable profit at last year’s level Comparable operating profit, EUR million 7 0 -6 339 -14 30 348 -8 Q2/2010 Power Heat Russia Distribution Electricity Other Q2/2011 Sales 9
Slide 10: January-June: Comparable profit at last year's level
January-June: Comparable profit at last year’s level Comparable operating profit, EUR million 24 -12 997 990 -113 29 48 31 H1/2010 Power Heat Russia Distribution Electricity Other H1/2011 Sales 10
Slide 11: Fortum a forerunner in sustainability
Fortum a forerunner in sustainability g CO2/kWh electricity, 2009 1200 1000 800 600 400 Average 346 g/kWh 200 155 41 GDF SUEZ Europe Union Fenosa Fortum total 0 Fortum EU Vattenfall Iberdrola Verbund Statkraft E.ON Dong RWE PVO SSE EDP Drax Enel CEZ EDF DEI • Dow Jones Sustainability Index World – F
Slide 12: Financials
Financials 12
Slide 13: Comparable and reported operating profit
Comparable and reported operating profit Comparable operating Reported operating Comparable operating Reported operating MEUR profit profit profit profit II/2011 II/2010 II/2011 II/2010 I-II/2011 I-II/2010 I-II/2011 I-II/2010 Power 257 271 271 280 582 695 760 747 Heat 25 33 25 35 196 165 290 194 Rus
Slide 14: Q2: Power
Q2: Power Power • Comparable operating profit decreased – Swedish nuclear availability back at 80-85% – Lower hydro and nuclear volumes – Water reservoirs improved significantly towards the end of the quarter MEUR II/2011 II/2010 I-II/2011 I-II/2010 LTM Sales 574 597 1 267 1 366 2 603 Comparable ope
Slide 15: Nuclear output in Q2
Nuclear output in Q2 Planned outages in Oskarshamn 1&3 and Forsmark 1 in Q2/2011 Q2 2010 (In 2010 no outages in Q2) If timing would have been similar in 2011 compared to 2010, nuclear output would have Q2 2011 exceeded 2010 levels during Q2 Improved availability in Sweden TWh Nuclear Outage effect 1
Slide 16: Q2: Power result declined due to several reasons
Q2: Power result declined due to several reasons Comparable operating profit, EUR million 271 0 -10 -4 -3 3 257 Volume Stronger Property Russian Q2/2010 Other Q2/2011 & price SEK taxes import 16
Slide 17: Q2: Heat
Q2: Heat Heat • Comparable operating profit decreased – Lower heat volumes in Sweden, caused by divestment during first quarter – Integration cost provisions in Poland MEUR II/2011 II/2010 I-II/2011 I-II/2010 LTM Sales 322 301 1 047 952 1 865 Comparable operating profit 25 33 196 165 306 Net Assets
Slide 18: Q2: Russia
Q2: Russia Russia • Comparable operating profit improved – Commissioning of the new unit – Higher electricity market prices – Efficiency improvements – Reversal of CSA provisions related to the newly commissioned units MEUR II/2011 II/2010 I-II/2011 I-II/2010 LTM Sales 195 169 490 413 881 Comparable
Slide 19: Q2: Distribution
Q2: Distribution Distribution • Comparable operating profit increased – Lower transmission costs – Stronger SEK • Smart metering rollout to network customers in Finland continued MEUR II/2011 II/2010 I-II/2011 I-II/2010 LTM Sales 215 200 526 480 1 009 Comparable operating profit 60 53 184 155 336 Ne
Slide 20: Q2: Electricity Sales
Q2: Electricity Sales Markets • Comparable operating profit at last year’s level – Tough competition – Restructuring of the Business Market segment MEUR II/2011 II/2010 I-II/2011 I-II/2010 LTM Sales 183 327 556 964 1 390 Comparable operating profit 10 10 21 -3 35 Net Assets 77 59 Comparable RONA, %
Slide 21: Q2: Income statement
Q2: Income statement MEUR II/2011 II/2010 I-II/2011 I-II/2010 2010 LTM Sales 1 316 1 295 3 350 3 242 6 296 6 404 Expenses -968 -956 -2 353 -2 252 -4 463 -4 564 Comparable operating profit 348 339 997 990 1 833 1 840 Other items affecting comparability 261 12 512 85 -125 302 Operating profit 609 351
Slide 22: Q2: Cash flow statement
Q2: Cash flow statement MEUR II/2011 II/2010 I-II/2011 I-II/2010 2010 LTM Operating profit before depreciations 764 490 1 813 1 351 2 271 2 733 Non-cash flow items and divesting activities -299 -6 -569 -73 124 -372 Financial items and fx gains/losses 12 -146 -290 -323 -641 -608 Taxes -144 -73 -258 -
Slide 23: Key ratios
Key ratios MEUR LTM 2010 2009 Q2 ‘11 EBITDA 2 733 2 271 2 292 Comparable EBITDA 2 431 2 396 2 398 Interest-bearing net debt 6 783* 6 826 5 969 Net debt/EBITDA 2.5 3.0 2.6 Comparable Net debt/EBITDA 2.8 2.8 2.5 Return on capital employed (%) 13.8 11.6 12.1 Return on shareholders' equity (%) 19.1 15.7
Slide 24: Debt maturity profile
Debt maturity profile MEUR 1750 2011 231 1500 2012 668 2013 639 1250 2014 1,223 1000 2015 1,051 750 2016 879 2017 270 500 2018 190 250 2019 840 2020 73 0 2021+ 1,530 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021+ Bonds Financial institutions Other long-term debt CPs Other short-term debt pe
Slide 25: Strong financial position
Strong financial position Fortum’s financial targets LTM in Q2/2011 Return on capital employed 12% 13.8% Return on shareholder's equity 14% 19.1% Net debt/EBITDA around 3.0 2.8* * Comparable net debt/EBITDA Good liquidity – committed credit lines total EUR 2.7 billion 25
Slide 26: Outlook
Outlook 26
Slide 27: Q2 Summary
Q2 Summary • Solid performance continued - seasonality • Power – Improved nuclear availability- timing of Swedish planned nuclear outages impacted volume – Swedish nuclear back at 80-85% in availability – Lower hydro volumes – water reservoirs improved at the end of the quarter – SEK burdened – Resu
Slide 28: Outlook
Outlook • Key drivers and risks – Wholesale price of electricity • Demand • Fuels • CO2 emissions prices • Water reservoirs • Nuclear availability • Nordic markets – Market continues to recover – 2008 level to be reached by 2012-2014 – Electricity continues to gain share of total energy consumption
Slide 29: Outlook
Outlook • Capex (excluding potential acquisitions) – 2011-2012 around EUR 1.6 to 1.8 billion annually (mainly due to Russian investment programme) – 2013-2014 around EUR 1.1 to 1.4 billion annually – Disclosed divestments totalled approximately EUR 0.5 billion • Hedging – 2011 approximately 70% hedg
Slide 30: Wholesale prices for electricity
Wholesale prices for electricity EUR/MWh Spot prices Forward prices 110 100 90 80 70 German 60 50 Nordic 40 30 20 10 15 July 2011 0 2007 2008 2009 2010 2011 2012 Source: 30
Slide 31: CO2-free and energy-efficient solutions important
CO2-free and energy-efficient solutions important Work continues - Fortum’s strategy remains intact Fortum’s Strategy Leverage the strong Create solid earnings Build platform for Nordic core growth in Russia future growth Competence in CO2-free hydro, nuclear and energy efficient CHP production and
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